How to Start a Small Business in California

Photo by Cristiano Corsini (Flickr)

The state of California has been tagged with a negative reputation in recent years by small business organizations. California's budgetary woes have led to increased corporate taxes and other liabilities for businesses working on narrow profit margins. Small businesses are asked to contend with strict environmental protection laws, local property taxes and other blockades while trying to sell their products. You can start your small business from a strong position by following state regulations and getting a foothold in California's hottest industries.

Choose the location for your company's headquarters in California with the help of California Business Investment Services. This state agency works with businesses of all sizes to find tax credits and financial incentives from local governments useful for offices and production facilities. See Resources.

Research health, building and business permits from local governments in California through the CalGOLD database. You can click through the industry, county and city categories in CalGOLD to locate necessary permits for your small business.

Acquire an employer account number for tax and payroll purposes from California's Employment Development Department. Ask for information on state payroll taxes before hiring any employees to make sure accurate checks are issued.

Register your business with the Franchise Tax Board and the State Board of Equalization to pay your fair share in business taxes. The Franchise Tax Board handles tax payments from franchises and interstate businesses while the State Board of Equalization handles alcohol, tobacco and other excise taxes.

Interview regional wholesalers for your small business to cut down on overhead costs on your monthly deliveries. For example, an interior designer in San Francisco should look for clothing supply stores in the Bay Area for same-day delivery and easier access.

Recruit a small corps of managers, designers and customer service representatives from local talent pools. If you run a political consulting firm in Sacramento, look for new graduates from universities in Northern California as well as experienced residents who are familiar with California politics. Hold off on mass recruiting and job fairs outside of your area unless your business requires large-scale production teams.

Join small business organizations as well as the local Chamber of Commerce before opening your doors. Apply to the Small Business California and the California Small Business Association to access discounts, business advice and contacts within your industry.


  • Connect your small business to trendy industries in California to increase customer interest. For example, a home builder should offer green building consultations and use environmentally responsible techniques to attract eco-friendly homeowners in California.


  • Train your entire staff on proper disposal of hazardous materials and other requirements laid out in California's pollution control laws. Your business will be required to pay thousands of dollars in fines and suffer bad publicity if any member of your staff is found breaking environmental protection laws.