California is the most populous US state with a total population of 39.6 million and it is also the third largest state in the US. There are approx. 3,548,449 companies in California and state is known also for its economy which is US $3.0 trillion larger than of United Kingdom. California is also home to world famous cities such as Los Angeles and San Francisco. Silicon valley is also based in California and some of the world’s most notable companies such as Apple, Google and Facebook are also based in Silicon valley. Due to it’s ultra modern cities, fertile land, high income population, California is also among the best states to start a small business. If you are an entrepreneur and want to start a business in California then in post you will find all the details about best businesses in California that you can start in 2019.
List of Best Businesses to Start in California in 2020:
In the list below you will find best business to start in California in 2020 and we have also explained each of the business in detail below:
- Web Design and Development company
- Custom Designer cake
- Shoe Store
- ecommerce business
- Computer Repair company
- Fast Food
- Real Estate Rentals
- Day Care
- Plumbing Service
- Auto Repair Shop
- Event Management
- Interior Designer
- Pest Control
- Car wash business
- Professional House Cleaning
- Spa or Salon
- Coffee Shop
- Pizza outlet
- Eyewear Store
- Mobile App Development
How to Start a Business in California?
When you already have in mind what business to start in California then you need to decide on a business structure that suits you. The first step is company formation which could be a Sole Proprietorship, Corporation, LLC or a DBA. Starting a new Business in California is not at all complicated, it’s basically few simple steps that you have to follow in order to get started:
1. Company Formation in California
There are several options available for registering a business/company in California:
For starting a new business in California or company formation such as LLC or corporation, visit the California Secretary of State website. Before you wanna start with the company formation process in California, you may want to do California Business Search that will help you identify whether the trade name that you want to register for your company is available or not.
Perform a California Business Search and find all the registered businesses in California such as domestic stock, domestic nonprofit and qualified foreign corporations, limited liability companies and limited partnerships that have filed with the California Secretary of State Office. Registering your business as a legal entity for licenses and permits and other business taxes is utmost important before starting any operations.
- A DBA or ‘Doing Business As’ which is also known as a ‘Fictitious Business Name’ or FBN, is not really a separate structure, but just a different name that an individual or partners use as their business name. In Order to form a DBA you’ll have to contact your local County Recorder to find out exactly what forms to submit and what their submission process is. You can find the local county recorder’s office by searching ‘YOURCOUNTY county recorder’.
- Form an LLC or ‘Limited Liability Company’ is a type of business entity which is simpler to manage and does not have much obligations. It is a separate entity that doesn’t require directors or officers and have tax benefits as well. You will have to File Form LLC-1 (Articles of Organization) with the California Secretary of State. Once the articles are filed and approved you will then need to properly organize the LLC (yes, even ‘1 person LLC’s’) by holding an “Organizational Meeting” which takes contributions from the members, issues Member Certificates, adopts the company Operating Agreement and more. You can easily start the process of filing an LLC here.
- Register A Corporation is a separate entity (provides liability protection to the owners) that has a structure that includes shareholders, directors and officers. More complex than a DBA but the entity of choice for large companies and startups that intend to raise funding. Some professions are required to choose what is known as a ‘Professional Corporation’ or PC (doctors, lawyers, architects, etc.). File form ARTS-GS (Articles of Incorporation) with the California Secretary of State Corporation Division. You can easily start the process of forming a corporation here.
Video Tutorial, showing Steps to Form an LLC in California
2. Get a Federal Employer Identification Number (FEIN or ‘EIN’)
EIN is an employer identification number just like your Social Security Number but for your company. It’s required for Corporations and LLC’s and optional for DBA’s (if you don’t have any employees, then it’s required). In case you are a DBA and don’t obtain an EIN you will be required to use your Social Security Number on many documents so it’s typically recommended to get EIN in order to prevent identity theft. You can apply online with the IRS (Internal Revenue Service) or via IRS Form SS-4.
3. Obtain necessary Business Licenses, Permits & Tax ID
Since, you’ve registered your business name already, it’s time to obtain necessary business licenses for your company that will authorize your company to do business in your city or county. This is also a part of registering your company for state taxes and permits (the city may require them as part of the business licensing process).
How much does it cost to start a business in California?
Starting a Business in California isn’t expensive at all. All you have to do is form an LLC or a corporation with the Secretary of State. LLC or a Corporation is actually the legal structure of your new company.
- California LLC fee – The CA LLC fee is $85, payable to the secretary of state. In addition, a California LLC fee is also due for the statement of information, a document that must be submitted within 90 days of LLC formation and carries a filing cost of $20.
- California Incorporation Filing Fee – In addition, filing the California articles of incorporation including a filing carries a fee of $100, plus a $15 handling fee. You must also file an initial report giving detailed information about your company, which includes a fee of $25 and a $75 service fee.
