For many entrepreneurs, coming up with a business idea is the fun part. The real challenges come when you try turning that idea into a legitimate and legal business. Even in corporate-friendly California, with no state–wide business operating licensing requirements, you still need to apply for relevant permits at the county and municipal levels before you can start doing business.
This article explains some of the most common steps associated with registering your business in California.
How to apply for a California small business license
Because every city and county in California has licensing requirements, there are no universal steps that apply across the state when starting a business. However, below are the steps you’re most likely to run into when applying for a small business permit in California.
1. Decide on a legal structure
Before applying for a California small business license, you must first establish a legal structure for your operations.
- A sole proprietorship requires the least amount of setup; however, it also offers little protection since there’s no distinction between your personal and business assets.
- A general partnership typically involves two or more parties and offers similar protection as that of a sole proprietorship. Certain types of limited partnerships exist that can help keep personal and business assets separate.
- A corporation can provide the most protection for business owners. It also requires a lot of time and money to set up, often making it an unattractive option for new startups.
- A limited liability company (LLC) represents a favorable structure for many businesses. It’s fairly easy to set up, and owners enjoy some peace of mind when it comes to the protection of their personal assets.
For a more detailed overview of the relative pros and cons of each corporation structure, be sure to check out our longer article on how to register a small business.
READ: How to start a business in California
2. Apply for a local business license
Once you’ve formalized your legal structure, the next step involves applying for a business license in your town or county. Because each jurisdiction sets separate filing requirements, you’ll need to check with local agencies to determine which steps apply to your unique region, niche, and corporate structure. A good starting place is your town hall. However, there may be local trade organizations that can also point you in the right direction.
If you need help locating the proper agency, get started here.
3. Determine if you need a seller’s permit or professional license
Depending on your business, you may be required to obtain a seller’s permit or professional license.
- A California seller’s permit allows you to sell tangible goods with factored-in sales tax. This also makes you eligible for wholesale rates when buying inventory. If you plan to work in retail, having a seller’s permit is mandatory.
- Professional licenses vary by industry. As an architect, for example, you need a license from the California Architects Board. Hairstylists, massage therapists, electricians, attorneys, and doctors are other examples of professions that require licensing and certification in the state.
If you have questions about obtaining a seller’s permit, click here for more information.
What information do I need for a business license application in California?
The requirements for obtaining a business license can vary by jurisdiction. Having the following items prepared can help speed the process along.
- A business or “doing business as” DBA name
- Your completed business structure documents
- Associated phone numbers and addresses (even if yours is an online business)
- An employer identification number (EIN) – also known as a federal tax ID
- Personal information about the owners, including birth dates and contact info
We hope this article offers you some insight on how to get a small business license in California. Once set up, you’ll be ready to start making sales. When that time comes, you’ll need a way to accept payments and manage your business.
To learn how our POS and payment solutions can help, schedule a free consultation today.
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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