How to Start a Home Care Business in California: CDSS License, $5,603 Fee, $1M/$3M Insurance, $10,000 Bond

If you plan to send caregivers into clients' homes in California, the license you need is a Home Care Organization (HCO) license issued by the California Department of Social Services (CDSS). An HCO arranges non-medical in-home help, and the rules sit in Health and Safety Code (HSC) section 1796.10 and the sections that follow it. This guide covers the steps in the order that matters most: the license and what it costs, the insurance and bond you must prove, the aides you hire and register, and the duties you carry after you are licensed.

This article is informational content, not legal or tax advice. Fees and rules change, and several items below must be confirmed with the agency that sets them. Before you sign a lease, hire staff or buy a policy, speak with a California attorney and a certified public accountant (CPA) who works with service businesses.

What an HCO License Covers and What It Does Not

An HCO may arrange non-medical help such as companionship, meal preparation, bathing and grooming help, light housekeeping and rides. An HCO cannot provide skilled nursing, injections or any other medical care. If your business plan includes clinical services, you are describing a different kind of operation with different licensing requirements.

Do not confuse the HCO license with a home health agency license. Home health agencies are licensed by the California Department of Public Health, and HSC 1796.17(b) states that an HCO does not include a licensed home health agency or hospice. Each HCO is separately licensed under HSC 1796.17(a), so an owner who runs two agencies needs two licenses.

Materials and Information to Gather First

Pull these items together before you start. A missing item is the most common reason an application stalls.

• A business name that meets Secretary of State name rules, plus a filed formation document (Articles of Organization on Form LLC-1, or Articles of Incorporation)
• A California registered agent and, for an LLC, a California office address
• Proof of general and professional liability insurance with limits of at least $1,000,000 per occurrence and $3,000,000 in the aggregate
• Proof of a workers' compensation policy that covers your affiliated home care aides, including the policy number, dates and carrier
• An employee dishonesty bond of at least $10,000 that includes third-party coverage
• Background and disclosure information for every owner, officer, director and general partner
• A record of any past or present role as administrator, general partner, officer or director, or as a 10 percent or greater owner, of a community care facility, residential care facility, residential care facility for the elderly, child day care facility, day care center, family day care home or another HCO
• A record of any related license revocation or discipline
• Funds for the $5,603 initial license fee

Step-by-Step: Starting Your California Home Care Agency

Step 1: Form your business entity with the Secretary of State

The HCO license belongs to a legal entity, so form that entity first. Most owners choose an LLC or a corporation. Start by searching your proposed name in the Secretary of State's business search. An LLC name must contain “limited liability company,” “L.L.C.” or “LLC” (“Limited” may be “Ltd.” and “company” may be “Co.”). It may not contain “bank,” “trust,” “trustee,” “incorporated,” “inc.,” “corporation” or “corp.” A corporation name needs no designator. If you need time to finish your paperwork, you can reserve an LLC name for $10 for 60 days through the name availability page. The reservation cannot be renewed for consecutive periods.

The Articles of Organization (Form LLC-1) cost $70. Articles of Incorporation cost $100. File through bizFile Online. Online filings are normally processed within about 5 business days or less, while paper filings take 10 or more business days. If you need speed, the Secretary of State offers expedited options: 24-hour for $350, same-day for $750 (received by 9:30 a.m.), and 4-hour for $500 (drop-off only, precleared).

Name a registered agent for service of process. The agent must be either an individual who lives in California or a corporation that holds a Corporations Code 1505 certificate. An LLC must also keep an office in California, though that office does not have to be where business activity happens. Pick an agent who will receive legal papers quickly and forward them the same day.

Step 2: Buy the insurance and bond before you apply

Insurance and the bond are not paperwork you can finish later. You must prove them with your application, and you must keep them in force after licensing. Ask your broker to issue certificates that name the exact legal entity on your formation documents, show limits at or above the minimums, and state the policy dates.

Carry general and professional liability coverage of at least $1,000,000 per occurrence and $3,000,000 in the aggregate. Buy workers' compensation coverage for every affiliated home care aide, because the aides are employees of your agency. Add an employee dishonesty bond of at least $10,000 that includes third-party coverage. Ask your broker to confirm in writing that the bond includes the third-party coverage, since a bond without it does not meet the requirement.

