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Starting a Business Checklist for California

Starting a business in California can feel like a lot to handle, especially when you're trying to figure out all the state-specific requirements. Whether you're dreaming of opening a coffee shop, launching a tech startup, or setting up a consulting business, knowing what you need to do to get everything legally sound in California is essential. While the state is full of opportunities for entrepreneurs, there are also plenty of steps to follow, from licensing to taxes and local regulations.

In this guide, we'll walk you through all the California-specific steps you need to take to get your business up and running. If you're serious about making your entrepreneurial dream a reality, this checklist will help you navigate the red tape and make sure you don't miss any crucial details.


1. California Business License Requirements

One of the first things you'll need to figure out is whether your business needs a license to operate in California. Spoiler alert: almost all businesses in California need some form of license or permit, even if it’s a small home-based business. Here’s the lowdown.

Do You Need a Business License in California?

Yes, nearly every business in California is required to have a basic business license, which is often referred to as a business tax certificate. Even if you're running an online business or a freelance service, you'll likely need a license.

The state of California doesn’t issue a general business license, but cities and counties do. So, you'll need to apply for a business license in the city or county where your business is located or operating. Even if you're working from home, you need to check with your local government.

How to Get a Business License in California

  1. Determine your location. Business licenses in California are issued by local governments, so the process varies depending on where you’re setting up shop. If your business is in a specific city, you’ll apply for a license from that city’s local government. If you’re in an unincorporated area, you’ll go through your county.

  2. Contact your city or county government. You can usually find business licensing information on your local government’s website. Most city or county websites have online portals where you can apply, pay the fee, and get your license. Some areas might still require you to fill out paper forms and submit them in person or by mail.

  3. Complete the application. The application will ask for details about your business, like the business name, address, type of business, owner information, and estimated annual income. Make sure to double-check everything before submitting.

  4. Pay the license fee. The cost of a business license in California can vary widely depending on the city or county. It’s usually based on your type of business and estimated income, so it could range anywhere from $50 to several hundred dollars.

  5. Renew your license. Most California business licenses need to be renewed annually. Keep track of the renewal date so you don’t accidentally let your license expire.


2. Registering a Business Name in California

Now that you've got your business license in order, you’ll want to register your business name. If you're operating under your own legal name, this step isn't necessary, but if you're using a different name for your business—whether it's a creative brand name or simply something other than your full legal name—you’ll need to register it.

What is a Fictitious Business Name (FBN)?

In California, if you're doing business under a name that isn't your legal name, you need to file a Fictitious Business Name (FBN), also known as a Doing Business As (DBA). This lets the public know who's behind the business and protects you from other businesses using the same name in your county.

How to File a Fictitious Business Name

  1. Check name availability. Before you can register your business name, you’ll want to make sure no one else in your county is using the same name. You can do a search through your county clerk's office or online on their website. California doesn’t have a centralized database for DBAs, so you’ll need to check at the local level.

  2. File your FBN statement. Once you've confirmed the name is available, you'll need to file a Fictitious Business Name statement with your county clerk’s office. You can usually do this online or by mail. There’s a filing fee, which typically ranges from $25 to $100, depending on the county.

  3. Publish the name in a local newspaper. After filing your FBN, California law requires you to publish your business name in a newspaper within 30 days of filing. The newspaper has to be a recognized publication in the county where your business is located, and you’ll need to run the notice once a week for four consecutive weeks. The newspaper will provide proof of publication, which you may need to submit to the county clerk.

  4. Renew every five years. Your FBN is valid for five years, after which you’ll need to renew it. Make sure you mark this on your calendar so you don’t forget!


3. California-Specific Taxes and Regulations

California’s taxes and business regulations can be a bit tricky, so it's important to know exactly what you're responsible for as a business owner. From sales tax to state income tax, California’s tax system can catch you off guard if you’re not prepared.

