8 Steps to Starting a Business

1. Get a business license, even if you are starting a home-based business.

Contact the City Hall of the City where you will be locating your business or contact the county
- Riverside: www.tlma.riverside.ca.us
- San Bernardino: www.sbcounty.gov
2. File a fictitious business statement if your business name is different from your personal name, to
avoid confusion with other businesses.
County of Riverside, County Clerk
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County of San Bernardino, County Clerk
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3. Get state and federal tax .!. numbers.
State ,a- ./: 0enerally, businesses need a California 1m2loyer ./ 1.3$. 4ne e-ce2tion is a sole
2ro2rietor with no em2loyees. However, sole 2ro2rietors who must 2ay federal e-cise or 2ayroll ta-es will
need an 1.3, too.
,he 1m2loyment /evelo2ment /e2artment 1//$ issues 1.3s and administers California5s 2ayroll ta-es,
including 6nem2loyment .nsurance, 1m2loyment ,raining ,a-, State /isability .nsurance, and California
7ersonal .ncome ,a- withholding. 0o to their website at htt2:88www.edd.ca.gov8ta-ind.htm
9ederal ,a- .d
9re:uently asked :uestions about whether you need a federal 1.3 and how to a22ly for one can be found at
the htt2:88www.irs.gov8businesses8small8article8),,id;!&*"),)).html section of the .RS website. .f you need
to a22ly for an 1.3, com2lete <22lication for 1m2loyer .dentification 3umber htt2:88www.irs.gov82ub8irs-
2df8fss%.2df .RS 9orm SS%$. ,he instructions to 9orm SS-% and 7ublication #'*" 2rovide addresses and
fa- numbers by geogra2hic location for submitting your a22lication. 7ublications and forms are available
by 2hone at &))-,<=-94R> &))-&+!-*'('$.
"ther government re#uirements.
- $eller%s &ermit' (ost retailers, even occasional sellers of tangible goods, should register to collect sales or
use tax. ) $eller*s &ermit is issued to business owners, allowing them to collect tax from customers and
report it to the $tate. Go to http'++www.taxes.ca.gov+$ales,and,-se,.ax+$ellers&ermit.shtml
- For food handling license' /iverside+$an 0ernardino 1os. !ept of 2nvironmental 3ealth regulates
retail food o2erations, organi?ed cam2s, mobile home 2arks unincor2orated areas only$, non-munici2al
water systems, wells, on-site sewage system design, businesses that handle or store ha?ardous materials,
landfills, solid waste transfer stations, solid8li:uid waste haulers, medical waste and tattoo businesses to
name a few.
- Riverside County: www.rivcoeh.org
- San Bernardino County: www.sbcounty.gov
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- For 4oning issues'
Riverside Co. 7lanning /e2t
www.tlma.co.riverside.ca.us82lanning8content8?oning8ordnance8my?one.html
San Bernardino County 7lanning /e2t.
www.sbcounty.gov
5. $et up an accounting system
- 42en a business checking account to se2arate your business from your 2ersonal finances. ,he bank may
ask for a fictitious business statement and a federal ta- ../. number.
- 7urchase accounting software and have a C7< set it u2. @uickBooks is used by the maAority of small
businesses. <ttend a SC4R1 worksho2 on @uickBooks. Recommend a C7< review your books 2eriodically.
6. !ecide which business structure is right for you 7recommend also discussing with a business
attorney and a 1&)8
,he 2rinci2al issue in choosing a business structure is the 2ersonal liability of owners for business debt. <
secondary issue is how the 2rofits are ta-ed. <nd since most entre2reneurs want to limit startu2 costs, you
may want to choose the least e-2ensive to start, then make the final choice when the cash flow im2roves,
and your business grows large enough to worry about the liabilities.
