Starting a Consulting Business in California
Starting a consulting business in California can be a lucrative and rewarding career option, as long as you are passionate about the subject on which you will offer consulting services.
How to Start a Consulting Business in California
Consultants offer advice to people on how to handle certain tasks and situations, as well as provide resources to their clients. According to data from the United States Census Bureau, California had a population of nearly 37 million people as of 2009. With this many residents, it's easy to see why consultants are interested in doing business in California. Professionals can find many potential clients and set up successful consulting businesses across many different industries and specialties.
The first step in setting up a consulting business is deciding on the type of consulting services you will offer. You should have a passion for and knowledge about the industry in order to have success in your new role. As you prepare to start your consulting business, it's important to take steps to become an expert in your field. Review the latest trends and information in the industry. Attend seminars, review industry-specific magazines, and read books to learn as much as you can to provide the best advice and services to your clients.
How to Start a Business in California in 2018
After you have become an industry expert, you can start the formal process of starting a business. You will need to make sure to select the right type of business.
The easiest way to form a business is as a sole proprietorship. It doesn't exist as a separate legal entity, and you don't have to file any paperwork with the state. However, this business entity type also doesn't offer any protection from personal liability. As a result, you would be held personally responsible for any business debts or legal troubles. If two or more individuals are forming a business, this can be formed as a partnership.
A limited liability company (LLC) is one of the most highly recommended business formations, especially for those who are not citizens of the United States. An LLC is also one of the most common business structures for smaller companies because it offers flexibility, along with personal liability protection. A C corporation exists as its own legal entity, separate from its owners, shareholders, and managers. A corporation can legally pay taxes, incur debt, and enter into contracts separately from the owners of the business
Obtaining an EIN
The next step in starting a California-based business is obtaining an employer identification number (EIN). Also known as a tax identification number, the company's EIN serves as its key identifier and is assigned by the IRS. The number is similar in its functions to a social security number for a human being.
You will need an EIN for a number of reasons:
- Applying for licenses and permits.
- Opening a business bank account.
- Complying with IRS regulations.
- Paying taxes.
- Reporting business profits and losses.
Licenses and Permits
Next, you will need to apply for any necessary business permits and licenses as required in the area of California in which you will be providing your consulting services. You must obtain these permits and licenses prior to taking on a single client. Just about every type of business operating in the state is required to have some type of permit or license to operate. You could need:
- A zoning permit.
- A business license.
- A seller's permit.
Review the list of required permits and licenses on the SBA website's page titled “Business Licenses & Permits.” When you review the information on this page, you will need to provide two key pieces of information:
- Business type.
- County or city in which your business will operate.
After you input the information about your business, you will be redirected to a page with a list of business licenses, permits, and other requirements that are required in your city or county and your industry.
Most businesses need a tax certificate, which can be obtained from the Office of Business Licensing. The owner of a consulting business may also need to hold a professional license. In certain professions, you must be licensed to provide advice. Examples include health care, legal services, and architecture.
If you need help starting a consulting business in California, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.