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SITE NAVIGATION

Business

Small Business Guide

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Business

Small Business Guide

So, you’re starting a business.

11 Key steps to doing business in California’s capitol city.

Welcome to becoming a part of being the backbone of our local economy. Sacramento is home to thousands of small to mid-size businesses. Small businesses are the backbone of the local economy because they are innovative, flexible and strongly tied to the community.

Nationally, in fact, small businesses have generated between 60 percent to 80 percent of net new jobs annually over the last decade. Locally, over 70 percent of Sacramento’s more than 20,000 business establishments have fewer than 50 employees. Equally important are the numbers of individuals looking to start businesses.

We want and encourage innovators and entrepreneurs to start, invest and expand their business here in Sacramento. If you need assistance – to learn about local loan programs, connect the dots to resources, or provide information – you can count on our economic development professionals to be your points of contact.

On the following pages you will find 11 key steps to launching a business in the City of Sacramento and they will vary according to the type of business you intent to start.

Step 1: Create a Business Plan and Do A Needs Assesment

The business plan is the blueprint for your new venture. It acts as a guide, mapping out the course of your business. A solid business plan will help you reduce the risks commonly associated with starting a new business.

Evaluate your needs and location. Will you conduct your business out of your home? Will your new endeavor occupy an existing structure or will you build your own building? Are there available programs that can help your business get off on the right foot? These are key issues to research and questions to answer well in advance of starting a business venture.

Resources to get you started:

Sacramento Valley Small Business Development Center
916-655-2100

Capital Corridor Service Corps of Retired Executives (SCORE)
916-720-9990
sacinfo@scorevolunteer.org

Step 2: Establish A Legal Business Structure

How businesses are initially set up affects income taxes and levels of personal liability. If your business is to be established as a corporation, S corporation, limited liability company or partnership, you must first register with the California Secretary of State. You may also want to consult an attorney or tax accountant for more guidance.

California Secretary of State
916-657-5448

Step 3: Choose A Location and Check Zoning Regulations

When considering where to set up your business, first determine the following:

Will you have vendors or customers who come to you? Will your customers or vendors require parking or loading/unloading facilities? Will you have employees? Do you manufacture products for distribution or provide services?

Before finalizing any location plans or lease agreements, contact the City’s Community Development Department to: Determine if your location is zoned for your type of business and verify if any special regulations are required. Obtain a home occupation permit if you plan to operate your business from home.

Other considerations: Evaluate the age of the building you’re interested in with a view to change of use, fire inspection requirements and necessary environmental or health permits. Business owners may need to make tenant improvements to legally occupy older structures. Carefully research the former use of the building and determine if the proposed business will require substantial tenant improvements to comply with the change of use. Determine if an initial fire inspection plus semi-annual inspections are needed to be in legal compliance. Examples of businesses requiring semi-annual fire inspections are restaurants, auto painting businesses, hotels/motels and dry cleaners. Restaurants and product-manufacturing businesses may need certain environmental permits. The Sacramento County Business Environmental Resource Center (BERC) can help identify necessary permits. These services are provided free and are confidential for all businesses.

Resources to get you started:

Community Development Department
311 or 916-808-5011
planning@cityofsacramento.org

Business Environmental Resource Center (BERC)
916-874-2100

Step 4: Explore The Options For Financing A Business

Financing a start-up business may require personal savings, a second income stream (such as from a full- or part-time job), help from family and friends, personal belt-tightening or a combination. External sources of financing are also options and a worthwhile first stop is the Small Business Administration (SBA) or local bank to apply for capital. Many local banks and credit unions in the area are also SBA lenders.

The SBA offers two primary loan programs: The 7(a) loan program assists start-up and existing small businesses with working capital for a variety of general business purposes. The SBA does not itself make loans, but rather guarantees loans made by participating financial institutions. The SBA 504 program is typically managed through a local certified development corporation (CDC). CDCs work with the SBA and lenders to provide financing to small businesses with long-term, fixed-rate financing for land and buildings.

Other options for financing a business can include venture capital and angel investors for start-up and high-growth technology companies, industrial revenue bonds for manufacturers and research grants from the federal government.

Resources to get you started:

Small Business Administration
916-735-1700

Sacramento Loan Processing Center (SLPC)
SBA 504 Loan Program
916-735-1214
504questions@sba.gov

California Capital
Loan Guarantees and SBA 504 Loan Program
916-442-1729

Opening Doors
Microloan Program
916-492-2591

Step 5: Register A Fictitious Business Name

If you give your business a name other than your own, you must file a fictitious business name (FBN) statement with the Sacramento County Department of Finance. FBN guidelines and applications can be picked up at the Sacramento County Administration Building at 700 H St. in downtown Sacramento, or you can download the documents and apply online.

