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5 Key Steps to Start a Business

5 Key Steps to Start a Successful Business in California

Man standing in front of a business strategy diagram

Positioning Yourself to Succeed

Congratulations on embarking on the first step to starting your business in California! Starting a business is both an exciting and daunting feat to accomplish, but the fact that you are here, researching, shows that you have the passion and the will to make your dream become a reality.

The following article includes the necessary steps you need to take to not only start a business in California, but also to create the foundation to put yourself in the best position for your business to succeed.

“Luck is the last dying wish of those who want to believe that winning can happen by chance, sweat, on the other hand, is for those who know it's a choice.” – Anonymous

Always choose to win. Follow the steps below and you can.


Step 1 – create The Business Plan

Before diving in and obtaining a business license or hiring an attorney to choose the right business structure, you should first do some business planning. Taking the time to plan the launch and growth of your business will lay a solid foundation for your business to succeed. Creating a strong business plan is key to succeeding. It will keep your business from cracking under pressure and will constantly serve as a guidebook on what goals to achieve and what direction to pursue when you are deep in the midst of establishing your business.

To create an exceptional business plan, click here. In general, make sure to seriously consider the following:

  1. Market Research and Competitive Analysis – Why You Can Succeed

  2. Business Description – Who is and What Does Your Company Stand For?

  3. Goods or Services Company Offers – What is Your Company Selling that Benefits Consumers?

  4. Business Organization and Management – How is Your Business Structured to Ensure Success?

  5. Marketing Strategies – How Will You Attract Customers to Your Business?

  6. Funding – How Will Your Business be Funded and How Much Money Will it Make?

  7. Costs of Doing Business – How Much Will it Cost to Start and Run Your Business?

Step 2 - form The Business Structure

Next, you should seriously consider what type of legal business structure your business will adopt before conducting any business. Choosing the proper business structure (a.k.a. Entity Formation) is a crucial step that should not be taken lightly as choosing the proper business structure will ensure that you and your personal assets, such as your house and car, are protected and are not vulnerable to being used to pay any business debts.

Every business is different and has unique needs, so do not rely on standard entity formation templates. Hiring a business lawyer is highly recommended because a business lawyer will be able to determine the proper business structure for your business and customize the formation of any structure to fit your particular needs.

The following is a list of the business structures with links to separate articles that explain each type in more detail:

  1. Sole Proprietorship

  2. Partnerships

  3. Limited Liability Company (LLC)

  4. Corporation

    • C Corporation

    • S Corporation

    • Public-Benefit

    • Social Purpose

  5. Non-Profit

Step 3 - Apply for the Necessary Licenses and Permits

Next, before you start running your business, your city and/or county may require that you obtain certain licenses or permits to conduct any business. Visit to know exactly what licenses and permits are required. The site is from the California Governor’s Office of Business and Economic Development “Go-Biz” and it is a great resource for not only knowing which licenses and permits you need to obtain, but also how to start the process of acquiring them. 

Step 4 - establish the Financial Foundation

Now that you have done the planning and handled the legalities of starting your business, it is time to create the financial foundation to build your business upon. Although this step is not strictly required if you are a sole proprietorship, I do highly recommend that you not skip this important step because this step will allow you to more easily keep track of business expenses and profits.  This will enable you to keep an accurate accounting of your business so you can write those business expenses off and calculate the appropriate amount of taxes to pay.

In addition, keeping your personal and business funds separate will prove to the Internal Revenue Service (IRS) that your business is not a “hobby business.”  A hobby business is  not allowed to write any business expenses off as tax liability. The IRS requires that your business makes a profit in at least three out of five years. Having separate personal and business accounts will help prove that you are operating a for-profit business.

Click the link to know the Three Steps to Establishing the Financial Foundation.

*Please note that if your business is a corporation, you are required to keep separate personal and business accounts.  A corporation cannot co-mingle business with personal funds.

Step 5 - Protect Your Brand & creations (Intellectual Property Protection)

Developing a brand for your company or thinking of a new invention does not automatically mean that others cannot copy or use your brand or creations. You must register them as either a trademark, copyright, or patent to claim ownership in order to obtain protection from others unfairly stealing them for their own use without your permission. If you plan to have your business become a long-term for-profit company, it is crucial to seek out the appropriate intellectual property protection. Consult with a business lawyer to develop an intellectual property plan that works for your particular business, so your intellectual property is adequately protected.

Below are the different types of intellectual property protection with links to separate articles that explain each type in more detail:

  1. Trademarks

  2. Copyrights

  3. Trade Secrets

  4. Patents


*The above article is for general informational purposes only and should not be taken as legal advice. Please contact a business lawyer to find out how any information here applies to your particular circumstances.