How to Start a Business in California

Choose a Business Structure

California recognizes the same general structures as other states: a sole proprietorship or general partnership, which carry personal liability for the owners, or an LLC or corporation, which are separate legal entities that generally limit the owners' personal liability. See our guide on how to choose a business structure for the tradeoffs, and know that California generally bars LLCs from rendering most licensed professional services (law, medicine, accountancy, and similar fields), so licensed professionals typically use a registered limited liability partnership or a professional corporation instead.

Register a Fictitious Business Name if You Need One

If the business will operate under a name other than the owner's own legal name, or other than an LLC's or corporation's exact registered name, California requires a Fictitious Business Name Statement filed with the county clerk-recorder in the county of the business's principal place of business. The statutory base fee is $10 for the first name and owner, plus $2 for each additional name or owner on the same statement, though individual counties can charge more to cover their own filing costs. Most counties also require newspaper publication of the statement within 30 days of filing.

File Formation Paperwork if You're Forming an LLC or Corporation

An LLC forms by filing Articles of Organization (Form LLC-1) with the California Secretary of State for $70, online through bizfileOnline or by mail; a corporation instead files Articles of Incorporation. Processing time depends on current filing volume, and the Secretary of State offers expedited service for an extra fee if you need faster turnaround. A sole proprietorship or general partnership using the owners' own names typically skips this filing entirely. See our California LLC guide for the full LLC-specific filing steps, the registered agent requirement, and the Statement of Information due within 90 days of registering.

Get an EIN and Register for State Taxes

Apply for a free EIN directly from the IRS once the business is formed. If the business sells taxable goods or certain services, register for a Seller's Permit with the California Department of Tax and Fee Administration (CDTFA); there's no fee for the permit itself, though a security deposit may be required. An LLC's profits generally pass through to the members' California returns by default, while the LLC itself still owes California's separate $800 annual tax to the Franchise Tax Board.

Register as an Employer Before You Hire

Before paying any employees, register with California's Employment Development Department (EDD) within 15 days of paying more than $100 in wages in a calendar quarter; EDD handles both unemployment insurance and state income tax withholding registration in one place.

Check Local Licensing

Beyond state-level registration, most California cities and counties require a general local business license, and specific industries may need additional state or local licenses. Check with your specific city or county, since these requirements and fees are set locally rather than by the state.

The $800 Annual Tax Is an LLC- and Corporation-Specific Cost

California's $800 annual tax applies to LLCs and corporations organized in or doing business in the state; it's a separate charge from the Secretary of State's own filing fees and applies regardless of whether the business made money that year. Factor it into your ongoing budget from the start if you're forming an LLC or corporation in California, not just the one-time formation cost.

A Fictitious Business Name Doesn't Replace Entity Formation

Filing a Fictitious Business Name Statement lets a sole proprietor, partnership, LLC, or corporation operate under a different name; it doesn't create a separate legal entity or offer liability protection by itself. If liability protection matters, that comes from forming an LLC or corporation, not from the name filing.

Professional Licensing Can Limit Which Entity You Can Use

If your work requires a professional license under California's Business and Professions Code, confirm whether an LLC is even an option before choosing a structure, since California limits LLCs in most licensed professions to a short list of specific fields.

County and City Rules Add to the State-Level Checklist

Because fictitious business name fees, local business licenses, and some industry permits are set at the county or city level, the total cost and paperwork to start a business in California varies depending on exactly where the business is located, not just which structure you choose.

This Is Not Legal or Tax Advice

Which structure, licenses, and tax registrations fit a specific business depend on its industry and location within California. Talk to a tax professional about the $800 annual tax and any additional LLC fee, and confirm local licensing with your specific city or county.