California, also commonly referred to as Cali, is the most populous state in the United States and the third largest by area (after Texas and Alaska). Spread over an area of 163,696 square miles, the state has an estimated population of over 39 million residents and is home to 8 of the most populous cities of the country, including Oakland, Los Angeles, Long Beach, San Diego, Sacramento, San Jose, Fresno and San Francisco.
With a gross state product of more than $2.3 trillion, California’s economy is the largest in the US. Technology, real estate, government, finance, scientific, technical and professional business services account for majority of the state’s economy. The agricultural industry, though just 1.5% of California’s economy, has the highest output of any U.S state. Being the birth place of the film industry, the state has a massive influence on global popular culture, making it an ideal for your clothing startup.
As an entrepreneur, one of the most critical decisions you will have to make is choosing the location of your business. For maximum customer traffic, you should consider choosing a property in populous metropolitan areas and in close proximity to other amenities that are somewhat related to your business.
California is home to several commercial and shopping districts, including Solano Avenue, Newport Center, Shattuck Avenue, Telegraph Avenue, Montana Avenue, Wilshire Boulevard, Sunset Strip, Robertson Boulevard as well as Piedmont Avenue. Some of the country’s largest shopping malls are also located in California, such as the South Coast Plaza and Del Amo Fashion Center.
Since these areas attract huge number of shoppers, choosing a conveniently located property in any one of them could do wonders for your fashion shop. However, it’s recommended that you conduct your own research to determine where you can attain maximum customer traffic. Once you find an interesting property, make sure you inspect it carefully before signing any papers.
Choosing a Legal Status
The following are the most common types of business structures in California:
- Sole Proprietorship
- Limited Liability Partnership
- General Partnership
- Limited Partnership
Although running your fashion shop as a sole proprietor or partnership may seem like an attractive option, neither can protect you from personal liability. If you are fashion enthusiast, managing your startup shouldn’t be much of a problem. However, a successful fashion shop will have hundreds of customers coming through every day, and this brings with it the risk of injury or damages.
By opting for a business entity that can protect you from personal liability, you can rest assured that losses or damages are compensated by your business and not you personally. Consider consulting a tax advisor or private attorney to help you choose a legal status that will meet your business needs, and find out what your legal obligations will be.
California imposes higher-than-average income taxes on business incomes. However, if you think that is the worst part, think again! The state also levies both business and personal taxes (known as double taxation) on small business owners who have set up their business as pass through entities, such as limited liability companies or S corporations. Other types of taxes you should expect to pay include:
- Alternative minimum tax
- Corporate tax
- Franchise tax
- Sales tax
State & Municipal Licenses and Obligations
If you are operating your business solely, you will need to obtain a federal tax ID number. All other forms of business, acquiring an Employee Identification Number (EIN) is necessary. To collect sales tax on the clothes you sell, the state requires businesses to obtain a seller’s permit through the Board of Equalization. Depending upon the details of your business, other licenses and permits may also be required. Visit the CalGold website for more information.
Most fashion shops have employees. To ensure your business is operated efficiently and smoothly, you should hire your own sales persons and front-line staff. The average salary of sales representatives in California is $54,410. Customer representatives, on the other hand, earn an average of $47,000. The minimum wage is $9.00 per hour, so make sure you don’t go below that threshold.
The hiring process in California is like any other. You invite and review applications, interview and check references for potential candidates and finally offer the job to the most qualified and successful candidate. However, state and federal laws may limit what you can ask and require of your candidate. Learn more about it here.
Popular Clothing Styles
California is the birthplace of the largest film industry in the world: Hollywood! So, it doesn’t come as a surprise that people stay modern with their threads and clothing choices. You should stock your store with both traditional and latest outfits. Many vendors are located in the LA area, and a large tradeshow in the area a couple of times a year for your shopping pleasure.
Inventory Ordering and Management
To ensure your fashion shop is well stocked throughout the day, having a proper inventory ordering and management system is crucial. Consider hiring an inventory manager and invest in good quality software to streamline this process!