SpongeBob and his friends live in the underwater city of Bikini Bottom. Bikini Bottom is like a regular city with a downtown, suburbs, and coastal areas with its own airport, bus system, and fair park. Stephen Hillenburg said once that Bikini Bottom was loosely based on Seattle, Washington. A good example of this statement is in the episode Pre-Hibernation Week. Sandy and SpongeBob were fighting on a tall structure called the Sea Needle, referring to the Space Needle, a tall structure in Seattle. Stephen has said that he wants to leave the location of Bikini Bottom to the imagination, claiming that the Baywatch scene was just a reference to his favorite show of all time.
SpongeBob's house-pet is a snail named Gary, whose "meow" is similar to a cat. Although Gary only speaks in a few episodes, the characters have shown an ability to understand him. In addition to this, underwater worms bark exactly like dogs, and are kept on chains. Jellyfish are the equivalent of bees; buzzing, stinging with poison (although it appears as an electric shock), and producing delicious "jelly", mocking the name "jellyfish", while still referring to a bee's honey. Fish act as the citizens of the community but, as a rule, are not important characters.
SpongeBob, who is absorbent, yellow and porous, works as a fry cook at the Krusty Krab, a fast-food restaurant, with Squidward as the cashier. The Krusty Krab is owned by Eugene H. Krabs, also known as Mr. Krabs. Sheldon J. Plankton (commonly referred to as "Plankton") is Mr. Krabs' arch enemy who owns a low-rank fast-food restaurant called The Chum Bucket across the street from the Krusty Krab. The Chum Bucket has almost never had a customer, and he spends most of his time plotting to steal the recipe for Mr. Krabs's popular Krabby Patty burgers. Only in the movie does he succeed; the formula is never actually revealed to the audience. Plankton's computer wife, Karen, alternately helps him in his schemes or bickers with him.
Sandy Cheeks is another friend of SpongeBob. She is a squirrel that lives in an underwater dome in Bikini Bottom. She was sent there by her bosses, chimpanzees. Sandy has a Texan accent and is from the state itself. When not inside her tree-dome, she wears an astronaut suit. Sandy, just like a normal squirrel, hibernates once a year, as seen in a few episodes such as Prehibernation Week and Survival Of The Idiots.
Instead of cars, the residents of Bikini Bottom drive boats. SpongeBob is still in boating school after failing the driving test over one million times. Once, during an episode set in a wilderness area, Patrick questions how a camp fire is possible on the lagoon bottom. As soon as the question is asked, the fire is immediately extinguished with a sizzle. A flurry of bubbles accompanies actions in many of the episodes to remind the viewer that the setting is underwater. Ironically, when there is a separate body of water underwater, such as a swimming pool or lagoon, a non-car boat must be used to cross it because both SpongeBob and Patrick cannot swim, they must be taught by Larry the Lobster.
Mr. Eugene H. Krabs: Uh, SpongeBob...
SpongeBob SquarePants: Hold the phone, everybody. I'm getting an urgent news flash from Mr. Krabs. Go ahead, Mr. K.
Mr. Krabs whispers
SpongeBob SquarePants: I'm making a complete what of myself?
Mr. Krabs whispers again
SpongeBob SquarePants: The most embarassing thing you've ever seen?
Mr. Krabs whispers again
SpongeBob SquarePants: And now it's worse because I'm repeating everything you say into the microphone?
Mr. Eugene H. Krabs: Oh, for crying out loud, SpongeBob! You didn't get the job!