How To Get a Business License in California

Here’s an overview of what you need to know about business licenses for different types of companies in California. 

The first step towards starting a business in any state in the U.S., including California, is to have a clear business plan. Here, you’ll choose a business structure, note any business licenses and permits you need to operate, and think through details like your business name, marketing plans, and growth strategy. Types of businesses that require more licenses and permits carry more risk, like restaurants, medical spas, and piercing and tattoo parlors. 

After you have your business established as an entity, like an LLC or a sole proprietorship (more on the specifics below), you can begin to apply for specific licenses and permits. Take note — “business licenses” can refer to the more general term of licenses related to businesses, like a liquor license or a Seller’s Permit, or the specific “Business License,” which is the annual tax for doing business in a certain area.

Depending on the city or county, there are different tax rates and business requirements, so take this into consideration if you have multiple business locations in California.

Luckily, California has comprehensive online resources for new business owners to understand what they need.

Online Resources for Business Licenses in California

• CalGOLD Business Permit System

• California Department of Consumer Affairs

• California Secretary of State Starting a Business Checklist

• California Department of Tax and Fee Administration

• California Office of the Small Business Advocate (CalOSBA)

Why does California have business license and permit requirements? To keep people safe, and support the local area through municipal services. 

By establishing and enforcing state-specific business requirements, business owners have to maintain legal standards, train their employees adequately, and comply with safety inspections, which in turn prevents unsafe business practices and helps the region thrive. 

In this guide, we’ll walk through business licenses in California, and what new business owners need to know to comply with local requirements.

California Business License Checklist

What is a business license, and why do you need it?

Business licenses are required for anyone conducting business in a certain city or county. By completing a Business Tax Certificate wherever you operate your business, you can pay annual taxes specific to that area and the type of business you conduct. There are exceptions to the business license requirements in most areas for nonprofits and businesses earning less than $20,000 per year. 

How do you apply for a business license in California?

Refer to the local tax collector’s office in the city or county where you plan to operate your business. If you’ll have multiple locations, make sure to check for each area. To find out all of the business license and permit requirements based on the type of business and location, use CalGOLD’s handy search tool. Or, search “new business” + the city to find helpful resources like the Beverly Hills New Business Checklist. Most areas allow new businesses to register via online form, apply by mail, or fill out the paperwork in person.

How much do business licenses cost in California?

Business license costs vary based on location in California. As an example, a business license in Contra Costa County costs $100 per business entity, plus $10 per full-time employee. Temporary business licenses in this area are $100 per day.

How to get a business license in California

Business licenses are regulated by local tax and finance divisions. Most cities and counties in California have helpful online systems where you can apply for the business license, pay any application and renewal fees, transfer licenses, and check the status of your license at any time. Once you submit your application, you will be issued a business tax certificate, which is required prior to doing business. 

Here are a few California business license application links, for reference:

• Beverly Hills Online Business Tax Application

• Glendale Business Registration Certificate Application

• Los Angeles County Business License Application

• Monterey Business License Application

8 steps to starting a business in California

Create a business plan

Most business loans, permits, and licenses require a business plan. Here’s a free business plan template to guide you through the process.

Obtain financing

Depending on the type of business, there are tons of options for new business financing, like loans and grants. For restaurants, try Toast Capital — a restaurant financing program designed by restaurant people.

Set up a business entity and choose a business name

Choose the type of business category (LLC, sole proprietorship, partnership, or corporation) and business name, or “Doing Business As” (DBA) name. Take a look at existing business names in California to make sure yours is unique.

Register your new business with the California Secretary of State

Use the online portal to register your business with the California Secretary of State. Alternatively, you can mail the forms or fill them out in person. 

Apply for specialty licenses and permits based on your type of business and business location

Review your local city or county website for more information about location or industry-specific requirements. There may be zoning regulations and local permits that take time to secure.

