You have a fantastic, profitable idea. You want to start your own business, but you’re not sure how to do that. Starting a business in Beverly Hills does not have to be as complicated as you may think, as long as you follow a few specific steps and do your due diligence. Here are the steps you need to get started.
#1: Create a Business Plan
Creating a solid business plan is one of the most important tools you have for both establishing your business and obtaining financial support later. Put the time into creating a business plan that provides a clear explanation of what your business is. It should explain what you plan to do with your business over the next few years.
As a plan, it should outline what’s to be expected in this process, such as what you plan to do with your business, who will run it, how it will grow, and who will be a part of it. Be sure your business plan includes:
- Business goals
- Potential obstacles and how you will overcome them
- Strategies you’ll use to compete with others
- Organizational structure of your company
- Budget forecasting
#2: Business Formation
The next step is to consider your business formation or the legal structure of your company. Most businesses that just get started are sole proprietorships. That means the business operates with a single owner who maintains all of the responsibility as well as all of the liability. You do not have to do anything to be a sole proprietorship in terms of starting one. However, you do need to know the risks here.
A Limited Liability Company (LLC) is another option that provides far more protection to the owner. In an LLC, there is a division between the company’s assets and liabilities and your personal assets and liabilities. As a result of this division, should someone sue your business, your personal assets remain protected. Every state has slightly different rules and fees when it comes to LLCs. Setting up an LLC in California is not complicated, but it does come with a relatively high cost. For example, California requires LLCs to pay a franchise tax that starts from $800. Still, if you are forming a business in Beverly Hills, an LLC is one of the best things you can do to reduce the risks associated with managing your organization.
#3: Obtain an EIN Number
The next step is establishing your business’s financial ID. An Employer Identification Number (EIN) is like a Social Security Number for a business. You will use this to report taxes for your business and for other purposes throughout your business life.
It takes only a few minutes to get an EIN. You can do this right online at the IRS website. You will need to be the principal business owner or the responsible party, as defined by the organization. It takes about 15 minutes to complete the application. Once you submit it, it is validated, and then, within a few minutes, you will receive a document to view, download, and print. That document contains your EIN.
#4: State Tax ID
Next, you need to register for your taxes in California. This allows the state to recognize your business and sets you up for making state tax payments. You will need to register your business with the Secretary of State as a first step. This process is not the same as getting an EIN (you will need both in California to operate your business).
The California state tax ID for a business ensures you can pay your taxes as well as hire employees. The California Employment Development Department issues this number. You will need to complete the steps required by the California Employment Development Department on its website to register your business and receive your state tax ID number. Most of the time, you can complete this process online and receive a number for your business within the same day.
#5: Apply for Local Business Licenses and Permits
Beverly Hills has several steps for companies to take to establish their presence within the city’s limits. First, set up a meeting with the Beverly Hills Chamber of Commerce. This meeting allows the city’s staff to discuss your company with you, review your business plan, and then talk about the rules and regulations that may apply to your business. The organization then guides you through the process of obtaining approval, and a business license, through the city.
You will also need to apply for a Business Tax Registration Certificate within 30 days of starting your business. Some businesses need additional permitting to operate. A community Development Review is then completed by the city. This ensures all of your documentation is in line and the final approval of your business to operate in Beverly Hills is put into place.
#6: Apply for Beverly Hills Business Tax Registration Certificate
The city’s Chamber of Commerce can help guide you in this process once you meet with them. The Business Tax Registration Certificate is a necessary document. You need to have it within 30 days of opening your business, or you could face fines. However, you can also complete the application on the Beverly Hills website. You will need to complete this process if you plan to conduct, manage, or engage in any type of business, trade, profession, or occupation in the city.
The process includes providing information about the business, what it is, and how it operates. Even those who operate a home-based business need to register with the city in most cases.
#7 Open a Business Bank Account
Now that you have your business’s tax accounts set up, you can begin to create a way to collect and pay money. A business bank account is necessary to do this. A bank account allows you to keep your business’s revenue and capital separate from your personal use. That is key to not just having accurate records but also protecting your finances from liability claims made against your business.
You will need all of your identification numbers, EIN, state tax ID, and Articles of Incorporation. Be sure all people who should be on the account and therefore have access to the funds are listed on the bank documents. You can choose any bank you wish, but be sure to establish a business account with the financial institution.
#8: Set Up Accounting
It’s time to set up your accounting so you can begin to track your sales. Accounting provides a number of benefits to your business. It helps you keep track of your sales, allowing you to determine if you are charging enough for your products and services. It also enables tracking of all expenses, so you know where your company stands.
Accounting is also essential at tax time as it allows you to gather all of the data you need to report your taxes. It may help with obtaining loans, managing accounts receivable, and managing the growth of your business. To get started, consider the investment in an accounting software. Today’s software programs are easy to set up and become the backbone of managing the company’s finances.
#9: Obtain Insurance
You have already done a lot of work to set up your business. You need to protect it now. Insurance does that. A customized insurance policy should address most of the risks your business faces from threats like break ins, storms, and liability claims. Insurance is a tool that is there in case something goes wrong, and in business, that is more common than you may realize.
Work with an insurance company to set up a policy that fits your business’s specific needs. This typically requires coverage of your assets up to their value so that if something occurs, they can be replaced. You also need insurance to cover liability risks or claims made against your business by other people, such as customers or people who suffer an injury on your property. Once you have business insurance in place, be sure you know how to use it.
#10: Hire Employees
Hiring employees is a great sign that your business is growing. Doing so properly is not necessarily difficult, but you want to be sure that you understand all of California’s and the country’s labor laws to ensure you don’t make mistakes that could hurt your business.
Fill every role available as soon as possible. One employee you should consider hiring is a social media manager to help you manage and monitor your social media pages. This can help keep you consistent on social media and assist you with online review management. All of which can have an impact on the success of your business.
Once you interview and find the ideal candidate for the job, your next step is to onboard them. That typically means completing proper screenings, completing W-9 and other documents to establish the work relationship, and going over expectations. You will need to work with an employment attorney or another service to help you establish your business’s employment contracts. This differs based on the industry you are in.
Your accountant can also provide some information on setting up payroll. This allows you to pay your employees for the work they do and also collect state and federal taxes you are required to as an employer.
Starting a business in Beverly Hills could mean an opportunity to make your mark on the city. For many people, that means spending some time developing their business plan and working to best understand the laws and regulations that govern that business. There is help available to you every step of the way.