Key Takeaways

  • A business tax certificate (also called a business license) is required for nearly all businesses in California, including home-based operations.
  • Certificates are issued at the city level, and you must obtain one for every city where you operate.
  • Fees typically range from $50 to $100, though larger businesses may pay more.
  • Businesses must apply within 15 days of starting operations to avoid penalties.
  • Requirements often include registering your entity, securing an EIN, verifying zoning, and obtaining a seller’s permit if taxable goods are sold.
  • Certificates must be renewed annually, and failure to renew may lead to fines or business closure.
  • Certain industries (e.g., food, tattoo, firearm sales) may require additional state or county-level permits.

A California business tax certificate is a necessity to operate any form of business in the state. This even applies to both home-based and small businesses. These business licenses are obtained at the city level, so it is important to file with your city whenever starting a new business, no matter how small. You may hear these licenses referred to by different terms such as:

  • California business tax certificates.
  • Business License.
  • Business tax certificate.

It is important to note that you will be required to obtain this documentation for each city that you open your business in. So for those who plan on opening several locations throughout the state, you will be required to obtain a license or certificate for each city.

These licenses also differ from business licenses granted by the county and state that allow you to conducted business in a specific area or for a specific product. Licenses held by companies such as gun dealers and tattoo artist will also have to have additional licenses regarding health and safety. These are required at the state level but also can be required by the county and the city.

How to Obtain California Licenses

In most cities in the state, you will have the ability to download, complete, and pay your fee for these licenses online. Fees average $50 to $100 and mainly depend on the size of your business based on the number of employees.

Most of the businesses in California will qualify as a small business with even special small business licenses and home-based business licenses in many states. To find the required forms to file your license you can perform a lookup on your city's website. You will be required to apply for your license within 15 days of starting your business. If you do not comply, you could be subject to fees and penalties. Licenses can take a couple of weeks to receive.

Local vs. State Business Licenses

It’s important to distinguish between local business tax certificates and licenses issued by the state or county. A business tax certificate is granted by the city where your business operates and is essentially proof that you are registered to pay local taxes. By contrast, some professions and industries—such as contractors, healthcare providers, or alcohol and tobacco sellers—may need additional state-issued permits. Counties may also require separate approvals for activities tied to health and safety.

When planning operations, business owners should confirm with their city clerk and county offices whether multiple layers of licensing are necessary.

Business Tax Registration Certificate

If you plan to form as an:

  • LLC.
  • General partnership.
  • Limited partnership.
  • Corporation.

You will need to incorporate your business with the state before filing for your business tax registration certificate. You will also need to decide on the location of your business and determine any issues that may arise with zoning. Failure to have a location before filing for your certificate will result in the need to refile once the location is obtained.

Before filing for your certificate, you will have to make sure that your desired business name is not under use by any other business in the state. After choosing your business name, you will need to obtain your free Employment Identification Number (EIN) from the IRS. This number will serve as your tax identification and will be required for hiring employees.

If the goods you plan to sell will be subject to California state sales tax, you will need to register your business with the State Board of Equalization. Once you obtain a valid seller's permit, the state of California does not require it to be renewed. Failure to obtain a seller's permit can result in fines up to $5,000.

Application Process and Required Information

Most California cities allow businesses to apply online or in person. The application generally requests:

  • Business name and physical address
  • Federal EIN or Social Security number (if sole proprietorship)
  • Business structure (LLC, corporation, partnership, or sole proprietorship)
  • Contact information and mailing address
  • Description of business activities
  • Seller’s permit number (if applicable)
  • Zoning or Certificate of Occupancy documentation

Many cities also require you to declare the number of employees or report estimated gross receipts, as fees are often calculated using these figures.

Registering Your Business

You can register your business in person with the Office of Finance or online. To register, you must be ready to provide:

  • Your federal Employment Identification Number.
  • The description of the activities your business will participate in.
  • Your legal business name.
  • The type of business you have chosen.
  • The start date of your business.
  • Your businesses mailing address.
  • The contact information for your business.
  • You sales tax number.
  • Any permits or licenses linked to the goods or services you plan to sell that may require additional paperwork.

Costs and Renewal Obligations

Business tax certificate fees vary by city, but they usually fall between $50 and $100 for small operations. Larger businesses with more employees or higher gross receipts may pay significantly more. Some municipalities also charge processing fees or surcharges for specific industries.

Certificates are typically valid for one calendar year and must be renewed annually. Renewal notices are generally mailed or emailed, but it is the responsibility of the business owner to keep the certificate active. Operating without a valid certificate can result in penalties, late fees, or even closure orders until the business complies.

Obtaining Your Business Tax Registration Certificate

After registering your business and completing your application, you will be issued your Business Tax Registration certificate. If you file for your certificate online, you will be given a temporary certificate that can be print and displayed at your business certify you are compliant. You should receive the permanent certificate within four weeks of the date of application.

Once obtained, you will need to use the number on this certificate to pay your city taxes each year. A notice will be sent every December with instructions on how to file.

Penalties for Non-Compliance

Failing to secure or renew a business tax certificate can lead to significant consequences. Cities may impose:

  • Monetary fines and late payment penalties
  • Additional administrative fees for reinstatement
  • Business closure until proper registration is completed

In some cases, unpaid fees may be referred to collections, affecting your credit or ability to expand operations. Business owners should also note that failing to obtain a certificate does not excuse them from paying taxes owed during that period.

Special Considerations for Home-Based and Online Businesses

Even if your business is home-based or primarily online, most California cities still require you to obtain a business tax certificate. Home-based businesses may also be subject to zoning restrictions, such as limits on foot traffic, signage, or parking. Online sellers may be required to register both locally and with the California Department of Tax and Fee Administration (CDTFA) if they sell taxable goods.

Entrepreneurs should review local ordinances to ensure compliance and avoid unexpected enforcement actions.

Frequently Asked Questions

1. Do I need a business tax certificate if I work from home?

Yes. Most California cities require home-based businesses to obtain a certificate, even if no customers visit your home.

2. How much does a business tax certificate cost in California?

Fees vary by city but typically range from $50–$100. Larger businesses may pay higher fees based on gross receipts or employee count.

3. How often must I renew my business tax certificate?

Certificates must generally be renewed every year. Failure to renew on time can lead to late fees and business closure.

4. Can one certificate cover multiple business locations?

No. You must obtain a separate certificate for each city where your business operates.

5. What happens if I don’t get a business tax certificate?

Operating without one can result in fines, late fees, or closure orders. Cities may also pursue collection of unpaid taxes.

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