Besides being exciting to start a business in California, before you start doing business, you must obtain a California business license. This document gives you a legal right to run your business in the state. Whether you are starting a small retail store or opening a technological company, it is best to get the right license to keep your company legal and reputable. In this paper, we will discuss all you need to know about obtaining a business license in California – step by step.
1, What a California Business License is.
California business license is a government issued license which enables people or businesses to operate within the state legally. It serves as evidence that your business is within the local and state laws. Virtually all kinds of enterprises operating at home or large companies need one – home-based services or big corporations. The precise nature of the license will differ depending on your business and the location of your operation.
2, Identify the Presence of a State or local license.
California does not grant one business license that cuts across all businesses. Rather they are typically dealt with at the city or county level. As an example, in case you intend to work in Los Angeles, then you will have to seek a license with the Los Angeles Office of Finance.Other businesses including those dealing with health, food or construction might also need some extra state permits which may be issued by the following departments:
- California Department of Public Health.
- Contractors State License Board.
- Department of Consumer Affairs.
The initial step to compliance would be to find out what level of government controls your industry.
3, Register Your Business Name
Register your business name before you apply to have a California business license. You’ll need to:
- Select a distinctive name of the business that is not in use.
- Check the availability of names on the California Secretary of state web site.
- Register a doing business as (DBA) name in case you are running a business under another name other than your own name.
An open registered name will make you credible and prevent a court battle in the future.
4, Get a Federal Tax ID Number (EIN).
You would require an Employer Identification Number (EIN) or you are planning to employ workers or open a business bank account. The IRS issues this number and this serves as your social security number in the business. It is available at no cost by applying on the IRS web site. An EIN is frequently mandatory prior to obtaining a California business license since it serves to denote your company to the authorities so as to enable them to impose taxes. The exact type of license will vary based on your business and the area that your operation will be located.
5, Finalize Process of Application.
After registering your business and obtaining your EIN, you are now ready to apply to the license. The city application system is online in most of the California cities, but you can also go to your local city hall. The application normally requires:
- Business name and address
- Owner’s contact details
- Type of business activity
- EIN/Social Security Number.
- Estimated annual revenue
Make sure that you give the right information. One wrong move can postpone your California business license approval.
6, Pay the Required Fees
The cost of a California business license varies with the city or type of business. The average fees are between 50 and 150 dollars, and bigger and specialized companies might pay higher. Annual renewal fees are also charged in some local governments. For instance:
- Los Angeles: $50-150 on revenue.
- San Francisco: the average price is 100 dollars on the majority of small enterprises.
- San Diego: roughly $35-$80
It is always good to have evidence of payment as such may be required in renewal or auditing.
7, Re-New and Re-New Your License.
Once you have your California business license, you are not finished yet. Majority of licenses are supposed to be renewed on an annual or even bi-annual basis. It is important to update it so as not to face fines or business suspension. Here’s what to remember:
- Have due dates of renewal.
- Modify your license in case of a change of address or ownership of your business.
- Make payments at renewal or be violated.
Renewal of your license may result in fines or even shutting of your enterprise.
Additional Tips for Success
Keep Records in place: Keep copies of your license, tax papers and registration forms.
Consult Local Authorities: A California business license may have various regulations depending on the city in which it will be operated, and it is always important to check.
Visit State Resources: The California Business Portal provides a guide and Internet resources to new business owners.
Growth Plan: As you take your business to other cities or industries, you might have to get new permits or renew your licenses.
Conclusion
One of the important steps of transforming your business idea into a legal and sustainable business is to get a California business license. The above seven steps including researching requirements, renewing your license, etc. will ensure your business runs and does not get in trouble with the California law. It will not only save you the legal inconvenience of going through the process over and over again, but it will also allow you to develop a reliable and professional reputation of your brand.
