One of the most time-consuming steps in starting a business in California involves applying for business licenses and permits. This requirement normally takes place after incorporating – but before you can legally operate in the state.
Let’s dive in on registering a business in California and explore some of the types of business licenses that might apply to your situation.
Limited partnerships, corporations, and limited liability companies (LLCs) are all legally required to register within California. Only sole proprietorships are exempt.
California doesn’t require that you obtain a business license at the state level. However, nearly every municipality mandates that you obtain a local business license to legally operate in that city. Moreover, if you manage several locations in different cities, you’ll have to go through some of the steps below multiple times – once for each jurisdiction.
Because every city has separate licensing requirements, find the exact application steps used to require visiting your local town hall directly. Fortunately, the state now offers a free online database that allows you to search for relevant business licenses – based on geography and business type.
In addition to obtaining a business license in California, you may be required to secure certain local and state permits. The California Office of the Small Business Advocate (CalOSBA) provides a comprehensive overview of what types of permits are required. Below are some of the most common ones you may need to obtain.
Most cities restrict what types of businesses can operate and where. Zoning restrictions, for example, could prevent your business from opening in a residential neighborhood. Or, there might be areas that welcome commercial activity, as long as you’re not trying to open a nightclub.
If starting your business requires construction or heavy renovations, be prepared to apply for building permits as well. The same online database for licenses also doubles as a search tool for local permits.
If you plan on selling or leasing tangible goods that are normally subject to state sales tax, you’ll need to apply for a seller’s permit with the California Department of Tax and Fee Administration (CDTFA). This rule applies to almost every retailer and wholesaler in the state. Even if you plan to sell something small, like keychains or mugs, you’ll still need to get a seller’s permit in California.
If you buy inventory that you plan to resell to customers, having a resale certificate allows you to avoid paying sales tax. Although this step is strictly optional, it can save you a lot of money in the end. Better still, the California Tax Service Center has made the application process easy.
You probably already know that doctors, lawyers, and electricians all need to be licensed in the state. Did you also know that massage therapists, hairstylists, and a host of other professions also need occupational licenses?
To verify whether you need an occupational business permit in California, search the state’s professional licensure database.
It’s common for businesses to use longer, more official names for legal paperwork – and shorter, catchier ones for branding and marketing. This second name is often referred to as a “doing business as” or “DBA” name. The purpose of this statement is to ensure that consumers have access to the true name and address of the business owners. You can register yours through the California Secretary of State’s name reservations portal.
While choosing a catchy name can be a good idea when you register a business name in California, make sure it’s not too different from the official name you plan on using for bank accounts and payment processing. Otherwise, customers may be confused when they look at their credit card statements and see a business name they don’t recognize.
In some extreme cases, those confused customers might even call their banks to reverse the charges. Not only does this lose you a sale, but chargebacks can negatively impact your merchant account and lead to higher payment processing fees.
At Clover, we specialize in point-of-sale (POS) solutions for small businesses that can help you accept payments, check inventory, manage employees, book appointments, and more. All of this can be tracked directly through your Clover Dashboard – whether you’re in the office, at home, or on the road.
To learn how our POS and payment solutions can help you, schedule a free consultation with a Clover Business Consultant today.CONTACT SALES
This information is provided for informational purposes only and should not be construed as legal, financial, or tax advice. Readers should contact their attorneys, financial advisors, or tax professionals to obtain advice with respect to any particular matter.
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