How to get a business license in California?
California is one of the top states when it comes to forming a startup or incorporation of a new business. You can choose from several forms of businesses right from a self proprietorship entity to a limited liability company. One of the aspects that entrepreneurs or new business owners need to focus on is that every entity needs to apply for and obtain a license for California business as this will help make the business operational. You may have registered your entity but without a license or permit, as such you will not be able to sell your products or services.
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?
Obtaining Business License in California
If you are planning to operate your business in any city or county of California and unless your business is exempt from licensing; you will be required to apply and obtain a license for California business or a business tax certificate. If you have a business license or permit then you will be allowed to operate or transact business in the state legally. If you operate without a license then your business may be forced to close apart from the possibility of penalty fees or fines and can even lead to a loss of reputation. Once you have obtained a license or permit, you will have to ensure California business license renewal on time to avoid penalty.
How do I get a business license in California?
It is fairly easy to obtain a license for a California business although you need to first determine the type of license your business requires. For example, you may require a general license or a regulated license. Most of the licenses and permits are issued by the city offices, city hall, county clerk office, and civic departments like the fire or police department of the city or county your business is located in. A California business license renewal is also handled through the same offices that were responsible for issuing them. There are certain licenses or permits like the California Seller’s Permit that can be applied for from the California Department of Tax and Fee Administration (CDTFA).
General Business License
You can visit the CalGold database as it provides business-specific information regarding the license, permit, and registration requirements. There are certain state and local requirements that you need to fulfill prior to applying for a general business license in California. The cost of a California business license or permit will vary from one city to another although some cities charge a fixed amount as the fee for a business license while other cities have fees based on your annual sales. You can also opt for our “Business License Research Report” service, which is an extensive research report containing a list of filing instructions, supporting document requirements, and fees for all business licenses and permits for your company in California.
What do you need to provide when applying for a California business license?
A general business license in California or permit for regulated industries are governed by the Municipal Code of the city the business is located in. The municipal code also defines the various requirements a business has to furnish or fulfill in order to apply for a new license or for California business license renewal. Some of the important information you are required to provide in your license or permit application include:
- Name and address of the business establishment
- Names, addresses and phone numbers of all members or owners
- The mailing address of your company if it is different from the physical address
- A business phone number
- Driver license or state identification number and Social security number
- The type of business like an LLC, corporation, sole proprietorship etc
- Employer identification number (EIN)
- Seller’s permit number is required prior to applying for a business license in California.
This permit is applicable only if you are selling goods or leasing tangible personal property anywhere in the state
- The business activity as it plays a key role in determining the type and number of licenses and permits required. It will also determine the cost of California business license
- Some businesses may be required to provide North American Industry Classification System (NAICS) code and Standard Industrial Classification (SIC)
- Bank Information and name as well as account number of the merchant credit card processor
- Estimated Payroll Expenses and Gross Receipts from the specific state the business is located in
How much does a business license cost in California?
The cost of a California business license also known as a business tax certificate varies from one city or county to another. Normally, a business license can cost anywhere from $50 to $100 although it can be more as well. If you apply for a Business Tax Certificate in San Diego County for starting a restaurant having 1-10 employees then you will have to pay $753 and if you have 100 employees then the cost would be $1,059.
Similarly, a regulated license would vary according to the type of business activity like if your restaurant serves alcoholic drinks then it will fall under a regulated industry and you will have to obtain a license for California business through the California Department of Alcoholic Beverage Control.
If you start a Brew Pub – Restaurant then the license fee would vary from $790 to $1,235
Renewing California Business License
Once you have obtained your general business license in California, you can operate your business but at the same time, it is important to remember that a license needs to be renewed. You will need to apply for California business license renewal periodically or annually depending on the state or county requirements and this might involve an additional renewal fee. Most licenses have to be renewed 60 days prior to the expiration date. In the state of California, all active business licenses expire after a period of two years while inactive licenses expire after four years. Hence, it is important to ensure that the expiration date is marked on your calendar because if you miss the date, you may end up paying a late fee.
Need any Assistance in Obtaining Your California Business License?
In the state of California, there is a general business license and depending on the business activity, industry, and location of the company, you may also have to apply for regulated business licenses, and local permits. The process of searching for the right license and determining whether your business requires single or multiple licenses can be quite exhaustive and time consuming. We at IncParadise can help you in the process by guiding you to obtain a license for California business. You can also benefit from our Business License Research Report service, which will provide you with business license filing instructions, cost of California business license, and information pertaining to the list of documents required for submission.
Every business has multiple requirements apart from applying for a business license in California. All businesses formed in the state have to fulfill annual maintenance requirements as required by the state. This is where our wide variety of additional services can be helpful in your endeavors. These services vary from helping you obtain a tax ID (EIN) number to formation or registration of your new business, California Certificate of Good Standing, Foreign Qualification, and California Annual Report or Statement of Information among others.