If you do business in California, you might need a California business license, permit, or certificate to operate.
You might even need more than one of these licenses, depending on the work you do. If that’s the case, you certainly aren’t alone. Many businesses have to apply for licenses or permits from local, state, and federal governments.
What types of licenses are out there and how do you know you need to get a business license in California? We’ll clear up your questions in this guide.
Quick linksObtaining a business license (also known as a business tax certificate) in California varies by occupation and the location of your business. The state of California doesn’t require or issue a state-wide business operating license. Instead, it regulates some industries and professionals, like doctors, lawyers, and accountants.
You likely have to get a business operating license from your city or county, though requirements vary.
Follow these steps to set up your business and get the necessary licenses to operate in California.
Before you can apply for licenses in your business’s name, you have to form your business in the state of California. That’s true even if you’re a business of one, in which case you’ll form a single member LLC in California.
To form your business, you have to choose a name following California’s guidelines for naming an LLC, then file your articles of organization with the California Secretary of State.
Registering your LLC in California costs $70, plus $820 due in additional taxes and filing fees within the first four months after formation.
If you are a sole proprietor and doing business under your own name, you can simply use your name as the name of the business entity. If, on the other hand, you’d like your company to have a different name than your own, you will need to file a fictitious business name statement.
Some regulated occupations in California require a special license to perform services. Keep reading for more details below on what kinds of businesses require licenses and permits and where to find them.
Different government agencies issue licenses for different occupations. California’s online resource CalGold, from the Governor’s Office of Business and Economic Development, provides guidance for the types of permits your type of business might need.
There are also other permits you will need to apply for, such as a seller’s permit if you sell goods to customers, building permits, health license permits, and others. The exact process depends on the city, but for many you can apply online.
Each California city and county establishes its own licensing requirements and procedures.
Keep in mind, though, that most counties and cities in the state require business licenses or permits for all businesses, including one-person, home-based operations if:
Check with the city and county governments where your business is located to determine their requirements. If you work online or from home, your location is your home – or a unique address you adopted for the business, which you would have included when you registered the LLC.
You usually have the option to apply for a business license online in California.
Here’s the information you’ll likely need to provide when applying for a county or local business license in California:
Like the state of California, the U.S. government doesn’t require or issue a general, nationwide business operating license. Various government agencies regulate some industries, though. We’ll give specifics about which industries require federal licenses or permits further down.
If you’ve organized your business as an LLC (or corporation), you can also elect corporate federal tax treatment with the IRS, typically as an S Corp or a C Corp.
You’ll usually receive your license or a certificate with a business license number within a few weeks in the mail.
Once you get it, you might be required to post it at your place of business – generally the case if you’re open to the public. Read the instructions that accompany the license to determine any requirements.
Usually, you pay a fee to get a local business license in California, but some cities exempt very small businesses from fees. Fees vary by locality and range from as low as $15 to as high as a few hundred dollars.
They can also be based on your projected gross revenue (for example, 10 cents per $1,000 of projected revenue).
You have to renew the license and pay a fee every year.
If you organize your business as an LLC or a corporation, you’ll also have to pay the fees associated with filing to the Secretary of State. If you choose a sole proprietorship as your business entity, there are no additional fees.
An LLC and a business license are not the same thing – though they are both often part of setting up a new business in a state.
An LLC (limited liability company) is a type of business structure that determines financial and legal liabilities. When you form an LLC, you create a legal entity that’s separate from you as a person. It lets you adjust how you’re taxed on money you earn from your business and protects your personal assets – like your home and investments – from business liabilities like lawsuits and debt.
“Business license” is a general term that refers to any licenses, permits, or certifications required to sell goods or services. Different types of licenses are required and issued by federal, state, and local government agencies that regulate business activities and services.
Which business licenses your business requires depends on where you’re located and what kind of services you perform.
Most business licenses must be renewed annually or every few years. Depending on the type of license(s) you have, you may have to renew directly with the issuing agency
California doesn’t require or issue a state-wide business operating license. That means you don’t have to have a license from the state of California just to run your business in the state.
Just like all other states, California does require licenses and certifications for occupations that require extensive training or expose consumers to potential hazards. Those include:
CalGold is the best place to find information about the business licenses your type of business requires, as well as links to the issuing agencies.
You might think you’re in the clear if your industry doesn’t require a statewide license or permit. Think again. There’s a strong chance you’ll need to get a local business license.
Many California counties require businesses to obtain a business operating license before doing business in the county. This requirement applies to all businesses, including one-person, home-based operations. Many cities require a business license in addition to the county license.
For most small businesses, the federal government doesn’t require licenses or permits. But some activities are regulated by one or more federal agencies – and those activities might require a federal license or permit. You might need a federal license if you operate in these areas:
Contact the federal agency in charge of the activities relevant to your business and find out which licenses you’re required to have.
Here’s an example: Let’s say your business is involved with radio and television broadcasting. In this case, you’d be regulated by the Federal Communications Commission. That’s where you’ll find more information about federal licenses.
Tip: You can access a list of all federally licensed activities, along with links to more information, through the U.S. Small Business Administration.
California doesn’t necessarily require all businesses (of any structure) to obtain a license. While the state doesn’t issue or require a business operating license, it regulates and requires licenses or permits for some business activities. Most businesses are, however, required to obtain a business operating license with their county and/or city.
The operating location of your online business is typically the physical place where you do business. This is usually the address you list as your business address for tax purposes, whether it’s your home or another location. Your business is regulated by the state, county, and city where you operate. If you’re located in California, follow California and local regulations to obtain the proper licenses and permits to sell goods and services.
You can do a business search through the Secretary of State’s office in California to find information about registered and dissolved corporations, LLCs, and partnerships in the state. However, this search doesn’t display all business licenses. You can check a contractor’s license through the state license board. Just enter the contractor’s license number to see the status of the license.
The fee to file articles of organization for an LLC in California is $70, plus a $20 fee to file a Statement of Information within the first 90 days – and an $800 annual LLC tax due in the fourth month after formation.
For tax purposes, an LLC is considered a “pass-through entity,” which means business profits and losses are passed onto the owner to be taxed as personal – as opposed to corporate – income. California will collect income tax from you the same way it collects personal income tax if you’re an employee. You’ll also pay federal income taxes. You need to be aware of requirements for estimated tax payments, payroll tax obligations, and other federal requirements.
Many small businesses are likely required to get a business license in California. Some businesses need to get special licenses and permits from the state, but most just need a general business license from their local county and maybe their city.
The operating requirements – including annual renewals – can become overwhelming and hard to keep track of, which is why we created Collective to help.
After you join Collective, we’ll sort through all of the important details of your licensing requirements. Plus we remind you when it’s time to renew, so you never miss a deadline or pay a late fee. This way, you can focus on running your business.
Stephen has dedicated his career as an attorney and author to writing useful, authoritative and recognized guides on taxes and business law for small businesses, entrepreneurs, independent contractors, and freelancers. He is the author of over 20 books and hundreds of articles and has been quoted in The New York Times, Wall Street Journal, Chicago Tribune, and many other publications. Among his books are Deduct It! Lower Your Small Business Taxes, Working with Independent Contractors, and Working for Yourself: Law and Taxes for Independent Contractors, Freelancers & Consultants.
Our website contains general information only and this information is not to be taken as legal, tax, or financial advice. You should consult with your attorney and/or tax advisor to get answers to your specific questions.
Collective handles the tax and accounting side of your business – so you have more time to focus on your passion. LLC formation, S Corp election, bookkeeping, monthly financial reporting and an average member tax savings of $10,000*. Estimate your tax savings to get started.
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