Resources to get you started:

Sacramento County Department of Finance
916-874-6644
financeobla@saccounty.net

Step 6: Obtain A Business Operations Tax Certificate

A Business Operations Tax certificate (BOT) must be filed with the City of Sacramento’s Revenue Department. The BOT is not a license to conduct business at a specific location, but a tax levied on businesses that operate within the City. After filing the BOT application, the Revenue Division will contact the Community Development Department to ensure that the business will be conducted in an appropriately zoned locations.

Resources to get you started:

Sacramento City Revenue Division

916-808-8500
finance@cityofsacramento.org

Step 7: Review The Hiring Process Before You Hire

Here are the basics:

Get a Tax Identification Number. If you intend to employ anyone outside of your immediate family, you must obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN is also known as the Employer Tax ID and may be obtained by completing form SS-4. Employers can apply for the EIN online or by calling (800) 829-4933. Hiring employees also requires paying additional taxes and registering with the IRS.
Contact Social Security. Those who are self-employed and employers with one or more employees must pay Social Security taxes. Social Security information is available online or by calling at (800) 772-6270 or emailing employerinfo@ssa.gov.
Register with the state Employment Development Department (EDD) You must register with the EDD within 15 days of hiring employees. EDD regulates state disability insurance, unemployment insurance taxes, income tax withholdings and employment training taxes. There is no employer fee to register.
Obtain Workers’ Compensation information. Workers’ compensation insurance will be needed in the event an employee is injured on the job. The State Department of Industrial Relations provides information and assistance to businesses regarding workers’ compensation regulations and benefits. Visit the DIR website or email dwc@dir.ca.gov.
Contact Sacramento Works for free employer services. Sacramento Works and its network of one-stop career centers can assist with employee recruitment and on-the-job training, and can help employers obtain tax credits on their state or federal taxes. Visit Sacramento Works website or call (877) 920-5627. Sacramento Works services are provided free of charge to all businesses located in or moving to Sacramento County.

Step 8: Register For State Permits With The California Department of Tax and Fee Administration

Businesses selling tangible personal property in the state of California must apply for seller’s permit online via the California Department of Tax and Fee Administration. For a complete reference of regional, state and federal permits required in California visit CalGold.

Step 9: Tax Information Is Available From Number of Sources

Once each year, every business in the state of California is required to submit a Business Income Tax Statement to the Franchise Tax Board (FTB). For filing information, contact the FTB or a private accountant.

Step 10: Obtain Important Local Permits

Several permits may be needed to comply with local and state building codes:

Building Permits

Permits are required for all new construction and, in most cases, structural modifications, replacements and remodeling. Examples of improvements include structural, mechanical, plumbing, electrical and signage.

Fire Inspection Permits

Depending on the nature of the business, fire inspection might be needed for legal compliance, followed by annual fire department instructions. Examples of businesses requiring annual fire inspections include restaurants, motels, apartment buildings, auto painting, tire storage, hotels/motels and dry cleaners.

Special Business Permits

The City regulates certain businesses through the issuance of special permits. Examples of businesses requiring special permits include taxi drivers, fireworks vendors, mobile food vendors and towing companies.

Health Permits

Health permits issued by the County’s Environmental Health Division, are required for most retail businesses that sell food or beverages to the public. Other businesses that require health permits include swimming pool operators, solid waste facilities, grocery vendors and well water operators.

Home Occupation Permits

If working from home, you must apply for a home occupation permit.

Other helpful information:

Alcohol Sales

To sell or produce alcoholic beverages at a place of business, you must apply for a license issued by the California Department of Alcoholic Beverage Control (ABC). The type of license and fee required depends on the type of business operation (e.g. microbrewery, tasting room, restaurant, bar, grocery store).
The City of Sacramento’s Police Department oversees an ABC Liaison Unit that can help businesses navigate the licensing process as well as maintain compliance.
For a special event, alcoholic sales typically also require a special event permit issued by the City of Sacramento’s Youth, Parks and Community Enrichment Department

Americans with Disabilities Act (ADA) Access

The California Department of General Services maintains a list of Certified Access specialists that can assist businesses with questions about accessibility on their properties.