Why Start a Business in California?
AS mentioned above, California has the largest population among all the states in the US, approx. 39.6 million, and a higher-than-average per capita income which makes the state ideal for potential business investments and also California is very technologically advanced making it one of the best technology hubs in all of the United States.
A mandatory tax of US $800/year may stop you from starting your business in California but small businesses in California are thriving. The tax is nothing if you compare it to overall annual earning potential of a small business owner. However, many entrepreneurs that manage large corporations complain about the corporate tax structure of the state.
According to data compiled by the SBA, small businesses contributed 7 million jobs to California’s economy in 2018. That number represented half of all private-sector jobs and 34.8 percent of the entire labor force in December 2012. In 2014, California’s gross state product was $2.3 trillion, according to the Bureau of Economic Analysis (BEA). That is almost 13 percent of the United States’ total gross domestic product. If California were a country, it will have an economy larger than of UK and would find a place in the world’s top 10 largest economies.
Small Business Profile 2018 of the State of California
The above numbers prove that California has a lot to offer small businesses, and if you are looking to start a small business in California, we have complied a list of best businesses that you can start in 2019.
What are the best businesses to start in California in 2020?
Helpful Video explaining the best businesses in California in 2019
There are several types of businesses in California that you can start but we have listed only the best ones that you start in 2019.
Top 25 Small Business Opportunities in California
Web Design and Web Development is among the best businesses in California
Today, every small business needs a website or an ecommerce store to sell products. And with this, the developers and designers can easily start their own business by offering web designing services. It is one of the best small business ideas in California as there are many small businesses in the city. Moreover, thousands of startups are incorporated every year as well. Hence, you would not be short of clients. Also, you can work at home in this case easily. You should be a professional web designer to cater to the clients and work in the long-term.
Custom/Designer cakes
People are ready to spend money on beautiful cakes to make birthdays, anniversaries special. So, if you like baking and can bake really well, you can turn this into a business. It is an excellent business idea to start in California for the ladies or cooks who want to create a life out of cooking.
Shoe store
People love shoes and California spends way too much on shoes. Some of the most successful footwear companies in the world are based in the state, including Toms, Vans and DC Shoes. The shoe stores include retailers selling all kinds of footwear such as sandals, boots, sneakers and pumps as well as footwear accessories. With are over 3,000 shoe stores in California, shoe business is huge which employs over 25,400 people. Shoe industry in California is approx. US $3.7 billion in size it is also the home to the secondary market for shoes. Over US $15 million in sales are generated in the state each year.
E-commerce Business
E-commerce means electronic transactions that occur over the internet. There are several profitable ecommerce business ideas to start in California. There are several huge online businesses in the State. An online shopping business is easier, faster and cheaper to set up than a brick-and-mortar counterpart. There are about 5,000 companies with 55,000 workers in the ecommerce industry in California. One an average each employee brings in US $958,300, for total industry revenue of $52.66 billion in 2012. The booming tech industry in Silicon Valley and the San Francisco Bay Area has helped e-commerce companies grow even more through new platforms such as apps and software. The California Retailers Association, which represents all segments of the retail industry, is a major trade organization for business owners in e-commerce.
Computer Repair Company is also among the best businesses in California
If you are tech savvy and love troubleshooting computer issues then this business idea is the right one for you. Everyone needs tech services, and for this, you need to market yourself. California is the home to many small and large companies, and it would help you create a vast and great clientele.
Fast food
Date nights, business meetings and relaxation after a hard day’s job are some of the reasons why fast food businesses make huge sales daily. Just look for a very nice space in a public place where you can sell good food, snacks and drinks to people.
Real estate rentals is also among the best businesses in California
Real estate leasing and rental companies are in great demand in California. California is the most populous state in the US and is expected to grow to 44,085,600 people by 2030, according to the state Department of Finance. After the housing bubble burst, the demand for rentals increased for housing, storage and business purposes. California also has high number of immigrants. One of the businesses that guarantees success in California is setting up a real estate development or agency business to help people find accommodation in the state and these challenges are faced by newcomers and immigrants mostly.
Day Care
Another profitable business that you can choose from the list of small business ideas in California is the daycare service. L.A. is a city where almost every mom is a working mom. And helping them out with daycare services would help you earn a lot. You can also place a term about limited children with the service. Nonetheless, you should have the human resources to manage the children along with the equipment to keep the kids entertained.
Plumbing services
Plumbers can make money from installation of plumbing materials in new homes or fixing plumbing problems like clogged or leaking pipes.
Auto repair
More than fifty percent of the residents of California own cars. This means that there is a lot of demand for auto repair services in the state.