Get an employer identification number (EIN) and explore employer responsibilities

An EIN is required for all businesses with employees. Find more resources for businesses who plan to employ people in California here. 

Determine your tax requirements

Taxes might be collected by the IRS, state, or local governments. Search for tax requirements based on your industry, size, and business structure.

Submit ongoing registration documents

To maintain your status as a business in California, you’ll need to submit annual documentation to the state, file your taxes, and maintain safety. When you first apply for business licenses, take note of annual renewals and ongoing requirements.

Timeline for getting a business license in California

To avoid fees, apply for your business license more than 30 days before you plan to begin operations. You’ll need to know your business tax structure, so make sure you have that done already. Talk to a business accountant or tax specialist to understand what type of business category you should choose based on your business plan and goals.

What are the differences in setting up your business and obtaining licenses based on business structure?

The type of business you have and the tax structure you choose will determine fee schedules and paperwork requirements, and some are more advantageous than others. 

In California, businesses set up as corporations or Limited Liability Companies (LLCs) need to file a Statement of Information with the California Secretary of State within 90 days of registering the business, and annually. 

The State of California Franchise Tax Board website includes all of the filing requirements and tax considerations for different types of businesses in California based on business structure, industry, income level, deductions, and more. We’ll run through some of the main differences for business operations in California based on tax structure.

LLC

In California, LLCs pay an annual filing fee that starts at $800 and increases based on annual revenue. To meet filing requirements, LLCs need to be doing business in California, and be registered with the Secretary of State. In addition to the annual $800+ tax, there is an LLC fee. 

Sole proprietorship

For sole proprietorship businesses in California, you’ll claim your earnings on your individual income tax return. It’s important to note that sole proprietorships take on personal liability for anything that happens with their business. Sole proprietors should report their business income on a Profit or Loss from Business Form and pay individual estimated taxes through the state. 

Partnership

Partnerships, with two or more co-owners, need to file Partnership Return of Income forms if they make money in California. General partnerships don’t have an annual tax fee, but limited partnerships pay $800 per year like LLCs do.

Corporation

S corporations and C corporations in California (this includes any corporations that are registered or doing business in California) pay the $800+ franchise tax.

When are business licenses required in California?

Most companies and individuals doing business in California, including independent contractors, temporary businesses, food trucks, service businesses, and others, need a business license, but organizations like nonprofits are usually exempt from paying taxes and fees. Corporations (as well as sole proprietorships, LLCs, and partnerships) selling or providing service to customers in California should review apportion and allocation guidelines to understand how their business income could be affected.

What businesses can operate without them?

Depending on the area, there are some exemptions under State, Federal, and local laws to business tax requirements in California. 

• In some areas, charitable or non-profit organizations who have non-profit tax exempt status on a State or Federal level do not need a business license. However, in areas like Monterey, non-profit organizations need to obtain a business license, but will have the fees waived by the IRS. 

• Businesses earning less than $20,000 per year, or those that rent or lease a small amount of units (four or less)

• Railroads

• Banks

• Alcoholic beverage manufacturers

• Insurance companies

• Agricultural businesses

Timeline for Starting a Business in California

For most new businesses in California, you’ll submit your business tax certificate to each city or county where you’ll be operating before you start operating. If you get started too early and operate without a business license, you can face fees, citations, and account closure. 

Here’s a quick roadmap to getting your business up and running in California.

12+ months prior to opening

• Create a business plan

• Establish a business structure, choose a name, and apply for an EIN

7 - 12 months prior to opening

• Scout a location

• Procure financing

2 - 6 months prior to opening

• Choose location

• Begin construction/renovation 

• Obtain business licenses + permits

• Select business operations technology, like a POS

1 month prior to opening

• Find + hire staff

• Begin marketing and social media efforts

The sooner you can get everything checked off the list so that you comply with local business requirements, the sooner you can get customers in the door (or virtual door) and start building a strong brand with loyal patrons. 

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