California Business License: How to Get One & What to Know

Statistics show that over 627,000 new businesses are started each year. Have you ever considered starting your own business? Are you overwhelmed with the long to-do list of things you need to do to get started? What is most important to address first? 

While thousands of people start businesses, there are also many businesses that fail each year. Properly setting your business up for success ahead of time can help to prevent this.

You may be doing research and get overwhelmed by the long list of items that you need to do before you can make your first sale. It is important to take the building process one step at a time and complete the most important things first. Keep reading to learn about how to get a business license in California and some of the items that you need in order to do so.

How to Get a California Business License

The first step to getting a California business license is deciding where your business will be located. Are you going to have a storefront location? Will you rent an office space? Are there shared team spaces that you and your team will work from? Even if your business will be remote, you will need a physical address under which to list it.

Familiarizing yourself with the companies in La Jolla will help you see what area that you would fit into. These companies are also a great network to start with as you begin your business journey. Business owners can help each other in many different ways while still being competitive in the same market. You can register for a California business license by going through the county that you are located in. 

What is a Business License in California?

A business license in California is the permit that allows you to do business within the state and more specifically, the county that you are located in. This is very important because all businesses need to comply with the state regulations for tax reasons. Starting a business without a license could lead to many problems, as well as being unlawful. 

If you have all of your information ready, you can apply online for a California business license. Think of this as the very first step in your business that has to be completed before you can do anything else. 

How Much is a Business License in California?

What is this going to cost you? How much is a business license in California? While it is an important question, it is a necessary step for you to generate revenue within your business. Typically, the cost is between $50 and $100. This can vary depending on your location and other details about your business. 

The purpose of your California business license is to inform the state that you will be performing a service or selling goods in a specific area. Part of your revenue will go toward the taxes and they need to be able to track that amount. In order to track and manage your revenue as your business expands, there are businesses that specialize in revenue cycle management to help you attain the most financial benefits and not lose money to poor management practices. Businesses that aren’t properly managing their revenue to pay their employees, the bills, and future growth can get into trouble because they aren’t sure where the revenue is going or how much there is to start with.

What You Need to Apply for a California Business License

Now that you are familiar with the cost, you may be wondering what you need in order to apply for the license. The first thing that you will need in order to apply is all of the contact information for the business. Once you have that, you need to declare the type of business that it will be. Is it a sole proprietor, LLC, partnership, or corporation. Once you have decided that, you will need to list your social security number for a sole proprietorship and Federal ID Tax number if you are any of the other forms of business. 

Another important part of the process is that you will need to inform them of the type of business that you will be doing, along with the number of employees that you will hire and your expected annual sales. The amount of employees and annual sales can fluctuate, especially in the startup stage of your business. It is important to give an honest estimate of these areas and not try to overestimate what may or may not happen. It may take research to find out what businesses like yours would typically reach in annual sales within their first year. Talking to other business owners, if they are open to sharing, can also give you an idea of what to list in this area of the application.

Do You Need a California Business License?

Yes. The simple answer is that you will need a California business license to operate any type of business within the state. Taking this step in your business is a decision to officially enter the space and begin producing revenue. You can create jobs in your area while selling goods or providing services to a growing number of clients for years to come.

When you are getting started, you may need to outsource services or get additional help until you build a team that can support you. There are many tech solutions for San Diego startups that can help you get started. Taking advantage of these can allow you to run your business without an accounting or tech department for example until you are able to hire the right people to do so down the road.

Build a Business Today

Now that you have read about the details around how to obtain a business license in California, you can get started with this process today. Getting informed about the requirements in your city and county will give you a better idea of what you need to do next. Once you have this taken care of, you can start making money and truly building your business for the future. 

About the banner photo: The banner photo for this article is from the @pannikinlajolla account on Instagram. Pannikin is a small business located in La Jolla, and their coffee tends to fuel our editorial staff.

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