Starting a service business in California

Form your business in California

File Articles of Organization (Form LLC-1) with the Secretary of State through bizfile Online or on paper. The Secretary of State's fee page lists $70 for this filing in October 2026. Within 90 days of forming, file a Statement of Information (Form LLC-12), $20, which lists your managers or members and your agent for service of process. Since August 1, 2026, the Secretary of State requires web user access to file a Statement of Information online. Separately, the Franchise Tax Board gives a new LLC until the 15th day of the 4th month after it files with the Secretary of State to pay its first $800 annual tax.

Ongoing state filings

Two recurring obligations. First, the Statement of Information (Form LLC-12, $20 as listed in October 2026) is due every two years in the filing window based on your original registration month; failing to file can bring penalties assessed by the Franchise Tax Board and suspension. Second, every LLC doing business or organized in California pays the Franchise Tax Board an $800 annual tax by the 15th day of the 4th month of its tax year. An LLC with California income over $250,000 also owes an LLC fee, estimated and paid by the 15th day of the 6th month. The first-year exemption from the $800 tax only covered tax years beginning in 2021 through 2023.

Using a business name (DBA)

Fictitious business names are filed with the county clerk where your principal place of business is located, not with the Secretary of State. Under Business and Professions Code § 17917, within 45 days of filing you must publish the statement in a newspaper of general circulation in that county under Government Code § 6064, Fees and newspaper rates vary by county, so check your county clerk's fictitious business name page.

Not sure whether you need an LLC at all? Read LLC vs sole proprietor for contractors, then get your free EIN from the IRS.

Licensing for service trades

The Contractors State License Board (CSLB) licenses construction work statewide. Its licensing guide says any construction work valued at $1,000 or more in labor and materials must be done by a licensed contractor, splitting a job to stay under the limit is illegal, and if the work needs a permit or you have workers, a license is required at any price. Licenses are issued by classification (for example C-20 warm-air heating, ventilating and air conditioning, or C-39 roofing), and an active license needs a $25,000 contractor's bond, fingerprints for every owner and officer, and exams unless you qualify for a waiver. Pest control is licensed separately by the Structural Pest Control Board. Cities and counties issue their own business licenses or tax certificates, so check every city you work in.

• Contractors State License Board (CSLB): Contractor licenses by classification for construction, home improvement and specialty trades on jobs of $1,000 or more
• Structural Pest Control Board: Structural pest control companies and operators

Workers' compensation

The Division of Workers' Compensation states that California employers are required by law to have workers' compensation insurance even if they have only one employee. You buy it from a licensed insurance company or from the State Compensation Insurance Fund (State Fund), or self-insure with state approval, which the Division says requires a net worth of at least $5 million and net income of $500,000 a year. Contractors face an extra rule through the CSLB: its May 2025 licensing guide says C-8 concrete, C-20 HVAC, C-22 asbestos abatement, C-39 roofing and C-61/D-49 tree service licensees must carry workers' compensation whether or not they have employees. Other licensees with no employees file an exemption certificate instead. Confirm the current rule with CSLB when you apply.

More on coverage: business insurance for contractors.

Sales tax on services

California's sales and use tax is administered by the California Department of Tax and Fee Administration (CDTFA). For construction work, the CDTFA's Publication 9 says contractors are generally the consumers of the materials they furnish and install, and on a lump sum contract they always are: tax is paid on the contractor's cost of materials rather than charged to the customer. On a time and material plus tax contract, or one that transfers title to materials before installation and states their price separately, the contractor becomes the retailer of those materials. If you also sell products to customers, you need a seller's permit from the CDTFA. Read Publication 9 before you write your contract templates, because the contract type decides who owes the tax.

Recording business calls in California

Penal Code § 632 makes it a crime to record a confidential communication, by phone or in person, without the consent of all parties, with fines up to $2,500 per violation. A recording announcement at the start of every call ("this call may be recorded") lets the caller hang up or continue, which is the standard way California businesses handle it; see our call recording guide before you turn on recording or an AI receptionist.

See our guide to recording business calls before you turn on call recording or an AI receptionist.

How the seasons shape the work

California's climate varies more than any other state's, so seasons depend on where you work. Coastal and Southern California markets support year-round exterior work, while wildfire season from summer into fall brings defensible space clearing, smoke cleanup and air filtration demand, and winter atmospheric river storms drive roof, gutter and drainage calls. The Central Valley's hot summers push air conditioning work, and the Sierra and far north get real snow.

Statement of Information deadlines are easy to miss

The Secretary of State sets a six-month filing window for each Statement of Information that ends with your original registration month. A business registered in January, for example, files from the first day of August through the last day of January. Put the window on your calendar when you form, because penalties for missing it are assessed by the Franchise Tax Board.

Then set up the back end that gets you hired

The paperwork makes you legal. Customers still have to find you, reach you and pay you. Before your first job, set up a business phone number, email on your own domain, a Google Business Profile, a simple website, and a way to send quotes and take card payments. The launch checklist lays out the order.

California questions