How to Get a Business License in California

A California business license, also known as a California business tax certificate, is a permit needed to legally operate a business within the state.

However, navigating through all the CA licensing requirements can get confusing, so we've provided this handy guide to illuminate the process. We'll discuss what permits and licenses may pertain to your business and how to apply for them.

Do you need a California business license?

In California, business licensing is controlled by the city and county levels—not the state level. That said, there are some additional statewide licenses certain businesses may need to acquire to operate in certain industries, but we'll get more into that later.

So, do you need a California business license? Yes, you do. You will need to apply for a business license through your local city or county office of business and economic development, which administers and oversees all businesses in their jurisdiction.

Why do you need a California business license?

California requires businesses to obtain local business licenses because these permits demonstrate that your business is operating legally and responsibly within the state, and allows the state to enforce appropriate regulations to ensure your business is up to code.

Some of the most important reasons for acquiring a general business license in California include:

• Compliance. It proves your business is compliant with local and state regulations.
• Tax purposes. It helps keep track of your tax record, ensuring your business is registered and paying local business taxes, and eligible for certain tax incentives or benefits afforded to certain types of businesses.
• Credibility. It signals to your customers and clients that your business is above board.

How to get a business license in California

Getting a general business license in California requires carefully following the appropriate steps to ensure your business is properly covered and compliant.

Below, we'll break down each step for you:

1. Establish your company

The first step involves figuring out how to start a business in California.

To begin with, you'll need to develop your business idea and complete your business plan—this is not only good practice but is a requirement.

Next, you'll select a business entity or business structure and register it with the state. Examples of business structures include a sole proprietorship, a limited liability company (LLC), a corporation, or a partnership.

Once you've formed your business, you must register your business name and obtain an employer identification number or Federal Tax Identification Number (EIN) through the US Internal Revenue Service (IRS) for tax filing purposes.

After completing these steps, you'll have all the documentation you need to apply for a CA business license.

2. Apply for a California state business license

Now, it's time to apply for your California business license. 

Mail your information and payment to the appropriate licensing office, or you can visit your city's or county's official website to fill out an application and pay the licensing fee. For example, if you live in San Diego, you'll visit the Office of the City Treasurer webpage and complete the online form.

To apply, you'll provide the following information:

• Registered business name
• Business address and telephone number
• Business entity
• EIN or your social security number (SSN)
• Description of your business

LegalZoom’s personalized licenses reports can provide you with more information regarding business license requirements and the application process.

3. Apply for other CA licenses or permits

In some cases, you may need to acquire additional licenses or permits—such as a California seller's permit or occupational license—to legally operate in the state

To identify which may apply to your California business, turn to our business licenses services. At LegalZoom, our personalized license reports will show you which additional licenses and permits—if any—apply to your business and how to acquire them. 

4. Apply for federal business licenses

The final step involves identifying if you need any federal business licenses. If your business involves activities that are governed by a federal agency, then you will need a federal business license.

Each federal agency has its own application process, so if this step applies to you, visit the agency website(s) to apply.

For instance, if you're selling fireworks, you'll need to file with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and if you're running a fishing operation, you'll apply with the National Oceanic and Atmospheric Administration (NOAA).

LegalZoom can help you navigate federal licensing. Our business license report determines which federal licenses apply to your business, ensuring your business meets all the necessary federal regulations. 

How much do California business licenses cost?

Since each California city and county oversees business operating licenses, they have their own application process and associated fees.

What does a business license cost in California? Business license fees can vary anywhere from $15 to several hundred dollars.

For example, in San Diego, a business tax certificate costs $34 for a business with 12 or fewer employees and $125 (plus $5 per employee) for a business with more than 13 employees. Meanwhile, the same license can cost $25, $150, $250, or $500 in San Francisco, depending on business type and size. This license will need to be renewed every year, which involves additional payment.

You can also incur late fees if you don't apply for a license within a certain number of days of starting your business or don't renew within a specific time period.

If your business requires other licenses and permits, you may face additional fees. For instance, if you operate a trucking company out of California, you may need a California International Fuel Tax Agreement (IFTA) license fee, which costs $10. Meanwhile, a California seller's permit doesn't cost anything, but your business may need to provide a security deposit.

For more information on required licenses and associated costs, visit the California Department of Tax and Fee Administration (CDTFA) website.

Types of California business licenses

Now that you have a better idea of how to get a business operating license in California, let's further discuss some of the different types of licenses available in this state.

Local business licenses

This guide has focused on this type of license. They refer to the licenses that the California cities and counties grant businesses at the local level.

Regardless of what kind of business you're operating within the state, you must obtain a CA business license.

Statewide licenses and other permits

In addition to the California city or county business license, your business may need other statewide licenses and permits to operate.

A California seller's permit is one of the most common statewide licenses. It's required for California businesses that plan to sell taxable goods or services.

The following industries require a seller’s permit:

• Retail. Clothing stores, grocery stores, and bookshops
• Service industry. Restaurants, salons, and caterers
• eCommerce. Online marketplaces and subscription-based services

Depending on the nature of your business, like if you sell cannabis or alcohol, California may request additional licensing.

The following are some other licenses or permits you may need to consider when running a California business:

• California Cigarette and Tobacco Products Retailer's License
• Cannabis Tax Permit
• International Fuel Tax Agreement (IFTA) license
• Alcoholic Beverage License
• Building and Construction Permit
• Public Health Operating License

Furthermore, California requires some specific industries and professions to obtain occupational licenses to operate in the state. Some examples of professions that may need these licenses include the following:

• Teachers
• Doctors
• Nurses
• Lawyers
• Cosmetologists
• Electricians
• Building contractors

For more guidance on these additional licensing requirements, consult the California tax and fee administration via the CDTFA website.

Federal business licenses

Most businesses do not need to obtain a license from the federal government. However, there are federal agencies that oversee and regulate certain industries and business activities. Businesses in the following industries will need to obtain licenses from the relevant federal regulatory agencies:

• Agriculture
• Alcohol
• Firearms
• Fish and wildlife
• Transportation
• Pharmaceutical
• Radio and TV broadcasting

The easy way to get a California business license

Need some help obtaining your California business operating license, federal license, permits, or other operational matters? LegalZoom's business license service can simplify the process for you. We’re the preferred online method for finding business licenses, as we deliver a customized summary of your federal, state, and local license requirements, provide direct access to the applications, and keep you up to date on licensing report changes and deadlines. Our services ensure your business is compliant so you can rest easy. 

FAQs

How do I renew my business license?

Most California counties and cities require you to renew your business license after a year, but some regions may have different renewal schedules.

To renew your local business license, visit the website where you first obtained it and follow the steps for filling out a renewal application. In most cases, you'll simply confirm any changes to your business information and pay a small renewal fee.

What happens if I operate without a business license in California?

If your business gets caught without the appropriate business licenses and permits, there are ramifications.

In some cases, the local jurisdiction could force you to close your business or shut down operations until you receive the appropriate licensing. In other cases, state, local, and federal authorities could charge you fines or fees. Furthermore, your business could face a lawsuit if it's found operating without the legal requirements.

Do online businesses need a business license in California?

Yes, regardless of what kind of business you're operating in California, you need to acquire a business operating license. This includes online businesses, storefront businesses, and at-home businesses.

How long does it take to get a business license in California?

Once you apply for your license and pay the filing fee, you should receive your business tax certificate in the mail within a few weeks.

Is a California seller's permit the same as a California business license?

No, a California's seller permit is not the same as a California business license. A California business operating license is a city- or county-issued license that allows your business to operate in California, while a seller's permit is a license that allows you to legally sell taxable goods or services within the state.