How do I start a retail business?
Starting a retail business in Sonoma County? Start here with this step by step guide.
✨Retail Business Checklist ✨
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🛍️ Set up your business
Check out our Steps to Start Your Business article for more information on business operations set-up!
📝 Business plan
Your business plan communicates what your business does, your vision for the future, and the steps you will take to reach those objectives. Generally, the business plan should include:
- An executive summary
- A marketing plan
- An operations plan
- The proposed organizational structure
- Financial projections
🚧 Business structure
You have probably heard the terms sole proprietorship, general partnership, limited partnership, and type C or S corporation. The determination to form a company under a particular structure has much to do with the business activity, location, and organization.
The legal structure of the business will dictate many of the entity's operational functions and tax liability, entrepreneurs are encouraged to seek legal advice when considering these choices.
For more information, see our page on Business Structure.
✍️ Register your business
Register your business correctly with the California Secretary of State (SOS). This should be done after you determine the most appropriate operating structure for your business and have determined its name. Sole proprietors do not need to register, but corporations, limited liability company, and partnerships must file with the SOS.
You may also need to register with the California Employment Development Department (EDD). An employer is required to file a Registration Form within 15 days after paying more than $100 wages to one or more employees
💸 Income taxes
As a business owner, you are required to pay state and federal taxes on your business every year.
For federal taxes, you will need to apply for an Employer Identification Number (EIN).
For state taxes, you will need file with the California State Tax Franchise Board.
🔍 Research your location
To avoid unexpected costs and delays, be sure to contact your local planning and building department for permitting requirements before:
- Buying or leasing any property,
- Performing any sort of construction on your property (updating floors, installing equipment, etc.).
When looking for a location, it is important to keep zoning laws in mind. You can only open your store in an area that is commercially zoned for Retail Businesses.
Once you find a location you like, work with your local planning department to check that your store is up to code and meets regulations.
✅ State Requirements
💸 Seller's permit
California requires that you obtain a seller's permit if you are selling tangible, taxable goods (like food and clothing). You can apply for a Seller's permit through the California Department of Tax and Fee Administration (CDTFA).
This seller's permit also allows you to sell at community events, such as farmer's markets and craft fairs.
🍽️ Resale certificate
You may also be interested in getting a Resale certificate through the CDTFA. A California resale certificate lets you buy goods tax-free if you’re planning to resell them, rather than use them personally—just show it to your supplier at the time of purchase! This is limited to items you will not collect sales tax on, such as napkins or to-go boxes.
💬 Fictitious business name
If your new entity will conduct business under a name that does not contain the surname of any and all owners, or is a corporation that will do business under a different name than is registered with the State, you will need to file a Fictitious Business Name Statement with the County of Sonoma Clerk-Recorder-Assessor’s Office. This application must be filed within 40 days of the business start date.
🤕 Workers' compensation insurance
Every employer in California is required to have workers' compensation insurance, even if you only have one employee. Workers' comp insurance provides medical care, disability benefits, supplemental job displacement benefits, and death benefits. Don't be afraid to shop around for an insurance carrier that best meets your needs.
☑️ Local Requirements
👷 Work with permit and zoning authorities
To avoid unexpected costs and delays, be sure to contact your local planning and building department for permitting requirements before:
- Buying or leasing any property,
- Performing any sort of construction on your property (updating floors, installing equipment, etc.).
If you do any un-permitted work, you may face steep fines and risk delays.
If you want to do any kind of construction work to your retail space (including minor improvements such as signage), it is a good idea to check in with your local planning department. Any improvements to an existing facility may trigger additional permits and costs, including but not limited to:
- Use permit
- Impact fees
- Traffic mitigation
- Sewer
- Workforce housing
- Accessibility upgrades
- Parking upgrades
- Septic expansion
- Design review