California Business Guide

    How to Start a Business in California (CA) — 2026 Guide

    Everything you need to register, license, and launch your business in California. Step-by-step guide with current fees, tax rates, and compliance requirements.

    Starting a service business in California comes down to four things: picking a structure, registering with the state, getting licensed for your trade, and setting up a way to bill customers. Filing an LLC in CA costs $70, ongoing reporting is $20 biennially (statement of information), sales tax is 7.25% + local, and personal income tax runs 1%–13.3%. Below is the full sequence, the fees you should budget for, the licenses most trades need, and the deadlines that catch new California owners off guard.

    Most new registrations come out of Los Angeles, San Diego, San Jose and the rest of California — local business licenses are issued at the city or county level, so check yours after the state filing clears.

    What it costs to start a business in California

    ItemCA cost
    LLC / entity filing (one-time)$70
    Annual / periodic report$20 biennially (Statement of Information)
    Federal EIN (IRS)Free
    Sales tax registrationTypically free
    Trade / professional licenseVaries by trade
    Local business licenseSet by city / county

    Fees change — confirm current amounts with the CA Secretary of State and the California Department of Tax and Fee Administration.

    Realistic timeline for a California launch

    Week 1

    Choose your structure and file with the CA Secretary of State ($70). Get your free EIN from the IRS the same day.

    Week 2

    Register for California sales tax with the California Department of Tax and Fee Administration, then open a business bank account under the registered name.

    Weeks 2–4

    Apply for your trade license and local business license. This is usually the longest step: Seller's permit (free); City business license ($50–$500).

    Weeks 3–4

    Get general liability insurance (and workers' comp before your first hire), then set up estimates and invoicing so you can bill the day you're cleared to work.

    California Business Quick Facts

    LLC Filing Fee

    $70

    Annual Report

    $20 biennially (Statement of Information)

    Sales Tax

    7.25% + local

    Income Tax

    1%–13.3%

    Steps to Start a Business in California

    1

    Choose your business structure

    2

    Register with the CA Secretary of State

    3

    Get a federal EIN

    4

    Register with the Franchise Tax Board

    5

    Get a seller's permit from the CDTFA

    6

    Obtain city/county business licenses

    7

    Get workers' comp insurance if hiring

    8

    Open a business bank account

    Required Licenses & Permits

    Seller's permit (free)
    City business license ($50–$500)
    Contractor's license (CSLB)
    Professional license

    California Business Tips

    California has an $800/yr minimum franchise tax for LLCs

    Use CalGold to find all permits needed for your business type

    Get a seller's permit before collecting sales tax

    Many cities require separate business tax certificates

    Official Resources

    Frequently Asked Questions

    Is California expensive to start a business?

    Filing is only $70, but the annual $800 franchise tax makes it pricier than other states.

    Do I need a seller's permit?

    Yes, if you sell taxable goods or services. It's free from the CDTFA.

    How long does it take to start a business in California?

    Online LLC filings with the CA Secretary of State are typically processed in a few business days, and an EIN from the IRS is issued immediately online. Trade licensing and local permits usually take longest — plan on two to six weeks before you're fully cleared to work, depending on your trade.

    Do I need an LLC to start a service business in California?

    No — you can operate as a sole proprietor in California and still invoice customers legally. An LLC ($70 to file, $20 biennially (statement of information)) separates your personal assets from business liability, which matters most once you're on customer property, hiring help, or signing contracts.

    Do I have to collect sales tax in California?

    California sales tax is 7.25% + local. Materials and goods are commonly taxable, while labor treatment depends on the type of work, so bill parts and labor as separate lines and register with the California Department of Tax and Fee Administration before you start collecting.

    How do I get paid once my California business is registered?

    Open a business bank account under the registered name, then invoice from a tool that applies CA tax per line item and accepts cards. Glo Invoice sends invoices by text with a one-tap pay link, and Tap to Pay lets you charge on site before you leave the job.

    Invoicing guides by trade in California

    Cities in California

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