To get a business license in California, you apply to the city or county where your business operates for a local business tax certificate, and then add whatever state and federal registrations your specific business triggers on top of it. There is no single statewide license. Depending on what you sell, where you work, and how you’re organized, you may also need to register an entity with the Secretary of State, get a federal EIN, file a fictitious business name, obtain a seller’s permit, and hold a professional license from a state board.
Here is the order that keeps the paperwork from tripping over itself.
Register Your Entity with the Secretary of State First
If you plan to operate as an LLC, corporation, or limited partnership, register with the California Secretary of State before you do anything else. Cities and tax agencies will ask for your entity’s filing confirmation on their applications, and the IRS advises forming your entity with the state before applying for a federal tax ID so your EIN isn’t delayed.1Internal Revenue Service. Employer Identification Number You can file online or by mail through the Secretary of State’s business programs portal.2California Secretary of State. Starting a Business
Sole proprietors and general partnerships skip this step unless they want to formalize their structure. If you’re running an LLC or corporation without registering, the liability shield you formed the entity to get can collapse, and you can’t enforce contracts in California courts until your registration is current.
Get a Federal EIN
An Employer Identification Number is a nine-digit federal tax ID from the IRS. You need one if you have employees, operate as a corporation or partnership, or pay certain excise taxes.3Internal Revenue Service. Get an Employer Identification Number Sole proprietors without employees can use their Social Security number, but banks and local licensing offices frequently ask for an EIN anyway.
Applying online at the IRS website is free and gives you a number immediately. Keep the confirmation letter. You’ll need it for the business license application, your bank account, and state tax registrations.
File a Fictitious Business Name If You’re Using One
If your business operates under any name that isn’t your legal surname (for sole proprietors) or the exact entity name on file with the Secretary of State (for LLCs and corporations), California law requires a Fictitious Business Name statement filed with the county clerk where your principal office sits.4California Office of the Small Business Advocate (CalOSBA). Setting Up Your Business in California “James Smith Painting” run by James Smith doesn’t need one. “Bay Area Painting” does.
Fees vary by county. Los Angeles County charges $26 for one business name and one registrant, plus $5 for each additional name or registrant.5Los Angeles County Registrar-Recorder/County Clerk. Fees – Fictitious Business Names Most counties also require publication in a local newspaper, usually another $30 to $80. The statement expires after five years and has to be renewed.
Use CalGold to Find Every Permit That Applies
Before you file anything with the city, run your business through CalGold at calgold.ca.gov. Enter your location and business type and the tool generates a list of federal, state, and local permits that may apply.6CalGold. CalGold v2 – Permit Assistance Tool It doesn’t issue anything. It just tells you which agencies to contact.
Do this early. The list often turns up requirements owners don’t anticipate, like fire clearances for certain retail spaces or air quality permits for light manufacturing. The California Office of the Small Business Advocate also publishes industry-specific guidance on permits and regulation.7California Office of the Small Business Advocate (CalOSBA). Permits, Licenses, and Regulation
Confirm Zoning Before You Apply
Your local planning or community development department can tell you whether the property’s zoning classification allows your intended use. Many California cities require a zoning clearance letter as part of the business license application, and this is where a lot of applications stall.
Home-based businesses need to look at this carefully. Most cities allow home occupations but impose restrictions that shape how you operate: caps on non-resident employees (often zero or one), limits on client visits, no exterior signage, no commercial vehicles parked at the residence. Some cities require a separate home occupation permit; others allow home businesses by right if you stay inside the rules. San Mateo County, for instance, permits home occupations without a separate permit but prohibits retail sales, outside employees, and displays visible from the street.8County of San Mateo. How Do I Start a Home Occupation Read your specific city’s ordinance.
Apply for Your City or County Business License
Nearly every California business needs at least one local license, usually called a Business Tax Certificate. Cities license businesses inside their limits; counties license businesses in unincorporated areas.9California Legislative Information. California Code BPC 1600010Justia. California Business and Professions Code Section 16100-16105 – Chapter 2 Licensing By Counties
You’ll typically be asked for:
- Your EIN, or Social Security number if you’re a sole proprietor with no employees
- Secretary of State filing confirmation, if you formed an LLC, corporation, or partnership
- Your Fictitious Business Name filing receipt, if applicable
- A California driver’s license or state ID number
- Zoning clearance from the local planning department
- Estimated gross receipts for the coming year, because many cities calculate the fee from projected revenue
Most cities have online portals for account creation, document upload, and electronic payment. Paper filings go by mail or in person with photocopies and a certified check or money order. The most common reasons applications get bounced are missing signatures and incomplete attachments, so check both before you submit.
