How to Start a Home-Based Business in California

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Home-based businesses are easy to start in California
Home-based businesses are easy to start in California (Image: Woman working on laptop at home on the couch. image by Andy Dean from <a href='http://www.fotolia.com'>Fotolia.com</a>)

In many ways starting, a home-based business in California is no different than starting any other type of business. You need solid research, a good marketing strategy and excellent organizational skills. Operating a business from your home also requires an additional layer of self-discipline, as constant distractions such as kids or house chores can make it a challenge to stay focused on work. Nevertheless, with the aid of today’s technology it is possible for anyone to start a home-based business with relative ease.

Create a business plan. Even though most home businesses are small operations that don’t require a large amount of research or accounting expenses, your chance of success greatly increases if you create a business plan before doing anything else. Include the general business idea and the reasons why you think your business will be successful, such as who will buy your product, where the customers will come from, how you will advertise, how much you need to make to break even on a monthly basis, and whether you will need a loan or will finance the business yourself.

Confirm zoning laws and location. Check with your city or county government to see if your type of business is allowed to operate in your home.

Register your business. If you will be a single proprietor operating under a fictitious name, you must file the name with your county recorder-clerk’s office. If you are planning on registering your business as a corporation, limited liability company (LLC), or a partnership, then you will file with the California Secretary of State by submitting the forms related to your business type and paying the appropriate fees. The necessary forms for California are online at the California Secretary of State website: sos.ca.gov.

Determine whether you need an employer identification number (EIN). If you are creating anything other than a sole proprietorship, you need to get an EIN from the Internal Revenue Service. You will use this number to file taxes on behalf of your home-based business. If you are operating as a sole proprietor, then you can file taxes for your business using your social security number.

Register for state taxes and licenses. All businesses in California must register for one or more tax-specific numbers. These include special licenses or permits you might need (such as a seller’s permit if you business involves selling items online), and unemployment insurance tax if you have employees.

Tips & Warnings

  • Get free business advice from your local Small Business Association (SBA) center. They have offices all over the state of California and provide support from getting loan advice to developing marketing strategies.
  • Be sure to carefully determine what permits and licenses you need to operate legally in California to avoid breaking the law and paying costly fines.

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