Starting an Online Business in California
California enjoys dominance in several economic and business areas with small and internet based businesses playing a crucial role in the Golden State’s international competitiveness. You can also become an integral part of the state’s flourishing economy once you start an online business in California. The question is how do you form a startup? The following steps will provide an insight into the requirements and documentation required to start an ecommerce business in California.
1. Prepare your online business idea and plan
The business idea and plan is crucial towards the sustenance and success of every business. If you already have an idea then you can create your business plan around it. If you are researching ideas then it is important to choose an area that you have expertise and experience in. For example: If you possess knowledge of blog writing and do off-road hiking then you can combine the knowledge and experience to start an online business in California that shares information, travel itineraries, and more. Once you have identified your idea based on core strengths, it is time to create a business plan. The plan for every business will be different based on the industry, activity, target audience, etc., but there are some key areas that remain the same. If you start an ecommerce business in California then the key areas would be:
- Your mission and how you will get there
- Your short and long-term goals and objectives
- Define your target online demographic profile or market
- Define the online competitive market for your niche
- Provide a value proposition
- Create a revenue model
- Define benefits of online services or products
- Develop a strong internet marketing strategy
- Define risks including future internet business issues
- Create a financial plan and scaling your business
2. Choose your online business name and buy domain
If you start an online business in California, it is important to identify a name for the business first. A business name is an essential aspect of the branding strategy and should ideally be short, memorable, and easy to pronounce or write. A simple business name is also easier to translate across geographic or language barriers if you are planning to go global. At the same time, you have to check for availability of the business name as it will help you in reserving the name with the office of the secretary of state. If you are planning to start an ecommerce business in California then it is important to also check for the availability of the domain name. The domain name extension can be any of the following:
- .com (commercial business)
- .net (network)
- .co (Commercial)
- .org (organisation)
- Country codes like .us or .uk
- .info (information)
- .biz (business)
The most common extension is a .com extension and you can research over the internet for domain name registration. There are some domain registrar and web hosting companies that offer free domain name registration if you opt for a web hosting package.
3. Register your online business with CA SOS
Once you have reserved your business name with the California Secretary of State and booked your domain, the next step would be to register the business. You can start an online business in California but prior to registration, you will need to define the structure of your business. The different types of entity that you can form in the state are:
- Sole Proprietorship
- Limited Liability Company
- Limited Liability Partnership
- Limited Partnership
- General Partnership
If you start an ecommerce business in California as a sole proprietorship then you will not be required to register but for all other businesses, you have to file new business formation documents in the state. The fee and the form will vary according to the business structure chosen.
We at IncParadise are one of the top registered agents in the state and have a team that is professional, and possess the necessary expertise to guide you towards new online business registration. We have helped many entrepreneurs and first time business owners to start an online business in California.
Register your online or e-commerce business in California today!
4. Obtain all necessary licenses and permits
Once you have registered with the California SOS, applying for an online business license in California is important to ensure the business is operational. In fact, all types of businesses have to apply for and obtain California business licenses irrespective of whether you start an online business from home or a store front. The business license or permits required will depend on your location (city or county) and the type of online business activity (selling products or service).
Every new business in the state will need to apply for a general online business license in California, which is issued by cities or counties. For example: If you start an online business from home in Glendale, California then you will need to also apply for additional permits or licenses like the home occupation business permit.
If you want to know more about the types of online business license in California that your startup may require then you can order our detailed California business license check report. This is a comprehensive report that elaborates on essential details like fees related to a business license, list of filing instructions, supporting document requirements, types of licenses and permits in the state and the issuing authority.
This is a comprehensive report that elaborates on essential details like fees related to a business license, list of filing instructions, supporting document requirements, types of licenses and permits in the state and the issuing authority.
5. Get EIN and File your taxes
Whether you are planning to start an online business from home or will be maintaining inventory in California, you will be required to file taxes in the state. There is California sales tax applicable on sales of $500,000 or more in tangible personal property in the state. You will be required to register with the California Department of Tax and Fee Administration (CDFTA), if your online business does not have annual sales of $500,000 or more. If you start an online business in California then district taxes may also be applicable. These are voter-approved sales and use taxes that are imposed primarily by counties, cities, and other local jurisdictions. In order to file taxes in California, you will need to apply for an employer identification number (EIN), which is issued by the Internal Revenue Service (IRS).
6. Open bank account
Once you have obtained your online business license in California the next step would be to open a business bank account. A business bank account plays an important role when it comes to segregating your business expenses and revenue from personal expenses. This is especially important if you start an ecommerce business in California as the revenue generated and expenses will be higher. Having a business bank account will not only help you to keep a track of all business related expenses but also simplify annual tax reporting in California. IT is important to note that you may need to show your Employer Identification Number (EIN) in order to open a business bank account.
7. Comply with taxes and other regulatory requirements
Once you start an online business in California, you will need to comply with annual maintenance and tax or business license requirements. Some of the important requirements are:
- Most business licenses in the state have to be renewed annually or on a date specified by the city or jurisdiction in which the business is based.
- Apart from this, you have to file an annual report known as the “Statement of Information” in the state of California.
- If there is any change in the name, address, or ownership of the business entity then you will be required to inform the Secretary of State and update it in the records
- You need to ensure your business is compliant with the zoning laws and regulations of the jurisdiction your business is located in.
8. Market your business
If you are planning to start an online business in California then marketing it is core to the long-term success of the business. The first step is to develop a strong marketing strategy and this will be based on three important factors, which are:
- The type of online business
- The target audience
- The competition
If you start an ecommerce business in California then your marketing strategy should comprise of several elements like:
- Company Website
- Search Engine Optimization
- Visuals to strengthen branding
- Mobile commerce (m-commerce) for maximum reach
- Digital marketing campaigns
- Organic content creation and sharing on social media
- Promoting products or services through email marketing
- Customer experience