Sales Tax

If your business sells physical products (or even some digital goods and services), you’ll likely need to collect sales tax. California's sales tax rate varies depending on where you’re doing business, as it includes both a state rate and a local rate.

  • Statewide base rate: 7.25%
  • Local rates: Can range from 0.10% to 3%, depending on your location.

You'll need to register for a seller's permit through the California Department of Tax and Fee Administration (CDTFA) if you plan to sell taxable goods or services. This permit allows you to collect sales tax from customers and submit it to the state. The application is free, but failing to register before you start selling could lead to fines.

California Income Tax

California has a progressive state income tax, which means the more you earn, the higher your tax rate. As a business owner, you’ll need to pay income taxes on the profits you make from your business.

If you're a sole proprietor, you’ll report your business income on your personal tax return using Schedule C. If you form an LLC or corporation, you'll have additional tax filing requirements. California also has a franchise tax, which applies to most businesses and must be paid annually.

  • Franchise Tax Minimum: $800 per year for LLCs, corporations, and other registered entities.

Employment Taxes

If you plan on hiring employees, you’ll need to be aware of California’s employment tax requirements. As an employer, you’ll be responsible for withholding state income tax from your employees' wages and paying unemployment insurance (UI) and employment training tax (ETT). You’ll also need to register with the Employment Development Department (EDD) to manage these taxes.


4. Local Permits and Zoning Rules

In addition to the state licenses and taxes, you’ll also need to make sure you're complying with your city or county’s local regulations, including permits and zoning rules.

Zoning Laws

Zoning laws are local regulations that dictate how land can be used. Before you set up your business, you’ll want to make sure the location you’re choosing is zoned for the type of business you’re operating. For example, if you're opening a retail store, the area needs to be zoned for commercial use. If you're running a business from home, there may be additional restrictions.

To check zoning rules for your business location:

  • Contact your city or county planning department.
  • Visit their website to see zoning maps and guidelines.
  • Verify whether the property or area is zoned for your type of business.

If your business doesn’t comply with the zoning laws, you might need to apply for a conditional use permit or find a different location.

Local Permits

In addition to your business license, many businesses in California need specific local permits, depending on the type of business you’re operating. Here are a few examples:

  • Health permits: Required if you’re in the food service industry or running a business that deals with health-related services, like a tattoo parlor or nail salon.
  • Building permits: If you’re renovating or building out a physical space for your business, you’ll likely need a building permit.
  • Sign permits: If you’re putting up a sign for your business, you might need a sign permit from your city or county.

You can usually find information on local permits through your city or county’s website, or by contacting the local planning or permit office.


5. Starting a Business in California: Summary Checklist

Starting a business in California can feel overwhelming, but when you break it down into manageable steps, it’s totally doable. Here’s a summary checklist to help you keep track of the main tasks:

  1. Choose your business structure. Decide if you're going to be a sole proprietor, LLC, corporation, or partnership.

  2. Get a business license. Apply for a business license in your city or county.

  3. File a Fictitious Business Name (DBA). If you're doing business under a name other than your own, file for a DBA with your county.

  4. Register for a seller's permit (if applicable). If you're selling taxable goods or services, register with the CDTFA for a seller's permit.

  5. Set up your tax accounts. Register with the IRS for an Employer Identification Number (EIN), and set up your state tax accounts with the Franchise Tax Board and Employment Development Department (EDD) if necessary.

  6. Check zoning laws and apply for local permits. Make sure your business location complies with local zoning laws and apply for any required local permits.

  7. Set up your business finances. Open a separate business bank account, and set up accounting software to track your income and expenses.


Final Thoughts

Starting a business in California requires following several steps, but once you’ve tackled each one, you’ll be well on your way to launching your venture. By making sure you’re compliant with all state and local requirements, you can avoid fines and setbacks—and focus on growing your business! California offers a huge market with plenty of opportunities, so it’s a great place to start your entrepreneurial journey. Good luck!

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