Owning and operating your own business can be extremely rewarding and practical. However, there are probably more things than most new business owners realize that need to be taken into consideration when attempting to start up a new business.
Depending on local, state, and federal law, a business may be required to obtain a business license or permit in order to operate. A business license may sometimes also be referred to as a business tax certificate. In California, each city and county establishes its own licensing requirements and procedures, so rules vary by location.
Requiring businesses to obtain licenses allows cities, counties, and states to ensure that the business complies with all applicable regulations, is taxed correctly, and that someone operating a business requiring specific training has the necessary qualifications to do so.
Whether or not you need to look into getting a business license in California will depend on several factors including your profession and the local laws where you plan to operate. If you are required to have a business license to legally operate and fail to obtain one, you will likely face stiff fines, lawsuits, a damaged reputation, and probably be forced to close your business.
Who Needs a Business License in California?
While some states require all businesses to obtain state business licenses, in addition to any required local licenses, the state of California does not. Typically, the owner of any business will need to get a general business license in the city that the business is located in. If a business does not operate within city limits, then the business license will need to be obtained through the county in which the business is located. A business with multiple locations will need to get a business license in each location that it operates.
There are license and/or certification requirements in California for several business activities and occupations that require extensive training or that have the potential to expose the public to hazards, including:
- Medical professionals
- Lawyers
- Accountants
- Hairdressers, barbers, and cosmetologists
- Providers of security services
- Construction related occupations
- Architects/engineers
- Realtors
Even if you are licensed to practice in a different state, you may still need to obtain a license issued in California in order to legally operate your business. Licensing requirements are specific to each profession and many licenses are issued by the Department of Consumer Affairs.
The methods by which you can obtain a business license will vary based on the city or county, but you can generally do so in person, by mail, or even online.
A great place to start when determining what kind of licenses you might need to operate your California business is the CalGold permit assistance website. The website will allow you to search for what permits or licenses you might need based on your location and business type. While there is useful information on this site, you will likely still need an attorney to assist you in the overall licensing process, to ensure that you don’t miss any steps or requirements.
How Much is a Business License in California?
Depending on the jurisdiction and the profession, the cost of a state of California business license may be a flat rate, a percentage of gross sales, or some combination of the two. Generally a flat fee license will run around $50-$100, and rarely more than a few hundred dollars.
Also to be taken into consideration is that if you plan to use a “doing business as” (DBA) name that differs from the actual name of your business, it must be registered within 40 days of the launch of the business. Similar to business licenses, the filing fees for the DBA application will also vary by city, but is usually around $40 or so.
What Do You Need to Provide When Applying for a California Business License?
In completing the process for a California business license verification, you will likely have to provide proof of all relevant information, including:
- Proof of the business owner’s Social Security Number or the business’s Federal Employment Identification Number (EIN), as assigned by the IRS
- Address and contact information for both the business and the business owner
- A description of the business activities to be undertaken
- The legal business name, as well as any assumed name or “DBA”
- The number of employees that will be employed by the business
- Expected annual sales figures
- The business’s sales tax number, if applicable
There may be some other miscellaneous California business license requirements such as proof of a professional license or a certificate of occupancy for the business locations. Different types of businesses may also be required to provide proof of compliance with health department or OSHA regulations before being licensed. Again, the assistance of a qualified business attorney in California can help you ensure that you are meeting all the various requirements for a legitimate license.
How Long Does It Take to Get a Business License in California?
The process of reviewing a business license application and completing any necessary investigation is a relatively short process, and will typically be completed in 45 days or less. For this reason, if you plan on starting your own business in California, you should be sure to plan accordingly and file the application far enough in advance to account for the processing time, so as not to delay the business’s opening.
Professional Licenses in California
In addition to a business license, those engaged in professions requiring a professional license must also provide proof of such licensure. Professions requiring a professional license include:
- Healthcare professions
- The practice of law
- Realtors
- Cosmetologists
Many of these professional licenses are location specific, so again, it is important to be sure that the person who will be conducting business possesses a professional license specific to California, even if already licensed in other states or jurisdictions. The process for obtaining professional licenses for professions like those listed above will also vary slightly for each state or jurisdiction.
Should I Hire a Lawyer for Help with a California Business License?
If you are looking to start a business or move an existing business, a lawyer can help in obtaining a business license in California. There are enough things to worry about when starting your own business that it is almost always worth it to hire a lawyer to help you get squared away on the legal side of things.
An attorney will be familiar with local requirements for not only business licenses, but building permits, professional licenses, and tax requirements. They can complete all relevant application processes on your behalf, making for much less on your plate.
Hiring an attorney to assist you with licensing your California business is well worth the investment, as failing to comply with all applicable licensing requirements will without a doubt come with significant negative consequences.
For this reason, it is wise for all business owners to at least consult with a California business lawyer to ensure that they are in compliance with all applicable laws and regulations. Be sure to prepare any questions, documents, and other information that you can review with your attorney during the consultation phase.
