Our work is reader-supported, meaning that we may earn a commission from the products and services mentioned.

California Business License Basics

California Business License Basics

Advertising Disclosure

Advertising
Disclosure

California Business License Basics

Starting a small business in California often means registering with several federal, state, and local agencies. Let’s review common California business license registrations so your business starts off right.

Related: Guide to starting a business in California 

First Step – Set Up the Business

Sole proprietorship: In California, a sole proprietorship is a business owned by one person. It is the simplest form of business structure, with no legal distinction between the owner and the business. The owner has complete control over the business but is also personally liable for all debts and obligations.

General partnership: A general partnership in California is an agreement between two or more individuals to operate a business together. No formal setup is needed, but a partnership agreement, but it’s a great idea to draw up a partnership agreement to outline operations and responsibilities.

Corporation: A California corporation is a legal entity separate from its owners, known as shareholders. It offers limited liability protection, meaning shareholders are not generally personally responsible for the corporation’s debts and liabilities. The downside is that corporations are the most complex structure to start and operate. 

Limited Liability Company (LLC): A California LLC combines aspects of a sole proprietorship or partnership and a corporation. It provides limited liability protection to its owners, called members, shielding their personal assets from the company’s debts and liabilities, in addition to a flexible management and tax structure.

Related: Comparison of Business Structures

What Licenses Do California Businesses Need?

With the business structure out of the way, we can begin looking at the different types of registrations businesses in California may need. There isn’t a standard business license, as requirements vary depending on where the business is located and its activities. Here is a general overview of the different registrations your business may need.

Starting a business in California will mean potentially registering with a number of federal, state and local agencies.  Let’s take a look at common licenses and permits a business will register for in California.

Business License

There is no general state of California business license. However, many cities require businesses to be licensed in order to operate. Rules for business registration vary depending on location and what the business does.  Below are a few cities that have licensing requirements. 

  • Los Angeles:  Businesses located in or have employees conducting business in the City limits of Los Angeles will need to complete a New Business Registration and obtain a Business Tax Registration Certificate with the Office of Finance.
  • San Diego: The City of San Diego requires a Business Tax Certificate for businesses operating within City limits. 
  • San Jose: Within 90 days of starting, all businesses operating in City limits must obtain a Business Tax Certificate from the City of San Jose.   
  • San Francisco: The Office of the Treasurer & Tax Collector requires any business to obtain their Business Registration Certificate within 15 days of starting the business.  Business registration is required for any company operating in the corporate limits of the city.  Additionally, certain businesses such as billiard halls, food service establishments, tattoo artists, ice cream trucks and more have to register with the Office of the City Clerk
  • Sacramento: The City of Sacramento requires businesses to have a Business Operation Tax Permit
Take the guesswork out of figuring out what licenses and permits are required to start your business with license research packages from Bizee and LegalZoom.

For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements. 

Fictitious Business Name Statement

Sole proprietorships and partnerships in California that want to operate under a business name other than the full name of the owner(s) will register for a California Fictitious Business Name Statement (also known as a Doing Business As or DBA) with the County Clerk’s Office in the county where the business is located.

Employer Identification Number (EIN)

The California Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in California. It is used for tax filing and reporting purposes, similar to how an individual uses a Social Security number. Companies can apply for an EIN through the IRS website or by submitting a paper form.

Seller’s Permit

Businesses in California must register for a California Seller’s Permit from the Department of Tax & Fee Administration if they are involved with any business activity in California and/or intend to sell or lease merchandise subject to sales tax.

Resale Certificate

After obtaining the Seller’s Permit, most businesses will want to obtain a California Resale Certificate. This allows them to avoid paying sales tax on inventory purchases meant to be resold to customers.

Professional License

A variety of professions in the state are regulated and need to be registered before offering certain services.  A few common professions that require licensing in California include auto repair shops, cosmetologists, pest control, and many more.   Additional information, fees, and licensing requirements for professions are available from the California Department of Consumer Affairs.

In addition to professional licensing, there are a few other types of businesses that need licensing that are not covered by the Department of Consumer Affairs, a few of which include:

Next Steps

While it’s a good start, there are so many different licenses that may be needed. Double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

California Business License Basics

California Business License Basics

Leave a Reply

Your email address will not be published. Required fields are marked *

Some (but not all) of the links on StartUp101.com are affiliate links. This means that a special tracking code is used and that we may make a small commission on the sale of an item if you purchase through one of these links. The price of the item is the same for you whether it is an affiliate link or not, and using affiliate links helps us to maintain this website.

StartUp101.com is also a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

Our mission is to help businesses start and promoting inferior products and services doesn’t serve that mission. We keep the opinions fair and balanced and not let the commissions influence our opinions.