Thinking of starting a business

Step 1: Get your paperwork in order - Before opening for business, make sure you file the required legal, tax, and business licensing documents for your local area.

• Choose a business structure: It's important to select the proper legal structure for your business (sole proprietorship, LLC, LLP, GP, corporation) in the beginning because it's not easy to change it later. Each type of legal entity comes with specific requirements and restrictions.
• File your tax and employer identification documents: City, county, or state governments may require business tax filings.
• Get appropriate licensing: A city, county, or state license or professional certification may be required to operate.

Step 2: Create a business plan - Your plan creates the foundation for your business on how to structure, run, and grow it. Business plans can also help you get funding or bring on new business partners.

Step 3: Business funding - One of the greatest challenges small businesses and entrepreneurs face is accessing capital. Many small businesses are funded by loans from friends, partners, or family members. However, according to the 2020 Census, more than 68 percent of small businesses rely on banks for credit. Accessing traditional sources of capital often relies on connections or a track record of sustainable business growth. Below are some funding alternatives for small businesses:

• Government-backed loans:Microloans are good options for when a lender is not able to make a direct loan. They may also offer better lending terms and payment flexibility. The California Office of the Small Business Advocate also offers grants and financing.
• Investors and private equity: Consider capital raising through equity financing when a bank may not be an option.
• Business incubators and accelerators: Access seed grants and other resources like networking, mentorship, fundraising, and legal assistance. Be careful about signing shared equity agreements, mandatory participation contracts, or sharing proprietary information about your business, products, or services. APEX accelerators benefit underserved communities with regional offices across the state.
• Franchise opportunities: A franchise agreement grants the right to offer, sell, or distribute goods or services under a prescribed marketing plan or system. Franchising can be a relatively affordable way to start a business that provides educational resources, marketing support, and access to learn from an already established company. Most (but not all) franchises doing business in California are required to be registered with the DFPI.