What It Costs
Fees depend on the city, the business type, and expected revenue. A small professional services firm might pay $25 to $100. A larger operation could pay several hundred. Some cities prorate by quarter. In Yorba Linda, a contractor’s license is $100 for a full year but $25 if obtained in the final quarter.11City of Yorba Linda. Business License Fees
Every application and renewal also carries a mandatory $4 state fee under Government Code Section 4467, which funds construction-related disability access improvements.12California Department of General Services. Report SB 1186 License Fee and Use for Construction-Related Accessibility The city collects it and forwards it to the state.
How Long It Takes
Expect several weeks. Los Angeles issues a temporary certificate at registration and mails the permanent Business Tax Registration Certificate within four to six weeks.13Los Angeles Office of Finance. The Business Registration Process Smaller jurisdictions can be faster. Keep your receipt and any temporary documentation as proof of filing while you wait.
Add a Seller’s Permit If You Sell Goods
If your business sells or leases tangible goods, whether retail or wholesale, you need a seller’s permit from the California Department of Tax and Fee Administration. This applies to every entity type from sole proprietors to corporations.14California Department of Tax and Fee Administration. Your California Sellers Permit – Publication 73 The permit itself is free, but holding one obligates you to collect and remit sales tax.
You’re considered engaged in business in California if you have any physical presence: an office, warehouse, employee, or stored inventory. Out-of-state sellers trigger the requirement by exceeding $500,000 in California sales of tangible goods in the current or preceding calendar year. If you only sell services and never transfer physical products, you generally don’t need one. Temporary selling operations of 30 days or less at one location use a temporary seller’s permit instead.
Check Whether Your Profession Needs a State License
A city business license doesn’t replace a state professional license. California regulates dozens of professions through boards and bureaus under the Department of Consumer Affairs. Contractors, cosmetologists, accountants, architects, real estate agents, engineers, nurses, and dentists are among those who must hold active state licenses before practicing.15California Department of Consumer Affairs. DCA Boards and Bureaus
These licenses can take months. The Contractors State License Board, for example, requires four years of journey-level experience, a written exam covering trade knowledge and California law, and a $25,000 contractor’s bond; LLC contractors also need a $100,000 surety bond.16Contractors State License Board. California Contractors License Law and Reference Book 2026 Check your board early. Discovering you need a six-month licensing process after you’ve signed a lease is an expensive mistake.
Budget for the $800 Annual Franchise Tax
Every LLC doing business or organized in California owes an annual franchise tax of $800 to the Franchise Tax Board, whether or not the company earns any income.17California Franchise Tax Board. Limited Liability Company Corporations owe either the $800 minimum or a tax on net income, whichever is greater. The obligation continues every year until you formally cancel the entity with the Secretary of State.
The first payment is due by the 15th day of the 4th month after you file your formation documents. California waived the first-year tax for new LLCs formed between 2021 and 2023, but that exemption expired on January 1, 2024, so LLCs formed in 2026 owe the full $800 in year one. The narrow exception: if you cancel within one year using the short-form cancellation process, the first-year tax doesn’t apply.
LLCs with gross revenue above $250,000 owe an additional fee on top of the $800, ranging from $900 to $11,790 by revenue tier. Factor this into your startup budget.
After You’re Licensed
Display It
California law requires you to display your license prominently at your business location where state and local agencies can see it. If your premises is open to the public, it has to be in plain sight of customers.18Cornell Law School. Cal Code Regs Tit 4, 15039 – License Posting Requirement Inspectors check.
Renew On Time
Business licenses typically renew annually. Your licensing office will send a notice, but the obligation to renew is yours whether or not you receive one. Renewals usually require updated gross receipt figures so the city can recalculate your tax.
Late penalties escalate quickly. San Francisco adds 5% after one month, 10% after two, and climbs from there, with 1% monthly interest and an administrative fee on top.19San Francisco Treasurer and Tax Collector. Business Tax Penalties and Interest Other cities differ in the numbers but follow the same pattern.
Report Changes
If your business changes name, address, ownership, or legal structure, notify your licensing authority. Ownership changes can void an existing license if you don’t get prior approval. Contact your local office before the change takes effect rather than after.
What Happens If You Skip It
Under California Business and Professions Code Section 16240, practicing any business, trade, or profession that requires a license without holding a valid one is a misdemeanor.20California Legislative Information. California Code BPC 16240 A misdemeanor conviction in California can carry up to six months in county jail and a $1,000 fine.
Regulated industries face heavier consequences. An unlicensed contractor faces up to six months in jail, a $5,000 fine, and administrative penalties between $200 and $15,000. A second offense triggers a mandatory 90-day jail sentence and a fine of 20% of the contract price or $5,000, whichever is greater.21Contractors State License Board. Consequences of Contracting Without a License Customers who hire an unlicensed contractor aren’t legally required to pay and can’t be sued for nonpayment.
An unlicensed business may also be unable to enforce contracts in court, meaning you can complete work, get stiffed, and have no legal recourse. The licensing process is a slog. Skipping it costs more.