Electricity

Sacramento Municipal Utility District (SMUD) is the electricity provider within the City and County of Sacramento. Contact SMUD to turn on electric service, transfer the utility bill or upgrade electric service. (888) 742-7683

Gas

Pacific Gas & Electric (PG&E) is the gas provider for Sacramento. (800) 468-4743

Water and Sewer

The City of Sacramento’s Department of Utilities provides services related to water, sewer and drainage. (916) 808-5454 or utilitiescs@cityofsacramento.org

Commercial Recycling and Solid Waste

The City of Sacramento Recycling and Solid Waste Division regulates and enforces commercial solid waste and generation within city limits.
The City does not provide collection services for commercial solid waste. If you need commercial garbage, recycling, and organics recycling (food and green waste) services, you must use any current City of Sacramento Commercial Solid Waste Franchised Hauler.

Step 11: Incentives, Programs, And Resources Can Help Your Bottom Line

Local Programs and Resources

The Sacramento Brownfields Program assists in the redevelopment of sites that may contain environmental contamination. The program provides financial and technical assistance for revitalization.
The Sacramento Streamline Program is a process improvement initiative designed to help project applicants save time and money during the development process. There are several new program services, including electronic plan checks, flat fees for solar and more.
Sacramento Valley Small Business Development Center (SBDC) provides group training, business workshops and personal one-to-one consulting to new entrepreneurs to help them develop the management structures needed to support their businesses. In addition, the SBDC provides existing business owners – generally those with two to 25 employees and under $10 million in gross sales – with expert consulting resources from lawyers, CPAs, bookkeepers, brand and market enhancement specialists, and change management coaches. (916) 442-1729
Local Business Enterprise Program provides a five percent preference to businesses that reside in either the City or County of Sacramento on all City procurement opportunities under $100,000 and professional service contracts over $100,000. Please inquire about this preference when responding to a bidding opportunity.

State Programs and Resources

The Governor’s Office of Business and Economic Development offers other business incentives.
The Center for Small Business at California State University, Sacramento helps area businesses through grants from community organizations. Students, under faculty supervision, assist with marketing and business plan development and financial planning. (916) 278-7278 or csb@csus.edu
The Carlsen Center for Innovation and Entrepreneurship at California State University, Sacramento provides a venture incubator for the early stages of entrepreneurial businesses. (916) 278-5001 or carlsen.center@csus.edu
The Sacramento Employee and Training Agency (SETA) connects people to jobs and business owners to quality employees. SETA is responsible for employment development programs offered through the Sacramento Works Job Centers. The Centers make employment and training services available for critical industries that are experiencing a high demand for employees.
The Capital Corridor Service Corps of Retired Executives (SCORE) is an association of working and retired executives and business owners who donate their time and expertise as volunteer business counselors. They provide confidential counseling and mentoring services free of charge. (916) 720-9990 or sacinfo@scorevolunteer.org
The U.S. Small Business Administration (SBA) was established to assist, counsel, supports and protect the interests of small business concerns. The SBA provides financial, technical and management assistance to entrepreneurs seeking to start, run and expand their businesses. The Sacramento SBA resource center offers numerous workshops and training opportunities that provide the tools and skills needed to enhance and expand businesses.
The Sacramento Metropolitan Utility District (SMUD), the city’s local electric utility provider, offers energy efficiency services and other business-related incentives to support small business growth.
Pacific Gas & Electric (PG&E) is the natural gas provider for Northern California, including the City of Sacramento. (800) 743-5000
Get certified with the State of California’s Department of General Services to receive bid preference as a small or disabled veteran business. (916) 375-4940 or osdshelp@dgs.ca.gov
The California Capital Women’s Business Center is committed to helping entrepreneurs start and grow their businesses through educational workshops, one-on-one assistance, online learning, and connection with local resources.
The Veteran Business Outreach Center provides specific programs for Veterans, Service-Disabled Veterans, and Reserve and National Guard Members.
The County of Sacramento, Contract & Purchasing Servicing Division spends more than $150 million in goods and services every year, and much of that is with local businesses.
The County of Sacramento, Business Environmental Resource Center is a free, confidential, non-regulatory, and business retention resource, established in response to business requests for more compliance assistance with existing and expanding businesses and business startups.
Sacramento Works’ business services are provided free of charge or at low cost.

Local Business Associations and Improvement Districts

Depending on your location, you can benefit from the outreach and assistance from these local business associations and improvement districts that operate in the Sacramento region.