If you do business in California, you might need a California business license, permit, or certificate in order to operate.
You might even need more than one of these documents, depending on the work that you do. If that’s the case, you certainly aren’t alone, and many businesses have to apply for licenses or permits from local, state, and federal governments.
What types of licenses are out there and how do you know you need to get a business license in California? This article should help clear up some of your questions.
The Basics on Federal Licenses and Permits
For most small businesses, the federal government doesn’t require licenses or permits. But there are certain types of activities that are regulated by one or more federal agencies, and those activities might require a federal license or permit.
What are the types of business activities that are regulated by federal agencies and may require a federal license or permit?
- Agriculture
- Alcoholic beverages
- Aviation
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics
If you’re involved in a federally regulated activity the next step is to contact the federal agency that’s in charge of that activity. Find out what its requirements are and then follow through so that you can conduct business legally.
For example, if your business is involved with aviation, you’d be regulated by the Federal Aviation Administration. That would be the place to go for more information
Tip: You can access a list of all federally licensed activities, along with links to more information, by visiting this website, maintained by the U.S. Small business Administration.
California business license requirements
There are a few states where all businesses need to obtain state business licenses, in addition to any required local licenses. Luckily, California isn’t one of those states.
But, just like all other states, California does have license and/or certification requirements for an array of business activities and occupations that require extensive training or that expose consumers to potential hazards. Those include:
- Medical professionals
- Lawyers
- Accountants
- Building contractors and other construction related occupations
- Barbers and cosmetologists
- Architects and engineers
- Real estate brokers and salespersons, and
- Private investigators and other security services
Here’s an example:
If you want to work as an architect in California you need to get a license from the California Architects Board.
To see a comprehensive list of all of the occupations that are regulated by California state agencies, as well as access links to the appropriate agency, click here.
Note: The procedures for getting your business license varies by occupation. You might have to meet specific educational or training requirements or need experience in the field. You might even have to take and pass a written exam before getting your license. And, as you might have guessed, there’s a license fee that you’ll need to pay as well.
When do you need a business license?
Let’s say that you aren’t required to get a federal license or a state license. You might think that you’re off the hook. Think again. There’s actually a good chance that you’ll need to get a local California business license.
Each California city and county establishes its own licensing requirements and procedures.
Keep in mind, though, that most counties and cities in the state require business licenses or permits for all businesses, including one-person, home-based operations.
- If you’re conducting business within a city’s limits, check with your city government to determine licensing requirements.
- If you’re in an unincorporated area, check with the county government.
- If you have an office in more than one city or county, you might need to get a license for each one.
How much does a business license cost in California?
Usually, you pay a fee to get a local business license in California, but some cities exempt very small businesses from fees. Fees vary by locality and range from as low as $15 to as high as a few hundred dollars.
Fees can also be based on your projected gross revenue (for example, 10 cents per $1,000 of projected revenue).
How to get a business license in California
Each city and/or county has a website that explains its licensing requirements. Click here to find a link to the local website that you need.
Once you know where to go, you might have the option of applying for your business license online. Ore you may be able to download an application and email it to the appropriate party or file it via mail.
What do you need to provide when applying for a California business license?
You’ll likely be asked for the following information:
- Social Security Number or Federal Employment Identification Number
- A description of your business activities
- Your legal business name and any assumed name or “dba”
- Your business start date
- The number of employees and your expected annual sales
- Your business address and contact information,
- Each business owner’s contact information
- Your business sales tax number, if any
What happens next?
You’ll usually receive your license or a certificate with a business license number within a few weeks via the mail.
Once you have your license you may be required to display your business license at your place of business.
You’ll also need to renew your business license in California periodically and that might involve an additional fee. Oftentimes, a renewal is required every one to three years, so be sure to mark your calendar so you don’t have to pay late fees.
Do freelancers need to worry about getting a California business license?
Yes!
While it’s true that a lot of freelancers, particularly those who work from home, never get a business license, if your local government finds out that you’re running an unlicensed business, you could be fined. And you might even be prevented from doing business until you obtain the license.
So it’s always best to avoid problems by researching the license(s) you need and applying for them.
An Easier Way to Tackle Business Licenses!
Feeling a bit overwhelmed over the idea of researching and getting a California business license? We get it- it’s a daunting and time-consuming process! That’s why we’ve made it easy for self-employed business owners to get the licenses that they need to operate.
When you join Collective, you’ll gain access to an organized Dashboard for tracking the most important aspects of establishing and maintaining a business. From forming your LLC, to obtaining and renewing your license, we’ve got you covered.
Ultimately, California business licenses can seem confusing at first because you have to sort out the details. But once you know what’s required of your business, you’ll be well on your way to conducting business legally and professionally.
Stephen has dedicated his career as an attorney and author to writing useful, authoritative and recognized guides on taxes and business law for small businesses, entrepreneurs, independent contractors, and freelancers. He is the author of over 20 books and hundreds of articles and has been quoted in The New York Times, Wall Street Journal, Chicago Tribune, and many other publications. Among his books are Deduct It! Lower Your Small Business Taxes, Working with Independent Contractors, and Working for Yourself: Law and Taxes for Independent Contractors, Freelancers & Consultants.
