During the Covid global pandemic, the tech sector’s financial success helped propel California to reach a $15 billion tax surplus for the next fiscal year. This proved to be a sharp turnaround from the previous year’s projected $54 billion deficit. The stock prices of tech giants such as Apple, Facebook, Alphabet, and Netflix had soared—reaching all-time highs. Shares of the widely used video conferencing company Zoom had seen a fivefold increase in value— as it became a household name.
A key reason behind California’s successful economy remaining stronger than the majority of the nation’s can be attributed to the fact that it has a higher percentage of exceedingly productive businesses than most states in the U.S. The Golden State’s tech sector, which bolsters GDP faster than any other industry, has been expanding at an impressive speed—more than that of the state’s other major industries.
Last year saw California’s GDP reach $3.35T, this amount represented 14.6% of the entire economy in the United States. As a result, if the state of California had to be viewed as a country on its own; it would prove more productive than countries such as the United Kingdom and India—as the 5th largest economy in the world. This makes the state the perfect climate for new businesses to startup as California is business-friendly and a hub for successful startups.
Capitalizing on California’s Economy
Due to the growth in the state’s economy, new businesses will be able to capitalize and use the market to their advantage. By setting up a business in the Golden State, business owners will benefit from the business-friendly climate. Starting a Limited Liability Company in California is relatively easy and can be broken down into the following steps:
Naming a California LLC
Creating a solid brand name is a vital step in the startup process. However, this goes beyond just finding something that is catchy and creative. The name is required to follow the naming guidelines that the state of California has laid out. For a complete list of naming rules in the state, entrepreneurs should research California’s Code of Regulations.
Choosing a Qualified Registered Agent
Appointing a registered agent is a federal requirement that needs to be fulfilled prior to the formal registration of a business. Also known as a California Agent for Service of Process, this individual or business entity will be a direct line of communication between the state and the business. They are the official recipients of important tax forms, all legal documents, any notice of lawsuits, and other official government correspondence on behalf of the business.
File the California Articles of Organization
In order to successfully register a business in California, entrepreneurs will have to file Form LLC-1 – Articles of Organization with the California Secretary of State. The state has made the process flexible in that business owners have the choice of registering either online, by mail, or in person.
File the Initial Statement of Information
All LLCs in the Golden State are obliged to file an Initial Statement of Information (Form LLC-12). This needs to be completed with the California Secretary of State within the first 90 days of formation. The process can be done online, in person, or by mail.
Create an Operating Agreement
An operating agreement is a requirement for all business owners when forming an LLC in California. This legal document comprehensively explains the ownership and operating procedures of the company— reducing the risk of future conflict between members of the organization.
Get an Employer Identification Number
An Employer Identification Number is an equivalent of a social security number that every business is required to have. An EIN is assigned to businesses by the IRS so that they are able to identify the business for taxation purposes.
For more information on starting an LLC in California, here is a suggested resource.
Final Thoughts
The Golden State is home to some of the world’s largest companies, and a wide host of leaders in the tech industry have set up shop in the state. This has opened up the market to now allow other smaller businesses to follow suit. In order to operate in California, entrepreneurs should conduct thorough research to ensure that their business complies with all local, state, and federal government regulations.
