Starting a business in California will mean potentially registering with a number of federal, state and local agencies. Let’s take a look at common licenses and permits a business will register for in California.
Business License – There is no general state of California business license, however many cities require businesses to be licensed in order to operate. Rules for business registration vary depending on location and what the business does. Below are a few cities that have licensing requirements.
Los Angeles – Businesses located in or have employee conducting business in the City limits of Los Angeles will need to complete a New Business Registration and obtain a Business Tax Registration Certificate with the Office of Finance.
San Diego – The City of San Diego requires a Business Tax Certificate for businesses operating within City limits.
San Jose – Within 90 days of starting, all businesses operating in City limits must obtain a Business Tax Certificate from the City of San Jose.
San Francisco – The Office of the Treasurer & Tax Collector requires any business to obtain their Business Registration Certificate within 15 days of starting the business. Business registration is required for any company operating in the corporate limits of the city. Additionally, certain businesses such as billiard halls, food service establishments, tattoo artists, ice cream trucks and more have to register with the Office of the City Clerk.
Sacramento – The City of Sacramento requires businesses to have a Business Operation Tax Permit.
Employer Identification Number (EIN) – Many businesses will register with the Internal Revenue Service (IRS) for an EIN or Employer Identification Number. The EIN is the business equivalent for a Social Security Number for an individual. Corporations, Limited Liability Companies, Partnerships and Sole Proprietorships with employees will all need to register for one. Sole Proprietorships without employees can use the owner’s Social Security Number.
There is no cost for an EIN and it only takes a few minutes to get.
Seller’s Permit – Businesses in California must register for a California seller’s permit from the Department of Tax & Fee Administration if they are involved with any business activity in California and/or intend to sell or lease merchandise subject to sales tax.
Resale Certificate – Businesses purchasing merchandise to resell will usually want to obtain a California Resale Certificate in order to not pay sales tax for merchandise that is being resold to customers.
Professional License – A variety of professions in the state are regulated and need to be registered before offering certain services. A few common professions that require licensing in California include; auto repair shops, cosmetologists, pest control and many more. Additional information, fees and licensing requirements for professions are available from the California Department of Consumer Affairs.
In addition to professional licensing, there are a few other types of businesses that need licensing that are not covered by the Department of Consumer Affairs, a few of which include:
Fictitious Business Name Statement – While not a business license, Sole Proprietorships and Partnerships operating under a name that is different from the full name of the owner(s) must register for a Fictitious Business Name Statement (also known as a Doing Business As or DBA) with the County Clerk’s Office in the county where the business is located.
These are a few of the most common business licenses, but there are far too many business licenses and permits in California for us to keep track of. Before starting your business, check with the City Hall, County Clerk, Chamber of Commerce and/or Economic Developer in your area to get more information regarding business licensing. Additionally, there are companies like IncFile or CorpNet that can do the research to ensure you have the proper federal, state and local licenses.