Step 3: Prepare owner disclosures and background information

CDSS reviews the background of the people behind the agency, so collect these details before you file. List every owner, officer, director and general partner. For each person, disclose any past or present role as administrator, general partner, officer or director, or as a 10 percent or greater owner, of a community care facility, residential care facility, residential care facility for the elderly, child day care facility, day care center, family day care home or another HCO. Disclose any related license revocation or discipline. Confirm that the agency owes the department no fees or penalties, because outstanding amounts are a licensing condition.

Step 4: Submit a complete application with the $5,603 license fee

The initial HCO license fee is $5,603 under HSC 1796.49. That fee covers a 24-month license and is nonrefundable. Renewal is also $5,603 for each two-year period, plus any other reasonable fees the department may prescribe. The fee section of the statute is written to end on January 1, 2029, so confirm the current amount with CDSS on the day you apply. Review the full package line by line before you pay, because the fee cannot be recovered if the application is returned or denied.

Step 5: Pass the background examination and complete orientation

After CDSS reviews your file, the licensing process includes a background examination and a department orientation. Make sure your application answers match the documents you submitted. If a disclosure on the form does not match a record CDSS finds, expect delays while the discrepancy is resolved. Plan your opening date around the orientation so that it does not become the bottleneck.

Step 6: Register with the tax agencies and your city

Your state and local registrations run alongside the license, and most take little time. Register with the Employment Development Department (EDD) because your aides are employees of the agency. Register with the California Department of Tax and Fee Administration (CDTFA) if you sell taxable goods, and apply for the seller's permit through the CDTFA sales and use tax page. The seller's permit is free. Care services are generally not subject to sales tax, but ask the CDTFA about any supplies or products you sell to clients. Sales tax is 7.25% statewide, and with district taxes, city rates run from 7.25% to 11.75%. If you buy goods for resale, the resale certificate has no required form, but keep your records.

For the franchise tax, an LLC organized or registered in California from 2024 through 2026 owes the $800 minimum annual franchise tax from its first year. An LLC whose first taxable year begins in 2027, 2028 or 2029 may pay a different first-year amount, so confirm it with the Franchise Tax Board (FTB). A newly incorporated or qualified corporation, or an S corporation, owes no $800 minimum in its first taxable year. An LLC also owes an LLC fee of $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, respectively.

California has no general statewide business license. The Secretary of State issues no licenses or permits, and the seller's permit is not a business license. Most cities charge a local business tax or registration certificate. Of the 483 cities, 445 report revenue from one, and there is no common formula, so the answer depends on where you operate. Counties license only regulated activities. Check with your city's tax or business license office, and ask your county whether anything applies to your service area, before you open.

Step 7: Recruit, screen and register your aides

Your affiliated home care aides must be adults, 18 or older, employed by your HCO, and listed on the CDSS home care aide registry (HSC 1796.12 and 1796.21). Before an aide is placed with a client, you must confirm the aide is cleared on the registry, which includes a fingerprint-based background check (HSC 1796.43 and 1796.24). CDSS sets the registry registration fee at actual cost (HSC 1796.48), so check with CDSS for the current aide registration fee before you budget for it.

Tuberculosis screening is a separate deadline. An aide hired on or after January 1, 2016 must be examined within 90 days before employment or within seven days after it, and then every two years after a negative result (HSC 1796.45). Track these dates in a spreadsheet, not in memory.

Under HSC 1796.44, each aide needs five hours of entry-level training before working with a client. Two of those hours cover orientation, and three cover safety, emergency procedures and infection control. Each aide then needs five hours of training every year. Online delivery is allowed. That section is written to expire on January 1, 2027, so check with CDSS for the training rule in force when you hire.

If you plan to refer independent aides instead of employing them, ask CDSS directly whether that model falls outside the license. HSC 1796.17(b) contains an employment agency exclusion, but that question belongs to the department, so do not assume your model fits it.

Plan aide pay carefully as well. The state minimum wage changes each January 1, so confirm the current rate with the Labor Commissioner before you set pay rates and build in room for the next change.

