A seller's permit and a business license are two different things, and neither one stands in for the other. The seller's permit is the state's sales tax registration. The CDTFA issues it, free, to businesses that sell taxable goods in California. The business license comes from the city where your business sits, and in some places from the county. The CDTFA answers the question on its own page: "No. You should contact your city and/or county business license department to obtain a separate business license."
Many businesses need both. Some need only one. This page sets the two side by side, then takes the common cases, with the City of Los Angeles as the worked example.
The two, side by side
| Seller's permit | Business license | |
|---|---|---|
| Who issues it | the CDTFA, the state's sales tax agency | your city, or in some places your county; in the City of Los Angeles it is the Business Tax Registration Certificate, the BTRC, from the Office of Finance |
| What it is for | charging sales tax on taxable goods and sending it to the state | doing business inside the city's limits; in Los Angeles it is also how the City's business tax is assessed |
| Who needs it | a business in California that sells or leases goods that would be taxed at retail, wholesalers and retailers alike; the CDTFA's general rule is three or more taxable sales in twelve months | in the City of Los Angeles, every individual or entity doing business in the City, from home included, sole proprietors included; other cities set their own rules |
| Who does not | a business that sells only services; a seller whose every retail sale goes through a marketplace registered with the CDTFA | in Los Angeles, a business physically in the City six days or fewer a year, and a short list of others the City names |
| What it costs | the permit is free; the sales tax is owed on your taxable sales whether or not you charged it | in Los Angeles, a tax on gross receipts; $100,000 or less a year owes nothing if you are registered, renew on time and claim the exemption on the renewal; other cities set a fee or a tax of their own |
| When it comes due | a return for every period the CDTFA assigns, monthly, quarterly or yearly, due the last day of the month after the period, even with no sales | in Los Angeles, a renewal by the last day of February every year, even in a year with no revenue; other cities set their own dates |
Each one has its own account, its own letters and its own calendar. Holding one tells the other agency nothing.
Do I need both?
Three common cases. The seller's permit rules are the same across the state. The license rules below are the City of Los Angeles's; other cities set their own.
- You sell goods: candles, clothing, food to go, jewelry. Both. The seller's permit from the CDTFA before the first sale, and the City's registration because you do business in the City. Most one-person sellers owe no City tax under the Small Business Exemption. The exemption is only for registered businesses that renew on time.
- You sell services only: design, cleaning, consulting, lessons. The City's registration, yes. The seller's permit, usually not, because you hand over nothing physical. Add a product, a printed book or a T-shirt, and the permit question comes back.
- You sell only through a marketplace. The City's registration, yes. The seller's permit, no, as long as every retail sale goes through a marketplace registered with the CDTFA, which collects and pays the tax. One sale at a market or from your own site, and you need the permit.
Which one comes first?
The seller's permit comes before the first taxable sale. The City of Los Angeles registration comes when you start doing business in the City; the City asks for your start date and issues a temporary certificate. The order on how to start a business in California is: the tax number from the IRS, then the seller's permit, then the city license.
Four things that get mistaken for one or the other
- A resale certificate. Not a permit. It is the form you give a supplier so you do not pay sales tax on inventory you will resell.
- An EIN. The business's federal tax number, from the IRS. Not a license and not a permit. In Los Angeles, a sole proprietor can register with the City using a Social Security number or an EIN.
- A DBA. A fictitious business name statement, filed with the county clerk. It is a name filing, not a license. Do I need a DBA in California? covers it.
- A trade license. Contractors, cosmetologists and other licensed trades carry a license from a state board. That license is about the trade. It does not replace the city license or the seller's permit.
What happens without each one
Without a seller's permit, a business that sells taxable goods still owes the sales tax on every taxable sale. At swap meets, flea markets and special events, the CDTFA says sellers making retail sales are required to hold a seller's permit. Sellers also give the operator their permit information, so the operator asks for it.
Without the City of Los Angeles registration, the City can look back up to eight years when it finds an unregistered business. The Small Business Exemption covers registered years only, so a business under $100,000 can still be taxed for the years it was not registered. The City's Voluntary Disclosure Program, for a business the City has not yet contacted, limits the look-back to five years and lets the City waive delinquency penalties.
Why this one is easy to miss
The seller's permit arrives first and looks official, so it feels like the license. At a market, the operator collects your permit information because the CDTFA requires it. Nobody collects the city certificate the same way, so it is the one that slips. And the City of Los Angeles does not use the word license at all. Its certificate is a tax registration. An owner looking for a license can hold the permit, pass the certificate by, and believe the list is complete.
The two sit on the small business compliance list as separate items, each with its own date. The permit has its own page: What is a California seller's permit?. So does the license: Do I need a business license in California?.
Where Khanna's comes in
If you want help reviewing your small business compliance, email us at daksh@khannasllc.com with your business and your city.
Common questions
I have a seller's permit. Does that mean I am licensed? No. The permit is the state's sales tax registration. Your city's license or tax registration is separate. In the City of Los Angeles it is required for any business activity inside the City.
I have a business license. Can I sell goods? The city license says nothing about sales tax. If you sell or lease taxable goods outside a registered marketplace, you need the seller's permit from the CDTFA before the first sale.
I sell at a weekend market a few times a year. Which do I need? The CDTFA's general rule is that three or more taxable sales in twelve months require a seller's permit. A seller at one location for less than 90 days can hold a temporary seller's permit instead. The city where the market is held may ask for its own license; ask the organizer what they check. The city where your business is based has its own rule too.
Does an LLC need either one? The LLC is a structure, formed with the Secretary of State. The seller's permit depends on what the LLC sells. The city license depends on where it does business. Both apply to an LLC the same way they apply to a sole proprietor.
Which one costs money? The seller's permit is free. The City of Los Angeles taxes gross receipts. A taxable business pays the minimum tax when it registers. A business at $100,000 or less that is registered, renews on time and claims the exemption owes nothing for the year. Other cities set their own fees.
General information for California owners as of October 2026, with the City of Los Angeles as the worked example. Khanna's is not a law firm or an accounting firm, and this is not legal or tax advice. The main rules above link to the CDTFA and City pages that state them. For your own situation, check with the CDTFA and your city's business tax office, or ask a lawyer or a CPA.