Obtaining a business licence to operate in California goes beyond just getting a piece of paper to file away or hang on the wall; it’s ultimately about ensuring your business complies with regulations and taxes. But it isn’t always clear which specific licences or permits your business will need. Whether you’re opening a café, launching a consulting service, or running an online store, having the right licences can help protect you from fines or even potential shutdowns.

Below, we’ll explain how to determine what business licences and permits you need in California, the general steps for applying, and how much the process costs.

What’s in this article?

• How to determine which type of business licence you need in California
  
• How to apply for a business licence in California
  
• How to get a seller’s permit in California
  
• Costs associated with obtaining a business licence in California
  
• How long does it take to receive your licence in California?
  

How to determine which type of business licence you need in California

Whether you’re starting a sole proprietorship, limited liability company (LLC), corporation, or partnership in California, you generally need a business licence to operate. Here’s how to determine which type of business licence you need:

• City or county requirements: Almost every city and county in California, with the exception of some unincorporated areas, requires that businesses have a general licence to operate. First, contact your local city or county clerk’s office for guidance and more information. If your business operates in multiple cities, you might need licences in each jurisdiction.

• Industry rules: Some industries come with their own licensing rules. If you’re offering health-related services, for example, you’ll need a local public health operating licence.

• State licences: Certain professions, such as real estate agents, accountants, and cosmetologists, need state-level professional licences to provide their services to the public. If your business sells tangible items, you’ll also need a state seller’s permit.

• Zoning and permits: Ensure your business’s location complies with local zoning laws. Depending on the business you’re conducting, you might also need building or fire department permits to start operating.

• Home occupation permit: Many cities and counties in California require a home occupation permit if you’re running a business from your home. This ensures your business meets local requirements for home-based operations, such as limits on the number of employees or customer visits.

For more detailed information, the California Small Business Advocate’s website is a great resource for researching what licences, permits, and registrations you’ll need based on your business type and location.

How to apply for a business licence in California

Here’s a step-by-step guide to applying for a business license in California:

• Determine your business structure: Decide whether your business will be a sole proprietorship, LLC, corporation, or partnership. If you’re structuring your business as an LLC or corporation, you’ll need to register your business with the state of California before applying for a business licence.

• Register your business name: If you’re a sole proprietor operating under a name other than your own, you’ll need to register a “doing business as” (DBA) name with the county where you plan to operate. Some counties allow you to file online while others might require in-person visits or mailing forms.

• Get your Employer Identification Number (EIN): If your business structure requires getting an EIN from the US Internal Revenue Service (IRS), you’ll need this number before applying for a business licence. You can apply for an EIN online on the IRS website.

• Check local requirements: Most businesses will need a general business licence from the city or county where they’re based. Visit your city’s and county’s websites to find the relevant application forms. Many local governments allow you to apply online, but some might still require you to mail or submit paperwork in person.

• Apply for state and industry-specific licences: Depending on what type of business you’re starting, you might need additional licences or permits from the state of California. You can use California’s CalGold online tool to find out which permits apply to your industry.

• Submit zoning and building permits: If you’re operating from a physical location, check local zoning laws to confirm your business can operate there. In some cases, you might need additional building permits or fire department clearance.

• Pay any fees: Most licences and permits come with application fees, which vary depending on the city or industry. You’ll pay these when you submit your application. Double-check if there are annual renewals to keep your documents current.

• Receive your business licence: Once you’ve submitted all the necessary paperwork and paid the fees, you’ll receive your business licence and can begin operations.

How to get a seller’s permit in California

If you’re selling taxable physical goods in California, you’ll need a seller’s permit. This applies whether you’re selling in person or online. Temporary seller’s permits are available for businesses that operate for only 90 days or less, such as a shop that operates only around Christmas time.

To get a seller’s permit in California, start by gathering the information you’ll need for the application, including the following:

• Your Social Security number (SSN) or EIN

• Information about the business entity (e.g. sole proprietorship, LLC, corporation)

• Your business or any physical location where you operate

• Expected sales figures (estimates are fine)

• Details on what you’ll be selling and where

Register online through the CDTFA website (the website for the California Department of Tax and Fee Administration) to complete and submit the application. There’s no fee for obtaining a seller’s permit, but you might be asked for a security deposit to cover any unpaid taxes in the event that your business closes. After you submit your application, the CDTFA will review it. Most permits are issued immediately online but some can take a few days to process.

Once you have your seller’s permit, you’re required to display it at your place of business. If you have an online business, keep a copy for your records. With your seller’s permit, you’ll be responsible for collecting and remitting sales tax to the state. Depending on your sales volume, you might need to file returns monthly, quarterly, or annually. The CDTFA will let you know your reporting schedule.

