Choosing a location for your new business is one of the hardest decisions an ambitious entrepreneur has to make. The cost of living, taxes, and employment rates are just a few of the factors you have to keep in mind to ensure that your business will thrive. For starry-eyed entrepreneurs, California is the state of dreams, with its huge customer base and beautiful weather. But does this mean that starting a business in California is a smart choice? Keep on reading to know what it is really like to run a company in this populous state!
Steep Taxes and Ever-Changing Regulations
If you are thinking about opening a business in California, you must build considerable capital first, considering the state’s sky-high taxes! As of 2018, the state lowered its sales taxes from 7.5% to 7.25%, which is still considered too steep, especially when compared to the tax burden of businesses in other U.S. areas. In addition to high taxes, you will have to deal with new regulations every few months. California’s administration is not afraid to enforce recently approved regulations and charge high fines for non-compliance. This is not to say that running a business in this state is impossible, but it just requires you to stay up-to-date with new rules to remain on the right side of the law.
Dozens of Niches to Choose From
California gives entrepreneurs unparalleled freedom when it comes to choosing their niches. There are many great chances for most people to build their companies from the ground up in the Golden State. Marketing and tourism, in particular, are two of the most successful industries there. Moreover, according to a ZenBusiness guide to starting an LLC in California, the state also allows entrepreneurs to pick their preferred business structures. For example, LLCs and sole proprietorships are two popular structures you can go for, depending on the nature of your prospective business and how you wish to run it. Each option comes with different tax liabilities and advantages, so make sure to do your research to make an informed decision.
Hundreds of Customers
There is really no shortage of customers in California! Based on recent statistics, around 30 million tourists visit the state every year, so this means more opportunities for you to increase your sales. This can greatly offset your tax burden and make running your business a lot more cost-effective. As long as you offer great products/services, you can expect to reach the breakeven point during your company’s first year.
Low Unemployment Rates
It is no secret that California has a very impressive talent pool. However, it is not easy to earn employees’ favor without offering comprehensive benefits. The truth is that not many Californians are currently looking for jobs due to the state’s low unemployment rates. So, it will probably take some convincing to tempt employees to leave their current jobs to work for you. This, in turn, means that expanding your team and growing your company will take some time.
Financial experts point out that California would have the 5th strongest economy in the world if it were an independent country, which is a big reason why you should take a leap of faith and start a business there. Sure, California does not have the lowest taxes or the most straightforward regulations, but you can easily overcome these obstacles by enlisting expert legal and financial help. So, what are you waiting for? Start your journey as a business owner in California now!