A Guide to Obtaining a California Business Licence

Starting a business in California? Don’t let licensing hurdles slow you down! With over 4.2 million small businesses in the state, proper licensing is key to staying compliant and avoiding costly fines. This step-by-step guide breaks down exactly which permits you need, where to apply, and how much they cost. Get your California business licence the right way.

California is home to over 4.2 million small businesses, representing 99.8% of all businesses in the state, according to the U.S. Small Business Administration (SBA). These enterprises employ nearly 7.5 million people, making California the state with the highest number of small business employees in the country. 

From tech start-ups in Silicon Valley to independent retailers in Los Angeles, California's economic engine relies heavily on small to medium-sized enterprises.

However, operating a business in the state is not simply a matter of registering a name and opening doors. One of the most important steps in launching a business in California is obtaining the correct business licence, permit, or certification required by state, county, or city authorities. 

With 482 cities and 58 counties, each with its own regulatory framework, licensing requirements can vary widely based on location and business activity.

Understanding the licensing landscape is vital, not only for legal compliance but also for avoiding fines, penalties, or closure. Whether trading online, offering consultancy services, or opening a brick-and-mortar establishment, most businesses will need at least one form of licence to operate legally in California.

Understanding business licences in California

Unlike some states, California does not issue a universal, state-wide business operating licence. Instead, business licences are typically issued at the local level (city or county), and specific occupations are regulated at the state or federal level. Businesses may also require additional permits depending on the nature of their operations.

Businesses can generally expect to need:

• A general business licence from the local government
• Speciality licences or permits for regulated professions or industries
• A seller’s permit if goods are sold
• Zoning or health permits, depending on the location and nature of business

How to get a business licence in California

1. Name and form your business entity

Before applying for licences, you must legally establish your business. Options include:

• Sole Proprietorship: If operating under your own name, no formal registration is needed. However, if using a trade name, you must file a Fictitious Business Name (FBN) with the county.
• Limited Liability Company (LLC): Requires filing Articles of Organization with the California Secretary of State ($70 fee) and paying an $800 annual franchise tax.
• Corporation: Must file Articles of Incorporation and comply with additional regulations.

2. Apply for state-level licences (If Applicable)

Certain professions require state-issued licences. Use CalGold, an online tool from the Governor’s Office of Business and Economic Development, to identify necessary permits for your industry.

3. Determine local licence requirements

Most cities and counties require a general business licence. Steps include:

• Check with your city or county: Requirements vary; some jurisdictions exempt very small businesses.
• Apply online or in-person: Many cities allow online applications.
• Provide required information: Such as-
  • Business name and structure
  • Employer Identification Number (EIN) or Social Security Number
  • Business address and contact details
  • Expected annual revenue
  • Industry classification (NAICS code)

4. Apply for federal licences (If Needed)

Federal licences are rare for small businesses but may be required for:

• Alcohol sales (ATF permit)
• Aviation (FAA approval)
• Agriculture (USDA regulations)
• Broadcasting (FCC licence)

5. Obtain a seller’s permit (If Selling Goods)

Businesses selling taxable goods must register with the California Department of Tax and Fee Administration (CDTFA). The permit is free, but some businesses must provide a security deposit.

Licensing costs in California

The cost of a business licence in California depends on several factors:

1. General business licence fees

• Typically range from $15 to several hundred dollars
• For example:
  
  • San Francisco: $25–$500 annually, depending on gross receipts
  • San Diego: Business tax certificate starts at $38

2. Home occupation permits

• Range between $50 and $100 in most cities

3. Professional or industry licences

• Vary based on industry
  • Contractor’s licence: $450 application fee plus $200 for initial issue
  • Cottage food permits: $100–$500 depending on sales type

4. DBA fees

• Filing a fictitious business name can cost between $25 and $55
• Additional publication costs (required by law) may range from $30 to $500 over four weeks

5. Zoning and building permits

• Vary widely based on complexity
  • Simple zoning clearances may cost a few hundred dollars
  • Structural permits may run into thousands

6. Renewal fees

Most licences are valid for one year and must be renewed annually. Renewal costs are usually equal to or slightly lower than the original application fees.

Licensing timelines

The time required to obtain a business licence depends on the type of licence, your location, and whether inspections or approvals are involved.

Frequently asked questions

1. Do I need a licence to operate an online business in California?
Ans. Yes. Your physical location determines the licence requirements, not whether your business is online. If you operate from a home in California, you need to follow local business licensing rules.

2. Does forming an LLC replace the need for a business licence?
Ans. No. An LLC is a business structure and does not eliminate the need for licences or permits.

3. Is there a public lookup for business licences in California?
Ans. Yes, you can use the California Secretary of State website to search for registered entities. However, local business licences (city-issued) are not always included.