Costs associated with obtaining a business licence in California

The cost of obtaining a business licence in California can vary based on your location, business type, and any industry-specific requirements. Here are some potential costs you might encounter.

General business licence fees

The cost of a general business licence varies by the city or county where your business is based. For example, San Diego issues business tax certificates instead of business licences and the fees for these start at $38. In San Francisco, the business registration fee ranges from $25 to $500 per year, depending on your business’s gross receipts.

Home occupation permit fees

If you’re running your business from home, many cities require a home occupation permit in addition to a general business licence. In Santa Ana, for instance, the home occupation permit costs about $50. In Oakland, the home occupation permit fee is $95 – the same as the fee for a general business licence.

Industry-specific licence and permit fees

Some industries in California require additional licences or permits, each of which comes with its own costs. Consider the following examples:

• Cottage food permit: For home-based food businesses, the Class A Cottage Food registration (for direct sales only) typically costs $100 to $150, while Class B (direct and indirect sales) permits range from $250 to $500. For instance, in Los Angeles County, Class A registration costs $118 and Class B registration costs $292.

• Contractor’s licence: For businesses in construction, a licence from the California Contractors State License Board costs $450 for the application fee, plus another $200 for the initial licence fee for a sole owner.

Seller’s permit (sales tax permit)

Obtaining a seller’s permit from the CDTFA is free. But depending on your industry and sales volume, the CDTFA might require a security deposit. If your business closes, this deposit will be refunded after you’ve paid your taxes.

DBA filing fees

If your business will be operating under a name other than your legal name, you’ll need to file for its DBA or Fictitious Business Name (FBN). The fees for filing a DBA in California differ by county.

In Los Angeles County, the first-time fee for filing an FBN is $26 for the business name and business owner, with additional costs for extra names. In San Diego County, the FBN filing fee is $54, with additional costs for extra business names or owners.

After filing a DBA, California law requires you publish the name in a local newspaper for four consecutive weeks. This can cost anywhere from $30 to $500 each week, depending on the newspaper and location.

Zoning and building permit fees

If you need to modify your home or business location to comply with local zoning laws (e.g. adding a separate entrance for customers), you might need a zoning variance or building permit. The fees for these permits depend on the complexity of the project. Zoning and conditional use permits in Los Angeles County cost anywhere from a few hundred to thousands of dollars, depending on the scope. The costs of building permits for structural changes also differ based on the nature of the work. In Los Angeles County, they range from a hundred to thousands of dollars.

Renewal fees

Most general business licences and permits must be renewed annually or biannually. The renewal fees are generally the same or slightly less than the original application cost.

Total estimated costs for a basic home-based business

For a simple home-based business in a medium-size California city (such as a consulting firm that requires no additional industry permits), you could expect to pay about $100 to $300, plus any applicable renewal fees. These costs would include the following:

• Business licence: $25–$150

• Home occupation permit: $50–$100

• DBA (if needed): $25–$55, plus possible publication fees

How long does it take to receive your licence in California?

The time it takes to receive a business licence in California depends on the licence type, your location, and whether any additional approvals or permits are required. Here are some typical licensing timelines:

• City or county business licence: Businesses can expect to get their general business licences within a few weeks. Timelines vary by location. In San Diego, for example, it takes up to two weeks to receive a business tax certificate.

• Home occupation permit: The approval time for a home occupation permit depends on your local jurisdiction but is usually a few weeks. If your jurisdiction requires an inspection, this process can take longer.

• Professional or state licences: A state-level licence or professional certification (e.g. contractor’s licence, health permit for a food business) can take two to six weeks or longer, depending on the licence type and whether additional inspections or approvals are required. The California Contractors State License Board takes four to six weeks to acknowledge it has received an application and can take even longer to approve one.

• Seller’s permit: In general, the CDTFA issues seller’s permits immediately if you apply online. If additional review is required or if you apply by post, your application might take a few days to a week to process.

• DBA filings: Acceptance for a DBA or FBN can take a few weeks. After filing, you also need to publish the name in a local newspaper for another four consecutive weeks before final approval is granted.

• Zoning permits or variances: Zoning permits or variances can take more time to process. Simple zoning permits might be issued within a month, while more complex requests will likely take longer.

• Health or safety inspections: Inspections associated with health and safety (e.g. for businesses that handle food, daycare facilities, and businesses with physical modifications) can extend the licensing process. Scheduling an inspection can add weeks to the process, depending on your local health or fire department.

For the fastest processing time, ask your local city or county government about whether it offers online applications and what additional steps, if any, you’ll need to complete based on your business type.