What business licenses and permits are required to operate in California?
California's complex and changing regulatory landscape can make business license compliance difficult to manage. 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 engage in activities that qualify as “doing business” in California and sell or lease items that are ordinarily subject to sales tax. This requirement applies to both wholesale and retail businesses.
For certain professions and industries, there are additional state-level licensing, registration, and/or certification requirements. There are usually licensing requirements at the local level as well. A business may need to obtain a county or city business license, plus other local licenses and permits, in each jurisdiction in which it plans to operate.
When doing business in California, licensing requirements can vary. Here are sample license, permit, and registration requirements:
- California business license: A basic or 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, permits, and registrations: Cities and counties may impose additional licensing and registration requirements, such as a certificate of occupancy and permits from various departments, including health.
- California state business registration: California LLCs and corporations (as well as LLCs and corporations from other states) must register with the California Secretary of State’s office.
- Fictitious business name registration: If a business plans to operate under a name other than its legal name, that business is required to register that name (called a fictitious business name, “doing business as”/DBA, or assumed name) with the local jurisdiction.
- State of California Franchise Tax Board: Doing business in California means being subject to California tax laws.
- California Department of Tax and Fee Administration (CDTFA) permit: Businesses may need to obtain a seller’s permit and other permits from the California Department of Tax and Fee Administration (CDTFA). The CDTFA administers sales and use taxes, as well as taxes on fuel, tobacco, alcohol, cannabis, and other products.
- California Employment Development Department (EDD): Businesses that employ one or more employees must register with the California Employment Development Department (EDD) and get a California Payroll Tax Account Number if they pay more than $100 in wages in a calendar quarter.
- Federal tax ID: Also called an EIN, a federal tax ID is issued by the IRS and is required for federal tax and other purposes.
- State licenses for industries and professions: A professional state license, registration, or certification may be required for certain businesses and professions. The California Department of Consumer Affairs (DCA) is one of the state’s major licensing departments. DCA licenses and regulates several million professionals in more than 280 license types through several dozen boards and bureaus.
- Special California state licenses and permits: Certain products and services may require special state-issued licenses and permits. For example, the California Department of Alcoholic Beverage Control (ABC) has close to a hundred different licenses, including ones for manufacturers, importers, warehouses, restaurants, music venues, and more.
- Federal licenses and registrations: Federal licenses are typically required for businesses regulated by a federal agency, such as the Securities and Exchange Commission, the U.S. Department of Agriculture (USDA), and the Bureau of Alcohol, Tobacco, and Firearms. For example, food businesses that buy or sell more than 2,000 pounds of fresh or frozen fruits and vegetables must obtain a USDA-issued PACA license.
