How to get a business license

Grasp the essentials of obtaining a business license in California, focusing on local and state-level requirements. Uncover specifics on when and why different types of business licenses are needed.

By Brad Nakase, Attorney

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Have a quick question? I answered nearly 1500 FAQs.

Do you need to get a business license in California?

The state of California does not mandate or grant business operating licenses. However, this does not cancel out the necessity of having a business license to conduct business there. Rather, most company licenses are managed at the county or local level, with the “seller’s permit” being the only type of statewide license. In general, in order to conduct business in California, you will require a business license, though there might be a few exceptions.

In California, When Is a Business License Required?

For tax purposes, businesses in the majority of Californian counties and cities are required to obtain a business license. Most rural counties’ unincorporated areas are home to exceptions to this rule. Depending on the kind of business you’re operating in and its location, you could require additional licenses or permissions on top of the local business operating license.

If your company operates in several cities or counties, for instance, you will first need to secure a business license at your main site before obtaining extra licenses in the other counties and cities.

Different Kinds of Business Licenses

To operate legally in the state of California, almost every sort of business will require at least one kind of license or permission. Regretfully, it might be difficult to determine which license you may require to conduct business in your area and within your particular industry. You might need to apply for county, municipal, state, or federal business licenses, depending on the type of business you run. Fortunately, California helps with this via the CalGold website. It offers a search engine that lets you find out which licenses you’ll need and which regulatory bodies handle them by business type and city or county.

California Local Business Licenses

A business operating license, often known as a “business license” or “general license,” is the most fundamental kind of license you’ll need. It typically comes with a business tax certificate. These are the most popular licenses, which are applicable to almost all kinds of enterprises and are almost the same in all Californian towns and counties.

If the name you are operating under differs from the one you registered the business under with the Secretary of State, you may need to file a Doing Business As (DBA) or Fictitious Business Name (FBN) statement.

Businesses that deal with people’s health, such as coffee shops, restaurants, fitness centers, or any other type of business, must have a public health operating license. To operate in the food sector, chefs, cooks, baristas, and waiters must also receive a food handlers’ certification. These licenses frequently call for testing and/or training.

Any agricultural operation employing any kind of pesticide will most certainly need a pesticide applicator’s license, which may involve some study and passing a test to obtain.

Extra Local Licenses

In California, you might also need to get the following additional permits from the city or county when you first open for business:

  • Land use and zoning permits. These are required if the property on which your firm is located is not appropriately designated for the kind of business you are operating.
  • Building permits. You’ll probably want a building permit whether you’re constructing a new structure or remodeling an old one.
  • Permits from the fire department. These are necessary if your establishment is open to the public and uses combustible materials, such as restaurants, fitness centers, daycare centers, hotels, or retirement homes.

Even though these permissions and company licenses are not the same thing, you should find out if you need to get one before opening for business.

Statewide Licenses for California

Certain business licenses in California are subject to state-wide regulations as opposed to municipal ones. The most typical kind is known as a seller’s permit, or sales and use permit. Before the initial sale is finalized, businesses leasing or selling any tangible property are required to obtain a seller’s permission.

You must register to pay an alcohol beverage tax with the Department of Tax and Fee Administration and apply for the necessary license(s) with the California Department of Alcoholic Beverage Control if your company sells, produces, imports, or distributes alcoholic drinks.

It might be necessary to obtain several additional California state licenses in order to run your firm. If you’re unsure, use the CalGold licensing website to investigate further.

Licenses and permits issued by the federal government

The majority of small businesses don’t require any government licenses or permits, but you might need one depending on your company’s size and kind of operations. Federal business permits are typically required in the following common business areas:

  • Agriculture
  • Sales, serving, importing, or distribution of alcohol
  • Aviation
  • Explosives, ammunition, and firearms
  • Fish and wildlife
  • Fisheries that are commercial
  • Transportation via sea
  • Drilling and mining
  • Nuclear power
  • Broadcasting on radio and television
  • Transportation

How to Apply for a Business License in California

Step 1: Create a company name and structure

In the event that you haven’t already, naming and forming your business is the initial step toward obtaining a California business license. If you haven’t launched your company yet, read up on creating an LLC or launching a business. Or, if you’d prefer to have someone else handle it for you, look into hiring a service. After starting a business, be sure you have all of your important business information organized and prepared before starting your application. You’ll require:

  • A company name
  • An EIN (employer identification number) or, in the case of a sole proprietor, Social Security number
  • A type of business entity, like a corporation, partnership, or LLC
  • A phone number and business address
  • A business plan that details expected earnings and costs
  • An insurance certificate (COI) for your business policy

Step 2: Submit a California business licensing application

After collecting the necessary information, you must apply to your city or county for a California business license and possibly a business tax certificate. To start the procedure, go to the website of your county or, if you live in an unincorporated region, your city, and fill out the necessary papers.

Step 3: Find out which additional municipal licenses might be needed

You should use CalGold.ca.gov to determine any additional local or state-level licenses that would be relevant to your company, then complete the necessary paperwork to apply for those licenses.

Step 4: Submit an application for any extra state licenses you require

You will require a seller’s permit if your company rents or sells tangible products. These permits are governed by state law. However, they may also be governed by local county laws. You might also have to submit an application for a state-level liquor license.

Step 5: Request tax treatment and federal licenses (if applicable)

Lastly, even though the federal government does not issue or demand broad business operating licenses, the nature of your company may necessitate obtaining licenses from particular government bodies. Certain types of farming, fishing, selling guns, selling alcohol, and transportation are common industries that need federal permits.

What Is the Cost of a California Business License?

In the state of California, the price of a typical business operating license might differ by municipality, and some even waive any costs for small enterprises. You should budget between $15 and $30 on the low end and several hundred on the high end. When the business license gets renewed annually, or every few years, this price needs to be paid.

Alternatively, rather than a fixed fee, you can be charged a percentage of your yearly income and number of employees. Smaller firms are typically assessed at a flat price; larger businesses are likelier to do this. Franchise taxes are not to be confused with the charges associated with obtaining a company license.

How are business licenses renewed in California?

While company licenses are handled differently by each Californian agency, most of them demand that licenses be renewed every year or every two years. Get in touch with the organization that issued you your business license in the first place if you have any questions.

Have a quick question? We answered nearly 2000 FAQs.

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