How to Get a Business License in Modesto, California

October 29, 2026

Modesto is the county seat of Stanislaus County and has about 219,700 residents, so the city has a large base of local businesses that pay its gross receipts charges. Whether you are opening a storefront downtown, consulting from a home office, or selling from outside the city, you need to know which charges apply to you, what you pay when you apply, and when each payment is due. This guide covers the Modesto business license, the quarterly mill tax, the Downtown Improvement District tax, and the state filings you complete first.

This guide is informational content, not legal or tax advice. Rates and rules change. Confirm current figures with the City of Modesto Finance Department, and consult a qualified attorney or CPA if your situation is complex.

Start With the State: California Has No General Business License

California does not issue a statewide business license. The Secretary of State issues none, and the CDTFA seller's permit is not a business license. Modesto's license sits on top of the state steps, so complete these first:

1. Form your entity. An LLC files Articles of Organization (Form LLC-1) for $70. A stock corporation files Articles of Incorporation for $100. Both file through bizFile Online. Check whether your name is available at the Secretary of State name availability page, and reserve it for $10 for 60 days if you need time.
2. Register with the CDTFA if you sell taxable goods. The seller's permit is free. The statewide sales tax is 7.25%, and Modesto's combined rate is 8.875%. Apply through the CDTFA sales and use tax page.
3. Register with the Employment Development Department if you have employees.
4. Add the licenses for your activity. Regulated trades and professions are licensed by state boards. Contractors, for example, need a Contractors State License Board license for any job of $1,000 or more.

Entity choice also carries ongoing costs. An LLC owes the $800 minimum annual franchise tax from its first year if it was organized or registered in 2024 through 2026. An LLC whose first taxable year begins in 2027, 2028 or 2029 pays $400 in year one under RTC 17941(g)(2), so confirm that amount with the Franchise Tax Board. The LLC fee is $900, $2,500, $6,000 or $11,790 once California-source total income reaches $250,000, $500,000, $1,000,000 or $5,000,000. The LLC also files a Statement of Information (Form LLC-12) for $20 within 90 days and every two years after that. A corporation files a Statement of Information (Form SI-550) for $25 every year. Both entity types must keep a California agent for service of process, and an LLC must also keep an office in California. California does not allow a domestic series LLC, and an LLC cannot render a licensed professional service, so professionals use a professional corporation.

The Three Modesto License Types

The City of Modesto classifies every business into one of three types, and your type determines your fee schedule:

• Commercial: a business based in a commercial location that is open to the public at regular hours.
• Home-based: a business operated from a residence.
• Outside business: a business based outside Modesto that does business in the city.

If you are unsure which type fits, call the Finance Department before you apply. Picking the wrong type changes your fees and can create a billing correction later.

What You Pay When You Apply

There is no single flat fee in Modesto. Your first-year cost depends on the month you start, your business type, a $100 deposit, and a $4 AB 1379 state fee. The license tax is prorated by month, so a business that starts in July pays the most and a business that starts in June pays the least.

Start month	Commercial license tax	Home or outside business license tax
July	$50.00	$75.00
August	$45.83	$68.75
September	$41.67	$62.50
October	$37.50	$56.25
November	$33.33	$50.00
December	$29.17	$43.75
January	$25.00	$37.50
February	$20.83	$31.25
March	$16.67	$25.00
April	$12.50	$18.75
May	$8.33	$12.50
June	$4.17	$6.25

Add the $100 deposit and the $4 state fee to the license tax. A commercial business that starts in July pays $154.00 in total ($50.00 plus $100 plus $4). A home-based or outside business that starts in July pays $179.00 ($75.00 plus $100 plus $4).

The Minimum License for Small Businesses

If your gross receipts are under $2,000 for the year, the minimum license applies. That is $35 per fiscal year for a commercial business and $20 per fiscal year for a home business. If your receipts pass $2,000, the city invoices you for the mill tax, the DID tax if your business is in the district, the deposit, and the difference in license fees. Track your receipts from the first month, because the jump can arrive as a single bill.

