Small Business · Checklist · Reviewed July 14, 2026
Business entity, seller's permit, and local license check
Put the setup papers in order. The business structure, tax ID, seller's permit, and local approvals are separate jobs.
The short version
A business usually needs several separate records
Choose the ownership form first. A sole proprietor usually does not file an entity with the Secretary of State; an LLC or corporation does. For a California LLC, that currently means $70 to form and a $20 Statement of Information within 90 days and every two years. It also generally owes an $800 annual state tax. Two more layers sit apart from the entity: a seller's permit is free and is usually needed to sell or lease taxable goods. Even then, the address can still need a city or county business license and zoning approval.
What changes the answer: An EIN, fictitious business name, seller's permit, and local license do not create an LLC. Forming an LLC does not approve the address, the work, or taxable sales.
The painful mistakes here are order-of-operations mistakes. People form the entity, sign the lease, and then learn the address or the trade needed its own approval first. Work the list in order.
How it works
The ownership form comes first
A sole proprietorship is one owner doing business without a separate state entity. A general partnership has two or more owners. It may exist without an entity filing. In both forms, the owners can be personally responsible for business debts and claims.
An LLC or corporation is formed with the Secretary of State. It has its own filing duties. It can separate some business risk from the owners. But the entity, contracts, money, insurance, and conduct must be handled the right way. Its tax treatment may not match its state-law name.
A California LLC has early and yearly costs
The Secretary of State currently charges $70 for California LLC Articles of Organization. The first Statement of Information is due within 90 days and costs $20. Another statement is due every two years, even when nothing changed.
The Franchise Tax Board generally charges an LLC an $800 annual tax. It is due by the 15th day of the fourth month after the tax year begins. A calendar-year LLC usually reaches that date on April 15. An added LLC fee can apply when total California income reaches the state fee levels. Formation is only the first bill.
The public name and tax number do different jobs
A business using a name that fits the state's fictitious-name rules files with the county clerk. A newspaper notice may also be needed. When it is, state law generally gives 45 days after filing to start it. The county explains the filing, newspaper, renewal, and proof steps.
An EIN is the federal tax number. A business may use it for payroll, banking, or an entity tax return. The IRS application is free. An EIN does not register the business with California. It also does not create trademark rights or replace a seller's permit.
A seller's permit follows the sale
A California business generally needs a seller's permit to sell or lease goods that are taxed at retail. Furniture, clothes, and toys are common examples. Many made-to-order physical items count too. A wholesaler can also need the permit.
CDTFA does not charge for the permit. It may ask for a security deposit in some cases. A seller at one site for 90 days or less uses the short-term path. The permit must be shown at the business. Each site or short-term sale may need its own CDTFA account setup.
The address creates local duties
A city or county can require a local business license or tax paper. The same address may need zoning approval. It may also need a home-work, building, fire, sign, health, or water permit. CalGOLD helps find the offices. It does not issue their permits.
Use the government that controls the real site. A mailing city may not govern an address outside city limits. Check before signing a lease. Check before giving an opening date too. A type of business may be legal but still barred at one site.
The first employee adds a new stack
A business generally enters the state payroll system after paying more than $100 in wages in a calendar quarter. It must register with EDD within 15 days after that point. The federal EIN is one number. The California payroll account is another.
California also requires workers' compensation coverage when a business has one or more employees. The first worker can trigger other duties too. These include wage notices, payroll records, paid sick leave, safety steps, and new-hire reports. Calling a worker an independent contractor does not settle the worker's legal status.
First moves
- 1
Write down the owner, business name, address, and opening date. Add what you will sell or do and whether you will hire workers.
- 2
Choose the business structure before filing. A sole proprietorship, partnership, LLC, and corporation work in different ways. Taxes and filing duties differ too.
- 3
For an LLC, corporation, or limited partnership, use the Secretary of State checklist and bizfile service.
- 4
Apply for an EIN directly with the IRS if you need one. The IRS application is free.
- 5
For goods that are usually taxable when sold or leased, check CDTFA registration. A seller's permit has no fee, but CDTFA may ask for security in some cases.
- 6
Check the rules for the actual address. The city or county may handle licensing, zoning, building, fire, and health. CalGOLD finds offices but does not issue permits.
- 7
Hiring workers adds more steps. Check EDD payroll registration, wage and safety rules, and workers' compensation before the first workday.
Watch for
- 1
An LLC and an EIN are different records. So are a seller's permit, business name filing, and local license.
- 2
The mailing city can differ from the government that controls zoning and licenses at the address.
- 3
A seller's permit is usually for taxable sales or leases of goods. A service business can still have taxable sales or other duties.
- 4
A fictitious business name filing does not create an LLC or settle trademark rights.
- 5
A home business can still need local approval. Landlord, HOA, zoning, fire, or health rules may also apply.
- 6
Do not pay a third-party website for an EIN when the IRS provides the application directly and without a fee.
Official sources
Where to confirm this
Use the source that matches the step you are on. Current forms, fees, deadlines, and agency decisions can change after this page is reviewed.
Use this as a map. It does not decide your rights, tell you what to file, or say someone broke the law. If a deadline, denial, eviction, firing, injury, tax bill, permit fight, or insurance dispute is on the line, use the official source or a licensed professional.