5.a Sole Proprietorship
< sole 2ro2rietorshi2 is an unincor2orated business that is owned by one 2erson. .t is the sim2lest form of
business organi?ation to start and maintain. ,he business has no e-istence a2art from you, the owner. .ts
liabilities are your 2ersonal liabilities, and you undertake the risks of the business for all assets owned,
whether used in the business or 2ersonally owned. Bou include the income e-2enses of the business on
your own ta- return. 0et more information and filing re:uirements for sole 2ro2rietorshi2s at
htt2:88www.ta-es.ca.gov8sole2robus.shtml
6.b General &artnerships and 9imited &artnerships
< 2artnershi2 is the relationshi2 e-isting between two or more 2ersons who Aoin to carry on a trade or
business. 1ach 2erson contributes money, 2ro2erty, labor or skill and e-2ects to share in the 2rofits and losses
of the business. < 2artnershi2 is not ta-able on the income of the entity. 1ach 2artner includes his or her share
of the 2artnershi25s income or loss on his or her ta- return. 0et more information and filing re:uirements for
general 2artnershi2s and limited 2artnershi2s. <t htt2:88www.ta-es.ca.gov8.ncomeC,a-8gen2artbus.shtml
6.c 1orporation
1orporations offer 2ersonal liability 2rotection, ta- savings, and increased o22ortunities for raising
ca2ital. Cor2orations are also re:uired to 2erform certain formalities such as holding annual meetings and
kee2ing detailed cor2orate records minutes$.
California corporations pay an annual minimum tax of $800, whether they do any business or not.
.n forming a cor2oration, 2ros2ective shareholders transfer money, 2ro2erty, or both for the cor2oration5s
ca2ital stock. < cor2oration generally takes the same deductions as a sole 2ro2rietorshi2 to figure its
ta-able income. < cor2oration can also take s2ecial deductions.
,he 2rofit of a cor2oration is ta-ed to both the cor2oration and to the shareholders when the 2rofit is
distributed as dividends. However, shareholders cannot deduct any loss of the cor2oration. 0et more
information about filing re:uirements for C Cor2orations. <t htt2:88www.ta-es.ca.gov8cor2C.shtml
$ 1orporation
<n S cor2oration is a hybrid business entity. .t has a se2arate legal e-istence and generally offers liability
2rotection to its owners shareholders$. .t 2ays California ta- on its net income and also is a conduit where
the 2rofit or loss flows through to the shareholders. ,he cor2oration must elect to be treated as an S
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cor2oration. ,here can be no more than (" shareholders and only one class of stock. Shareholders can only
be individuals, estates or certain trusts. S cor2orations can own subsidiaries.
,he income of an S cor2oration is generally not subAect to federal income ta-. .ts shareholders include on
their ta- returns their share of the cor2oration5s income, deduction, loss, credit, and their share of income or
loss. 0et more information about filing re:uirements for S Cor2orations.
9imited 9iability 1ompany and 9imited 9iability &artnership
<n DDC may be a sole 2ro2rietorshi2, cor2oration, or a 2artnershi2. < minimum of + members is re:uired
for federal 2ur2oses to o2erate an DDC as a 2artnershi2.$ Conse:uently, the a22licable ta- forms,
estimated ta- 2ayment re:uirements and related ta- 2ublications are de2endent u2on whether the
DDC o2erates as a sole 2ro2rietorshi2, cor2oration, or a 2artnershi2.
:. .rade secrets, &atents, .rademar;s , and 1opyrights
.rade $ecret' .nformation, including a formula, 2attern, com2ilation, 2rogram, device, method,
techni:ue, or 2rocess, that #$ derives inde2endent economic value, actual or 2otential, from not being
generally known to the 2ublicE and +$ is the subAect of efforts that are reasonable under the circumstances
to maintain its secrecy. ,rade secrets are not 2rotected by law in the same manner as 2atents and
trademarks. < com2any can 2rotect its confidential information through non-com2ete and non-disclosure
contracts with its em2loyees.
