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Opening a Small Business in CaliforniaAmy Morin
California has historically been known for its innovation and wide variety of businesses. However, in more recent years, it's lost its edge when it comes to small business. Before opening up a small business in California, it's important to know if California would be a good fit for your business. Researchers on the Small Business Climate In 2012, California received an F grade from the Small Business Friendliness Survey completed by Thumbtack.com in partnership with the Kauffman Foundation. In 2013, the grade went up slightly to a D. However, not all of California should be scaring away business. The Bay area was rated the top region in California for small businesses. San Francisco was ranked California's top business-friendly city. The survey results showed that California received failing grades in half of the 12 categories. Failing grades were received for: regulations, health and safety, employment, labor and hiring, licensing, and tax code. California was ranked 41st among the nation for its current economic health, which doesn't bode well for small business. The state was also ranked 35th for optimism about the future. Chief Executive Magazine ranked California dead last in the CEO business climate survey in 2012. The survey is based on responses from chief executives across the country on issues such as tax policies, workforce quality, and regulations. The magazine reported that California is actually hostile toward business. The other reasons the state ranked so low were due to its high taxes and strict regulations. California had the most new business establishments in 2009. The state had come in first or second in the nation for the most new businesses each year between 2001 and 2009. However, by 2010, the state ranked 50th. Unfortunately, the state doesn't appear to be bouncing back. Recent News about California Small Business It doesn't help that California was also in the news in late August ordering small business owners to pay back thousands in taxes. These businesses had been previously promised tax cuts, but the court ruled that these tax breaks were unconstitutional. About 2,000 small businesses will be forced to pay back about 120 million dollars. Businesses with the highest debt owe the state as much as $200,000. There are lots of other news stories about business owners expressing outrage regarding regulations. For example, some businesses have gone out of business due to California's strict parking regulations. Some businesses just aren't able to solve these problems. Other businesses have been sued due to problems with regulations about accessibility for people with disabilities. Businesses say they want to comply but aren't able to do so for one reason or another. Future of California Business Despite the negative forecast for small business in California, the good news is, the state's sharp decline in business may hopefully lead to legislative change. Hopefully the results of business surveys and economic reports will be a wake-up call that something needs to change. It's likely that a few small changes to policies and regulations could spur some increased business activity. This may be what's necessary to help with the state's economic growth. |
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