How to get a business license in California

Do you need a business license in California?

Doing business in California generally requires obtaining one or more licenses and permits to operate legally.

Many California businesses need to obtain a seller's permit from the California Department of Tax and Fee Administration (CDTFA). A seller's permit is required if you sell or lease tangible goods in California that are ordinarily subject to sales tax, whether at the wholesale or retail level.

Local licensing may also apply, for example, a county or city business license and other permits in each jurisdiction where you operate.

Steps to obtaining a business license in California

Business license requirements and the process for obtaining a license can vary based on your business activities and where you operate. Below are general steps for obtaining a business license in California.

Step 1: Research licensing requirements

Research all licensing requirements early in your business planning process. This should be done for every location where you plan to operate. Check zoning requirements, as these may restrict where you can do business. State and various local California government websites have online resources to help you identify your specific requirements.

For more information, see Research: The first step in business license compliance

Step 2: Register your business entity

To form a corporation or LLC in California, you must register with the Secretary of State's office. Out-of-state businesses operating in California must register as a foreign business entity. All California LLCs and corporations (domestic and foreign) must also appoint and maintain a California registered agent (also called an agent for service of process) in the state.

Once registered, all corporations and LLCs must file a Statement of Information with the Secretary of State within the first 90 days of registration, then annually for stock and foreign corporations, or every two years for nonprofit corporations and LLCs.

Step 3: Obtain an EIN

A federal employer identification number (EIN) is issued by the IRS and is required for many businesses. An EIN is used for filing federal taxes, opening a business bank account, and managing tax reporting for vendor payments (such as issuing 1099s).

Step 4: Register a fictitious business name (optional)

If you plan to operate under a name other than your legal business name — known as a fictitious business name or "doing business as" (DBA) — you must file with the county clerk/recorder in the county where your business is located. Registering early ensures your name is consistent across all subsequent state and local filings.

Step 5: Obtain state-level licenses, registrations, and permits

California businesses are responsible for obtaining all required state-level licenses, permits, and registrations. Common requirements include obtaining a seller’s permit from the California Department of Tax and Fee Administration (CDTFA); registering with the Employment Development Department (EDD); and obtaining industry- or occupation-related licenses and permits.

The California Department of Consumer Affairs (DCA), composed of 36 licensing bodies, regulates more than 280 license types, including certificates, registrations, and permits.

Step 6: Apply for local business licenses and permits

Most businesses need at least one license, permit, or registration at the city or county level to operate legally.

Common local requirements include a city business license, business-specific licenses and permits (such as health permits), zoning approval, certificates of occupancy, and signage, alarm, and home occupation permits.

Keep in mind that these requirements apply in every jurisdiction where you operate, and some cities require a separate license for each physical location.

California business license and permit requirements

Depending on your business type, location, and industry, you may need a combination of local, state, and federal licenses and permits. Here's an overview of the common license and permit requirements in California.

State

• California seller’s permit: Required for both wholesalers and retailers, this permit allows you to collect and remit sales tax on items you sell.
• Industry and professional licenses: Many industries and professions require a license or registration issued by a state agency. These requirements may apply to the business, the individual, or both. Common examples include professional services (such as healthcare or law), restaurants, and contractors. The California Department of Consumer Affairs (DCA) issues many of these licenses.
• Special state permits: Businesses that sell regulated products such as alcohol or tobacco must obtain special state-issued permits.

Local

• General business license: A general business license (sometimes referred to as a “business tax certificate”) is usually required at the county and/or city level. This license may be specific to the type of business activity or cover general business activities.
• Other local licenses and permits: Cities and counties may impose additional licensing and registration requirements, such as certificates of occupancy, certificates of use, and permits from zoning, health, and other departments.

Federal

• Federal licenses and registrations: Federal licenses are typically required for businesses regulated by a federal agency, such as the Securities and Exchange Commission (SEC), the U.S. Department of Agriculture (USDA), or the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). For example, food businesses that buy or sell more than 2,000 pounds of fresh or frozen fruits or vegetables in any given day must obtain a USDA PACA license.

How much does a California business license cost?

The cost of a city and/or county business license varies depending on factors such as location, business activity, number of employees, and revenue. Nevada City, for example, charges $142 for a standard one-year business license for a business with fewer than 10 employees.

In Los Angeles, businesses must obtain a Business Tax Registration Certificate. Tax rates are based on business type and gross receipts. For example, retail sales are taxed at $1.27 per $1,000, while personal property rental is taxed at $2.55 per $1,000. Small businesses with $100,000 or less in worldwide gross receipts may qualify for an exemption.

What are the penalties for not having a business license in California?

Conducting business without the required state or city licenses may subject you to fines and penalties. Failure to obtain a professional license can carry harsher penalties. For example, contracting without a license from the Contractors State License Board (CSLB) can result in six months in jail and/or a $5,000 fine, plus an administrative fine of $200 to $15,000 with increasingly stronger penalties if illegal contracting continues.

How to renew business licenses in California

Business licenses and permits must be renewed periodically, with requirements varying by license type. Professional licenses, for example, may require completed continuing education hours or a passed exam before renewal.

Most city and county business licenses are renewed annually. Local governments may also require you to notify them if you need to cancel a permit or tax certificate. It's important to track renewal deadlines and update your licenses promptly if any business details change, such as your name or address. Failing to renew can result in penalties, fees, and the inability to legally operate.

California business license resources

• Business license requirements: Compliance guide
• California Secretary of State
• California Department of Tax and Fee Administration
• California Department of Consumer Affairs
• CalGold Permit Assistance Tool