Step 8: Maintain your license and meet ongoing duties

Licensing is not a one-time event. Under HSC 1796.42, you must post your license and business hours where clients and aides can see them. You must keep the workers' compensation policy, bond and insurance in force at all times. You must also report suspected elder abuse, dependent adult abuse or child abuse as the law requires. Put these duties on the same compliance calendar as your entity filings and tax deadlines.

Recurring Costs and Deadlines at a Glance

Item	Cost	Timing	Agency
Articles of Organization (LLC-1)	$70	Filed before you operate	Secretary of State
Articles of Incorporation	$100	Filed before you operate	Secretary of State
LLC name reservation	$10	Lasts 60 days, not renewable for consecutive periods	Secretary of State
LLC Statement of Information (LLC-12)	$20	Within 90 days of filing, then every two years in the six-month window ending on the last day of the anniversary month	Secretary of State; FTB assesses a $250 penalty after a Secretary of State notice if missed
Corporation Statement of Information (SI-550)	$25	Within 90 days of filing, then every year	Secretary of State
HCO initial license	$5,603 (24 months, nonrefundable)	With your application	CDSS
HCO renewal	$5,603 (two years, nonrefundable) plus other prescribed fees	Every two years; confirm the current fee	CDSS
Aide registry registration	Set at actual cost	Before each aide is placed	CDSS; confirm the current fee
Fictitious business name statement	$10 plus $2 per additional name or owner (statutory); counties charge more; newspaper publication is extra	Filed within 40 days of starting; published once a week for four weeks; expires after five years	County Clerk-Recorder
LLC minimum franchise tax	$800	Annually, from the first year for LLCs organized or registered 2024 through 2026	Franchise Tax Board

Tips for a Smoother Launch

• File online through bizFile Online. Paper filings take 10 or more business days, while online filings are normally processed within about 5 business days or less.
• Reserve your name early if your insurance or bond will take time to bind. The reservation costs $10 and lasts 60 days.
• California does not allow a domestic series LLC. If you want a separate LLC for each branch, each one needs its own filing and fee.
• An LLC cannot render a licensed professional service, and professional corporations are used instead. If any licensed professional will deliver services, ask your attorney whether your structure fits.
• Have your broker confirm the liability limits, the workers' compensation roster and the bond wording in writing before you submit.
• Track each aide's registry status, tuberculosis dates and training hours in one spreadsheet so nothing expires unnoticed.
• Get current fees and rules from CDSS in writing, and save the response with your application file.

Common Mistakes to Avoid

• Looking for a state business license. California has none. The real local question is the city business tax or registration certificate.
• Describing medical services in your business plan. An HCO cannot provide skilled nursing, injections or other medical care, and a plan that includes them points to a different kind of license.
• Underinsuring. Liability limits below $1,000,000 per occurrence or $3,000,000 in the aggregate do not meet the requirement, and a bond below $10,000, or one without third-party coverage, does not either.
• Placing an aide before registry clearance. Each aide must be cleared on the registry, including a fingerprint-based background check, before placement.
• Missing tuberculosis deadlines. Aides hired on or after January 1, 2016 need an exam within 90 days before or seven days after employment, then every two years after a negative result.
• Omitting disclosures. One missed past role, owner position or discipline record can delay or derail the application.
• Paying before the package is complete. The license fee is nonrefundable.
• Letting filings lapse. A missed LLC-12 can bring a $250 penalty, and unpaid franchise tax creates its own problems.
• Relying on old numbers. Fee sections, training rules and the minimum wage all have dates that change. Verify each one before you rely on it.

Expected Results

Following these steps in order may help you file a complete HCO application the first time, which can reduce the back-and-forth that slows many new agencies. Completing the entity filing, insurance, bond, disclosures and aide registry steps in sequence is designed to keep your file organized and easier to review. Results depend on how complete your application is, CDSS processing time and the accuracy of each document. Treat any timeline as an estimate, and confirm current processing expectations with CDSS.

When to Get Professional Help

A sole owner with one LLC and a small number of aides may handle much of this alone. Get a California attorney involved if you have multiple owners, plan more than one agency, want to use an independent-aide referral model, or have any owner with a discipline history. Hire a CPA to handle franchise tax, payroll registration and the first-year tax questions. The California Small Business Development Center network at californiasbdc.org can also help you work through your plan.

This article is informational only and is not legal or tax advice. Verify every fee, deadline and rule with the named agency before you pay or file.