How to get a business license in California

If you're operating a business in California, you may need a business license from your city, county, or a state agency. While California doesn't issue a statewide general business license, it does require state-level licenses for certain regulated occupations.

Most businesses, though, will get their business license or business tax certificate from the city they operate in, or from their county if they're in an unincorporated area. If you sell taxable goods, you'll also need a seller's permit from the California Department of Tax and Fee Administration (CDTFA). Here's a closer look at business license requirements in California so you can determine which rules apply to your business. 

What is a business license in California? 

A California business license allows your business to provide certain goods or services. There's no one single license for every business in the state, though, and your requirements may come from several levels of government: 

• Local: You may need a local business license or business tax certificate from your city. If you operate in an unincorporated area, you might get this license from your county clerk or treasurer. 
• State: Your business may need a license from a California state agency, depending on what it does. Certain professionals are required to get a license from a board or bureau under the Department of Consumer Affairs. You may also need a CDTFA seller’s permit if you sell or lease taxable goods. If you have employees, you also may have to register with the Employment Development Department (EDD) for payroll taxes.
• Federal: Depending on your industry, you might be required to get a federal license or permit. Federally regulated activities include selling alcohol or firearms or operating a broadcast station.

If you get a local business certificate, expect it to contain your business name, certificate or account number, city, business activity classification, and an expiration date. What exactly the document looks like can vary by location. 

To understand your specific requirements, check out California's CalGOLD Permit Assistance Tool. After you enter your city and business type, this tool can help you find the permits you need for your business. 

Do you need a business license in California? 

If you operate a business, you likely need a business license or tax certificate in California. This requirement applies to sole proprietors, freelancers, and home-based businesses, along with more traditional business models. 

For example, you may need a license or registration if you're: 

• Operating a business from a storefront, office, home, or another location 
• Selling or leasing tangible goods 
• Hiring employees 
• Working in a licensed profession 
• Operating in a regulated industry, such as food, alcohol, cannabis or construction 
• Conducting business in more than one city 

Here's a closer look at California business license requirements for specific business structures. 

Does an LLC need a business license in California? 

You can start an LLC by registering your business with the California Secretary of State, but your work doesn't end there. Along with paying the annual LLC tax, you may also need a local business license, a professional license, or a seller’s permit if you sell goods. After starting an LLC, either on your own or with business formation services, check which licenses and permits you need to legally operate your business.  

Does a sole proprietor need a business license in California? 

Most cities in California require sole proprietors to get a business license. If you're operating under a different name, you may also have to file a fictitious business name statement with your county. That filing is on top of the business license requirement. 

Do freelancers and home-based businesses need a business license in California? 

Freelancers and home-based businesses also typically need a local license from their city or county. Some cities have home occupation rules that place limits on client traffic, visible signage, or other activities that could disrupt the neighborhood. Make sure to check the requirements for your specific address. 

The local business license, or business tax certificate

If you need a California business license, you may need to look locally rather than to the state, as licensing is often a city function. The exact terminology can vary; some cities offer a business license while others provide a business tax certificate. Cities also set their own fees, which often depend on a business's headcount or gross receipts. 

San Diego, for example, charges a fee based on the number of employees for its business tax certificate. San Francisco and Los Angeles both typically base their business registration fees on a business's gross receipts. Los Angeles offers a tax exemption for businesses with $100,000 or less in gross receipts.

If you operate in multiple locations, you may need a license or registration in multiple cities. You can find the appropriate office by searching for business licenses or registrations on your city's official website. You'll often apply through the city's finance or treasurer department, or the county clerk for unincorporated areas. 

The seller's permit 

If you sell or lease tangible goods that are subject to sales tax, like clothing or furniture, you likely need a seller's permit. The California seller's permit is a state-level permit that you can register for online through the CDTFA. There's no charge for the permit, though the CDTFA sometimes asks for a security deposit. 

You may be required to get this seller's permit even if you're selling for a short time, like at a festival or one-time event. In this case, you'll apply for the CDTFA's temporary seller's permit, which lasts for up to 90 days. 