Event Management
L.A. is a lively city, and due to this, many events take place in the town now and then. If you are great at managing events, or you have the experience of organizing stuff at your university or college, you can use this skill to earn by managing events. Event management is another one of the great small business ideas in California that you can take up and earn a lot through it.
Interior Designer
Another one of the small business ideas in California is interior designing services. L.A. is huge, and many people live in the city. Every now and then there are many restaurants, offices, and houses that need a new look or renovation. If you are good at interior designing, you can offer the services as per the budget of the clients. Moreover, if you take the business online, you would be able to increase your reach.
Pest Control
Pests can be a source of irritation and micro-organisms that lead to health problems, and no one likes to have them in their homes. You can make good money from helping people remove those annoying pests from their home.
Car wash Business
On the list of low-capital businesses that you can start is a car wash business or auto-detailing service.
Professional house cleaning
If you are the type of person that loves to keep things clean, you can start a house cleaning service to help people clean up their homes or offices.
Open a Spa or a Salon
Being a modern and hi-tech city, California residents are used to a fast paced lifestyle which often leads to stress, skin problems and body aches. People are always looking for a place to relax, get a warm & relaxing massage and even get facials to keep their skin clear looking and healthy. Spa business can be a highly profitable venture if you are passionate about beauty, skin care and health. Also, if you are into styling and fashion then opening a Salon can be a good idea as millennials are ready to spend on grooming and personal styling.
Other Small Business Opportunities in California in 2019
Coffee Shop
A lot of people love coffee, and would always stop over for freshly brewed coffee every once in a while. Setting up a coffee shop in a busy area will attract many customers during office break times and in the mornings. You can add donuts, pretzels or bagels etc as coffee accompaniment.
Pizza parlor
Everyone loves pizza, and if you look at the history of the most popular pizza joints, you would notice that they all started small. So you as well can start your own pizza business on a small scale and watch the business expand in future if you manage it well. You have to know though that you need to have some capital before you can start this business or buy a pizza franchise.
Eyewear Store
Eyewear is a growing marketing in the United States. The eyewear market amounts to US$31,901 and it is expected to grow annually by 1.2% (CAGR 2018-2021). Looking at the numbers we can say that starting an Eyewear Store in California can be a highly profitable business.
What’s the most profitable business in California?
At the moment on-demand services and on-demand apps such as TaskRabbit, Medicast and PostMastes are doing really well and making huge profits. On-demand services such as Laundry, good delivery, home repair and handyman services are always in demand by people due to their busy lifestyle.
On-demand beauty services are also in huge demand in the state as people are always looking for a hair cut, facials, body massage and nail care at their own convenience.
Tile Work South Bay in Los Angeles, California is tile repair and tile installation contractor. It’s a Small Business in California offering tile repair services in San Pedro, Torrance, Hermosa Beach, Hawthorne, LA, California.
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List of top 20 largest companies in California based on the number of Employees
| 1 | Wells Fargo | San Francisco | 270,600 |
| 2 | The Walt Disney Company | Burbank | 195,000 |
| 3 | Oracle | Redwood City | 138,000 |
| 4 | Gap | San Francisco | 135,000 |
| 5 | Apple | Cupertino | 116,000 |
| 6 | SYNNEX | Fremont | 108,000 |
| 7 | PORAC | Sacramento | 107,653 |
| 8 | Intel | Santa Clara | 106,000 |
| 9 | Alorica | Irvine | 92,000 |
| 10 | Western Digital | San Jose | 67,629 |
| 11 | McKesson | San Francisco | 64,500 |
| 12 | Dignity Health | San Francisco | 54,938 |
| 13 | HP | Palo Alto | 49,000 |
| 14 | Sutter Health | Sacramento | 43,000 |
| 15 | Seagate Technology | Cupertino | 43,000 |
| 16 | Concentrix | Fremont | 38,760 |
| 17 | L.A. Unified | Los Angeles | 36,420 |
| 18 | Sanmina | San Jose | 34,958 |
| 19 | Forever 21 | Los Angeles | 30,000 |
| 20 | TTM Technologies | Costa Mesa | 28,360 |
Businesses for Sale in California
If you are looking to buy a business in California then here are some very useful websites that you should check out. These websites have a huge list of businesses for sale in California along with asking prices. There’s also an option to ask for help from a Qualified Business Broker.
Bottom Line
California has a business-friendly environment and small businesses in California flourish due to its large high income population living in the urban areas such as San Francisco and Los Angeles, several startup resources such as SCORE California which provides mentorship, counseling and advice for new businesses.
Before you start a business in California, get in touch with a Local SBA (Small Business Administration) office to get necessary advice about small business development, business plan preparation, funding resources and marketing guide. Basically, SBA acts as a Business Development center for you that helps in setting up your new business, organizing it and help in growth as well.
You should also check business license portal CalGold which is especially for the state of California. It will be of great help to you.
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