Do I Need a License to Operate a Business in California?

Learn about the different types of licenses required for businesses operating in California.

Do I Need a License to Operate a Business in California?

California does not necessarily require that all companies obtain a license. While the state does not issue or require a commercial operating license, it does regulate and require licenses or permits for certain business activities. Most businesses will need some form of California business license. Most counties and cities in California require businesses to have a local license, and many businesses will need a seller's permit.

SCORE offers volunteer business professionals and expert mentors to advise and guide entrepreneurs looking to start or expand their businesses. See How to Form an LLC in California and How to Form a Corporation in California for more information. These are the most common licenses and will apply essentially to each and every type of business and will be nearly identical in every city and county in California. Depending on the type of business you operate, you may need to obtain local, county, state, or federal business licenses.

You can run a business as a sole proprietor (only you) or general partnership (you and one or more partners) rather than forming a business entity such as an LLC or a corporation. The inclusion of links to other websites does not constitute an approval of those sites by the Secretary of State of California, the State of California, or the federal government. Each agency in California handles business licenses differently, but most require that licenses be renewed annually or biennially. Virtually every business will need at least one type of license or permit to legally operate in the state of California.

The answers below will help you submit the necessary documents, pay the appropriate fees, and understand the basics of starting a business in California. San José: Within 90 days of starting, all businesses operating within city limits must obtain a business tax certificate from the City of San José. Your California State Employer Identification Number, also known as your EIN, is used for tax purposes and other state and federal documents to identify your business. Most small businesses won't need to obtain any federal license or permit, but depending on the size or activities your business performs, you may need to obtain a federal license.

San Diego: The City of San Diego requires a business tax certificate for businesses operating within city limits. You'll need to consider which business entity structure offers the type of liability protection you want and the best tax, financial and financial benefits for you and your company. If your company carries out activities regulated by the federal government, you will need to apply for the appropriate license or business permit. States, counties and municipalities apply sales and use taxes to California businesses on transactions. In conclusion, it is important to understand that while there is no single commercial operating license required by the state of California, there are certain licenses and permits that must be obtained depending on the type of business you are running.

It is essential that entrepreneurs research their local regulations before starting their businesses in order to ensure they are compliant with all applicable laws.