The Modesto Mill Tax: Quarterly Gross Receipts

The Modesto mill tax is a quarterly charge on gross receipts for the quarter. The rate depends on your business type:

Business type	Rate on quarterly gross receipts
Commercial retail	0.001 (one mill)
Commercial service	0.002
Home-based business	0.002

The city's own example shows the math. A commercial retailer with $5,000 in receipts at 0.001 owes $5.00. A service business or home business with the same receipts at 0.002 owes $10.00.

The city mails a quarterly Declaration of Gross Receipts. Report receipts for the quarter and pay by these due dates:

Quarter ending	Payment due by
September 30	October 31
December 31	January 31
March 31	April 30
June 30	July 31

The Downtown Improvement District Tax

Businesses inside the Downtown Improvement District pay an additional tax, the DID tax. It is calculated like the mill tax at half the rate: 0.0005 for commercial retail and 0.001 for commercial service. You pay it at the same time as the mill tax, and it is capped at $1,500 per business per year. The DID tax applies only to businesses inside the downtown district. It does not apply to businesses elsewhere in Modesto. Confirm your address with the Finance Department before you assume it does or does not apply.

The Deposit Refund

The $100 deposit is not a fee you keep paying. If you file quarterly, you can request a refund in writing after two consecutive full quarters paid on time. If you file annually, you can request it after a full calendar year paid on time.

Penalties for Late Payment

If the mill tax, DID tax or license fee is not paid or postmarked by the last day to pay, the city charges a penalty of 5% per month, up to 25%. Set calendar reminders for the four quarterly due dates. The penalty is capped at 25 percent.

Renewal Every June 30

Modesto business licenses do not renew on your anniversary. Every license expires June 30. The city bills the renewal on a Declaration of Gross Receipts for the period ending June 30, and payment is due by July 31. Plan your budget around that single annual date.

Home-Based Business Requirements

A home-based business must submit two documents with its fees: the Home Business License Application and the Home Business Agreement. The agreement covers the conditions you accept, such as the number of customers per day, vehicle activity, large family day care, and cottage food operations. Read the agreement closely before you sign, because those conditions follow the license.

Other Filing Requirements

If your primary industrial classification code appears on the State Water Board's list for the Industrial General Permit, you must submit a Stormwater Discharge Compliance Form (SB 205) with your application. If you plan to operate under a fictitious business name, file a Fictitious Business Name Statement with the Stanislaus County Clerk-Recorder within 40 days of starting. The statement must be published in a newspaper once a week for four weeks, and it expires after five years. The county sets its own filing fee, and the newspaper publication charge is separate, so confirm both with the clerk. The statewide statutory fee is $10 plus $2 per additional name or owner, but county charges run higher.

How to Apply in Modesto

1. Complete your state filings first, including the entity, the CDTFA seller's permit, and any state board license.
2. Choose your business type: commercial, home-based or outside business.
3. Calculate your first-year charges using the monthly table, and add the $100 deposit and $4 state fee.
4. Submit the application with the required forms. Home-based applicants add the Home Business License Application and the Home Business Agreement. Industrial classification codes on the State Water Board list also require the SB 205 form.
5. Calendar your quarterly mill tax due dates, your DID tax obligation if applicable, and your June 30 expiration.

For questions, contact the City of Modesto Finance Department at 1010 10th Street, Suite 2100, Modesto, California, or call (209) 577-5389. For free help with planning and recordkeeping, the California Small Business Development Center network offers advising across the state.

Next Steps

Modesto's license is simple once you know the three business types, the monthly proration, and the quarterly mill tax schedule. Start with the state entity and tax registrations, budget for the June 30 renewal, and keep your gross receipts records current so you never get surprised by a bill. This guide is informational, not legal or tax advice. Confirm every figure with the City of Modesto Finance Department before you pay, and talk to a qualified attorney or CPA about your specific structure.