Starting A Sole Proprietorship In California

How To Start a Sole Proprietorship Business in California? It is very simple. There are no legal formalities of establishing a sole proprietorship business. Nor you need to file tax returns.

Following are the steps to start Sole Proprietorship Business In California

1. Business Licenses

A business license is a grant given by legal authorities to operate the business legally. For Sole Proprietorship business, it is obtained in the clerk’s office where the principal location of the business is located.

2. Business Permits

You have a choice to open sole proprietorship business with his / her own name, otherwise, you need to create Fictitious Business Name Statement that is submitted to the government authorities in the location where your business is actually located.

It is very important that before starting sole proprietorship business, you must have a proper business plan and write it down on paper. 

You can read How to Write a Business Plan Step By Step Guide?

Your plan should be suitable to your passion and skills, otherwise, your business plan will fail at the end.

You should also do SWOT Analysis of Your Business Plan to find your strengths, weaknesses, opportunities and probable risk and threats to your business concerned.

In this way you can start your sole Proprietorship business.

Advantages of Sole Proprietorship Business

1. You enjoy full benefits of the business profitable activities. It is very inexpensive business and very easy to start as there are no legal formalities in establishing business.

2.Your liability to the business is unlimited. It means your personal assets can be sold out in case your business assets can not set off your total debts of the business. However, your business is not liable to pay tax. Only, you are liable to pay personal national tax as an individual person and it is separate from the business. So, you are not liable for double taxation which is levied in case of company.

3. Since, Sole Proprietorship is not a separate legal entity, so the profits and loss of the business can be shifted towards the personal National Tax of the business owner and the business may close down in case of loss that can not be set off by the business assets and personal properties of the owner.

4. The Sole Owner enjoys the full control of the activities of the business. However, the life of the business is limited and the business will end after the death of the owner.

5. The Sole Owner can easily dissolve the business since there are no more legal formalities and structures complications of the business. However, he / she relies mostly on his / her own skills and abilities eventhough he / she can hire employees but still he / she is wholly responsible for the management of the business' affairs.

So, establishing a sole proprietorship business in California is very easy.