How to Start a Business in California: A Step-by-Step Guide for Absolute Beginners

1. Before you start: is your idea viable?
2. Step 1 — Choose a business structure
3. Step 2 — Pick & check a business name
4. Step 3 — Register in California
5. Step 4 — Get EIN & open a bank account
6. Step 5 — Licenses & permits
7. Step 6 — Taxes in California
8. Step 7 — Insurance basics
9. Step 8 — Website & Google Business Profile
10. Step 9 — Your first 10 customers
11. FAQ

Before you start: is your idea viable?

Two quick checks save months later: (1) does someone actually want this, and (2) can you reach them affordably? Start with a 10–15 minute validation pass.

Step 1 — Choose a business structure (LLC, sole proprietorship, or corporation)

Pick based on risk, taxes, and simplicity. For many first-timers, an LLC offers liability protection with straightforward upkeep. A sole proprietorship is the simplest to start. An S-Corp is a cross between Corp and LLC – less paperwork, easier to maintain, but affords some benefits of a corporation. A corporation can fit startups seeking investors. If in doubt, start simple and upgrade later.

Step 2 — Pick & check a business name (and domain)

Choose a name you can register and a domain you can actually get. Check the California name database, then confirm the .com (or a clean alternative). Avoid names that sound like competitors.

• Run a state name search for conflicts.
• Check the domain and common social handles.
• Do a quick trademark search for obvious conflicts.

Step 3 — Register in California

File state formation (LLC/corp) or register a DBA for a sole prop if using a trade name. Some cities require a local business license or tax registration before you start operating.

Step 4 — Get an EIN & open a business bank account

Apply for a free EIN, then open a separate business bank account. Keeping finances separate protects your records and makes taxes less painful.

• EIN confirmation letter (save the PDF)
• Formation docs or DBA certificate
• Operating Agreement (LLC) or Bylaws (corp)
• Photo ID + initial deposit

Step 5 — Licenses & permits

Requirements depend on industry and location (state + city/county). Typical items: general business license, seller’s permit for retail, and any professional/health/safety permits relevant to your activity.

How to do it: Simply call your City Hall in the city where you’ll be running your business and ask what’s needed in your area. It varies a little by town.

Step 6 — Taxes in California

Plan for sales/use tax (if selling taxable goods), state income/franchise taxes, and any local business taxes. Register where needed and set calendar reminders for due dates.

Step 7 — Insurance basics

At minimum, price general liability. If you provide services, consider professional liability. If you’ll hire, workers’ comp is required. Many clients ask for proof of insurance before signing.

• Get 2–3 quotes with the same coverage levels.
• Ask about monthly pay-as-you-go options.

Step 8 — Build a basic website & Google Business Profile

Launch a simple, clean site in a day. One page is fine to start. Your goals: explain what you do, who it’s for, price or “starting at,” and a clear way to contact you or buy.

Need help choosing a path? See Beginner Marketing Basics or our guide: Set Up Google Business Profile.

Step 9 — Your first 10 customers (simple plan)

Keep it focused: a narrow offer, a short list of people to contact, and a clear ask. Track results and double down on what works.

FAQ: Common beginner questions

How much does it cost to start in California?

Plan for filings, permits, a domain/website, and basic tools. A lean setup is often in the $300–$1,200+ range before inventory or equipment.

Should I form an LLC or start as a sole proprietor?

If you need a liability shield or clients expect it, an LLC is common. If you’re testing something tiny, a sole prop can be fine to start—just keep finances separate. Many owners upgrade to an LLC when revenue or risk grows.

Do I need a business license?

Many California cities require a local business license or tax registration. Check your city/county site to confirm before you operate.

What’s the fastest way to get online?

Use a simple website builder, a single-page site, and a clear call to action. Claim Google Business Profile the same day and add photos and services.

How do I know if my idea will work?

Validate quickly: a simple landing page, a short interest form, 10–20 real conversations, and a small test campaign ($50–$150). If you get no interest, adjust the offer and try again.

This page is educational, not legal or tax advice. When in doubt, speak with a CPA or attorney.

Helpful resources

• One-Page Business Plan (free template)
• Startup Costs Calculator
• Beginner Marketing Basics
• Test Your Business Idea (quiz)