State licenses for regulated professions and industries

The state of California requires state licenses for certain regulated professions and industries. The Department of Consumer Affairs oversees licensing boards for professions such as contractors, cosmetology, and nursing. Real estate professionals are licensed through the California Department of Real Estate, and alcohol and cannabis businesses need state permits in addition to local permits. 

You can use CalGold to find agencies that oversee your business type and industry. Then review that agency's licensing requirements. Many professionals can also verify their professional license through the Department of Consumer Affairs license search.

Note that registering your business with the Secretary of State is part of forming your business entity; it does not fulfill licensing requirements, which you'll need to apply for separately. 

How to get a business license in California, step by step

While there's no single California business license for every company, here are the general steps you'll need to take to apply: 

1. Set up your business name and entity: This may mean registering an LLC or corporation with the California Secretary of State. If you'll be operating under a fictitious business name, you'll need to file a statement with your county. 
2. Get an EIN if you need one: You may need to get an employer identification number (EIN) if you'll be hiring employees, paying employment taxes, or for other reasons. 
3. File state tax registrations: If you're selling taxable goods, apply for your seller's permit through the CDTFA. And if you're hiring employees, find out if you need to register with California’s Employment Development Department (EDD).
4. Apply for your local license: Apply for your business license or certificate with your city or county. While processes vary, you may provide your business name, address, activity, Secretary of State entity number, EIN or SSN, business address, business activity, and seller's permit number if applicable. The application might also ask for your estimated gross receipts or number of employees.
5. Apply for any state-level licenses: Depending on your industry, you might need to apply with a state agency that regulates your work. 

How long each application takes can vary considerably. You might get your seller's permit the same day you apply, while local licenses may be issued in about two weeks. Professional licenses may take two to six weeks or longer. 

How much does a business license cost in California? 

As a business operating in California, you would have to pay for a local license, state permit, entity formation, or other fees. Local business licenses often start at around $25 but may go up to several hundred dollars for small businesses. 

California's larger cities tend to scale fees to a business's gross receipts. San Francisco's registration fee, for example, starts at $55 and goes up by revenue tier. In Los Angeles, businesses will pay a tax per $1,000 of gross receipts, though qualifying small businesses get an exemption. 

Home occupation permits, where required, may cost around $50 to $100, while fictitious business name filings cost around $25 to $55, plus the fee for the required newspaper publication. A seller's permit, on the other hand, is free and can often be issued the same day online. 

Costs for entity formation with the Secretary of State often start higher, and LLCs and corporations have to pay an annual $800 franchise tax. As mentioned, this yearly fee covers business formation costs, not license costs. 

Renewing a California business license 

Getting your initial business license in California is just the first step. In most cities, you need to renew your local business license on an annual basis. 

Missing your renewal deadline could result in late penalties or other consequences. Some cities like Los Angeles also require on-time renewals to qualify for tax exemptions. 

Professional licenses have their own renewal schedules and might ask you to complete continuing education. These licensing renewal deadlines are separate from the deadlines for the Statement of Information that LLCs have to file with the Secretary of State.

Why licensing matters for financing and business credit 

Getting your business license doesn't just matter for meeting state and local requirements. It can also come into play when you apply for financing. 

Lenders, banks, and business credit bureaus may ask for proof of licensing. Having the right licenses helps show your business is legitimate, just like establishing business credit can.

By keeping up with your licenses and establishing business credit, you'll put yourself in a better position to qualify for business loans and lines of credit. 

Nav is not a lender or a credit bureau. Credit information is provided by third-party sources.

The bottom line 

California doesn't have a general statewide license that applies to all businesses. Instead, you'll want to check with your city or county for business license requirements. Then you can add a CDTFA seller's permit or occupation-specific professional license from a state agency, if relevant. Once your business entity, licenses, and permits are in place, Nav can help you build your business credit and qualify for financing to run and grow your company. 

Frequently asked questions