Business License in California
This guide will not only provide you with information pertaining to licenses and permits that your business may require to become operational but also licensing requirements, cost of California business license, and renewal process among others.
You can start a business in California in a variety of industries like agriculture, a high revenue generating industry like tourism, oil drilling and solar power, professional sports, world’s most valuable technology industry, and one of the world’s largest international trade sectors. You will need to obtain a license for California business first.
Today, California is home to 4.1 million small businesses generating over $162 billion in revenues and over 539,000 business entities are based in the professional, technical, and scientific services sector. There are 68,022 small business exporters that generated revenue of $156.1 billion by exporting to 227 foreign economies. The growth rate of the California economy in 2019 was 2.2%, which is more than the overall US growth rate of 2.1%. If you are setting up your new business in the export, trade, or any other industry then the cost of California business license will vary according to the business activity or the industry.
What business license do I need in California?
As an entrepreneur or a business owner, you will need to obtain a license for California business. Prior to applying for a license or permit, you need to first determine the type of license or permit your business will require. The factor that defines the type of permit or license you may require is the business activity. A business activity may also highlight the need to apply for multiple licenses or permits and this is apart from the fact that certain counties or cities may require you to also fulfill zoning requirements. It is important to remember that once you obtain permits or licenses, you need to ensure timely or yearly California business license renewal. Business licenses in California can be divided into two categories, which are:
General business license
If you are planning to start a new business in California then it is important to obtain a license for California business first. The general business license is required by most entrepreneurs or business owners in the city the business is located and if your company is operating from unincorporated sections of the city or state then you will be required to obtain a license or tax certificate depending on the county. If you have or are planning to open branches of your business in several locations then you will have to apply for licenses or permits in all locations that you are and/ planning to operate from. The cost of a California business license will depend on the city, the number of locations, and the business activity. Let’s look at an example:
ABC Inc., has registered its business in the City of San Diego and will need to obtain a license for California business pursuant to City of San Diego Municipal Code Section 31.0121. In San Diego, ABC Inc. will have to register for a Business Tax Certificate instead of a business license. The issuance of this certificate confirms that ABC Inc. has paid all its business taxes. The cost of California business license applications is $38 and it includes $34 Business Tax and a State mandated fee of $4. The application can be submitted by mail, electronically, or in person.
Now if ABC Inc., wants to open a branch in another location like the City of San Jose then you will have to apply for a Business Tax Certificate in this city as well. Similarly, if the company plans to open another branch in Oakland then they will be required to obtain another Business Tax Certificate. It is also important to understand that if ABC Inc., is a seller of retail or wholesale goods, then they will be required to apply for a business license in California also known as a California Seller’s Permit.
Business license/permits for specific industries
Apart from a general business license in California, your new business will require additional licenses for specific industries or regulated industries. This type of license or permit is issued by different governing bodies. For example, the Department of Financial Protection and Innovation (DFPI) regulates and oversees the licensing by the Division of Financial Institutions. Let’s look at an example:
If you are planning to start a restaurant that also serves alcohol then you will require the following:
- A general business license in California or a Business Tax Certificate issued by the city where your restaurant will be located
- A California Seller’s Permit
- A business license or permit for specific industries or a liquor license issued by the California Department of Alcoholic Beverage Control
You can also find more information pertaining to business licenses and permits for regulated industries along with the cost of California business license through the California Government Online to Desktops (CalGOLD) Assistance Program. CalGOLD is an online searchable database of all regulated industries and professions in the state.
Do you want to know what business licenses your California company requires?