&atent' 0rants 2ro2erty rights to the inventor, issued by the 6S 7atent and ,rademark 4ffice, Fthe right to
exclude others from making, using offering for sale, or sellingG the invention in the 6nited States or
im2orting the invention into the 6.S. 3ote that the government does not 2rotect owners of 2atents from
infringement. .t merely allows the owner the authority to 2rotect him8herself. 4n the other hand, a 2atent is
a detailed descri2tion of the invention o2en to 2ublic view. < 2atent can cost as much as H#),))) if a 2atent
lawyer 2re2ares it. .t can also be 2re2ared by the inventor for a few hundred dollars with the aid of
2ublications such as 34D4 7ublications 7atent it Bourself. 7erha2s the best course is to 2re2are it
yourself, then have a 2atent attorney review it. htt2:88www.us2to.gov
.rademar;' < word, name, symbol, or device that is used in trade with goods to indicate the source of the
goods and to distinguish them from the goods of others. ,rademark rights may be used to 2revent others
from using a confusingly similar mark, but not to 2revent others from making the same goods. Cost: less
than H#,))). htt2:88www.us2to.gov
1opyright' < form of 2rotection 2rovided to the authors of Foriginal works of authorshi2G including literary,
dramatic, musical, artistic, and certain other intellectual works, both 2ublished and un2ublished. <llows
e-clusive right to re2roduce the co2yrighted work, to 2re2are derivative works, to distribute co2ies, to 2erform
or dis2lay the work 2ublicly. Cost: registration fee less than H#)). See htt2:88www.co2yright.gov8
<. =rite a 0usiness &lan
< business 2lan is recommended to #$ determine if a business venture is viable, +$ .dentify 7rofit
7otential, *$ antici2ate Cash 9low, %$ Communicate with Doan 4fficers and8or .nvestors and %$ as a
>anagement 0uide
<n effective business 2lan re:uires an understanding of:
- Bour competitive advantage. Ihy would someone buy from you instead of a com2etitorJ
Build your 2lan around your competitive advantage.
- .arget (ar;et. /efine who your customers are by location, age grou2, income level,
ethnicity, etc. ,he narrower you define them, the easier to reach them.
- (ar;eting . How will you reach your ,arget >arket ,K8Radio83ews2a2er advertising, e-
mail, internet, mailers, mi-ersL.J$
- 1ompetitors. Iho are theyJ Ihat do the chargeJ How is their serviceJ
- Financial pro>ections . Create a s2readsheet with startu2 and monthly costs for #+ months.
<dd 2roAected income and add each column to result in a monthly cash flow.
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4utline:
- 1-ecutive Summary # 2age$ /o this last
- Business descri2tion or F>odelG$. .nclude your e-2erience M :ualifications #2age$
- >arketing 7lan: Start with Com2etitive <dvantage, summari?e trial marketing results and
market research. /escribe target market, com2etitors. /escribe communication method
advertising, etc$ and budget. " 2ages$
- 9inancial 2roAections: see descri2tion above. * 2ages N addendum$
Ihere to Start: Dibraries, Bookstores Barnes M 3oble, etc$ have books on writing business 2lans <lso the
SB< website http'++www.sba.gov+smallbusinessplanner+index.html Click on OIrite a Business 7lan.
0oogle Fbusiness 2lansG, see free sam2les. <lso see SC4R1 website: htt2:88www.score.org. Click on O9earn
"nline' @uick Start Business 7lanP
<fter you have a rough draft of your 7lan, contact SC4R1 and arrange for a counselor to review it
Inland Empire SCORE 11801 Pierce Street, nd !l., Ri"erside C# $505
$51%&5%'($0
)e*site+ ,,,.iescore50(.org
&. 4btain 9inancing
,his subAect is beyond the sco2e of this guide. <t this 2oint you should be working with a SC4R1
counselor to hel2 you obtain financing. Bour financial 2roAections should clearly indicate two items of
interest to a lender or investor: #$ ,he Fbreak-evenG month and +$ the amount of money needed to finance
the business. Bou will need to know your credit score and it must be an e-cellent rating$ and have enough
collateral in a residence to cover the loan amount.
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