Steps to Getting a Business License in California
Starting a business in California can be exciting and rewarding, but before you can officially operate, you’ll need to obtain a business license. A business license is a legal requirement that allows businesses to operate within a specific jurisdiction while ensuring compliance with local, state, and federal regulations.
This guide will walk you through the step-by-step process of getting a business license in California, including key requirements, costs, and tips to streamline the application process.
Step 1: Determine Your Business Structure
Before applying for a business license, you must choose a business structure. The structure you select will impact how your business is taxed, your personal liability, and your regulatory obligations.
The most common business structures in California include:
- Sole Proprietorship – A single owner operates the business, and all profits/losses are reported on personal tax returns.
- Partnership – Two or more individuals share ownership and responsibility for the business.
- Limited Liability Company (LLC) – Provides liability protection for owners while maintaining flexible tax options.
- Corporation (C-Corp or S-Corp) – A separate legal entity that offers liability protection but comes with more regulatory requirements.
If you’re unsure which structure is best for your business, consulting with a legal or financial expert is a good idea.
Step 2: Register Your Business Name
If you plan to operate under a name other than your legal name, you’ll need to register a “Doing Business As” (DBA) name with your local county.
For example, if your name is John Smith and you want to operate as “Smith’s Auto Repair,” you must file a Fictitious Business Name (FBN) with your county clerk’s office.
To check if your desired business name is available, you can use the California Secretary of State’s Business Search tool.
Step 3: Obtain an Employer Identification Number (EIN) (If Needed)
An Employer Identification Number (EIN) is like a Social Security number for your business. It’s required if you:
✔ Plan to hire employees
✔ Operate as a corporation or partnership
✔ Need to open a business bank account
You can apply for an EIN for free through the IRS website (www.irs.gov). If you’re a sole proprietor with no employees, you may not need an EIN and can use your Social Security number instead.
Step 4: Register Your Business with the California Secretary of State (If Required)
Certain business entities, such as LLCs, corporations, and limited partnerships, must register with the California Secretary of State before obtaining a business license.
You can complete your business registration online through the California Secretary of State’s website (www.sos.ca.gov).
Step 5: Apply for a Business License with Your City or County
In California, business licenses are issued at the city or county level, not statewide. The requirements vary depending on your business location and type.
Here’s how to apply:
🔹 Find the correct licensing office – Visit your city or county government’s website to locate the business licensing department.
🔹 Complete the application – Provide details about your business, including its name, address, ownership structure, and nature of work.
🔹 Pay the licensing fee – Fees vary by location but typically range from $50 to $500.
If your business operates in multiple cities, you may need a business license for each location.
Step 6: Check for Additional Permits & Licenses
Depending on your industry, you may need additional permits or licenses to operate legally. Some common requirements include:
✔ Seller’s Permit – Required if you sell taxable goods or services in California. Issued by the California Department of Tax and Fee Administration (CDTFA).
✔ Health Permit – Required for businesses that handle food, issued by the local health department.
✔ Professional Licenses – Required for specific professions such as real estate agents, contractors, cosmetologists, and accountants. Managed by the California Department of Consumer Affairs.
✔ Zoning and Land Use Permits – Check with your city planning department to ensure your business location is properly zoned.
Failing to obtain the necessary permits can lead to fines, penalties, or even business closure.
Step 7: Register for State and Local Taxes
Most businesses in California must register for state and local taxes, such as:
- California Sales Tax – If you sell goods, you must collect and report sales tax. Register with the CDTFA.
- Employment Taxes – If you have employees, you must register with the California Employment Development Department (EDD).
- Business Property Tax – If you own business property (equipment, machinery, etc.), you may need to pay an annual property tax to the county assessor.
Tax requirements vary based on business type, so check with a tax professional or visit the California Tax Service Center (www.taxes.ca.gov) for guidance.
Step 8: Renew Your Business License Annually
In most California cities, business licenses must be renewed annually. Some local governments automatically send renewal notices, while others require businesses to track renewal deadlines.
To avoid penalties or fines:
✅ Mark your calendar with renewal deadlines.
✅ Check renewal fees (they may differ from the original application fee).
✅ Ensure compliance with any updated regulations.
How Long Does It Take to Get a Business License in California?
The processing time for a business license varies based on location and business type. Generally:
- Online applications may be approved within a few days to two weeks.
- Paper applications can take several weeks to a month.
- Additional permits (such as health or zoning permits) may extend the timeline.
To speed up the process, ensure you submit complete and accurate information when applying.
How Much Does a Business License Cost in California?
Business license fees vary by city and county but typically range between $50 and $500. Additional costs may include:
💲 Seller’s Permit – Free
💲 LLC Registration Fee – $70 (one-time) + $800 annual franchise tax
💲 Corporation Filing Fee – $100 (one-time) + $800 annual franchise tax
💲 Professional License Fees – Varies by industry
Always check with your local city hall or county clerk’s office for the most accurate pricing.
Final Thoughts
Obtaining a business license in California is an essential step in legally operating your business. While the process may seem complex, breaking it down into these steps can help:
✅ Choose a business structure
✅ Register a business name (if needed)
✅ Obtain an EIN (if required)
✅ Register with the Secretary of State (for LLCs and corporations)
✅ Apply for a business license with your city or county
✅ Check for additional permits
✅ Register for state and local taxes
✅ Renew your license annually
By following these steps, you can ensure compliance and focus on growing your business with confidence.
If you’re unsure about any requirements, consider consulting a business attorney or local Small Business Development Center (SBDC) for assistance.
Have any questions or experiences with getting a California business license? Drop a comment below! 🚀
