How to Start a Short-Term Rental in California: No State License, So San Diego, SF and LA Rules Decide

If you want to learn how to start a short-term rental business in California, the first fact to absorb is that there is no state short-term rental license. The Secretary of State does not issue one, and the CDTFA seller's permit is not a business license. The city or county where the property sits decides whether a short-term rental is allowed at that address, under what conditions, and what registration or license you need. Two properties a few miles apart can fall under completely different rules.

This guide covers the steps in the order we would take them: check the address, set up your business, register for taxes, then apply for the local permit. Three worked examples (San Diego, San Francisco and Los Angeles) show how far the rules can diverge. This is informational content, not legal or tax advice. Zoning, lease, insurance and tax questions depend on your specific facts, so talk to a qualified attorney or CPA before you buy, list or sign anything.

What California Does and Does Not Regulate

For these rules, a short-term rental is a stay of 30 consecutive days or less. Stays longer than that fall outside this definition, and the rules below do not apply to them.

California also has no general statewide business license. Your business gets its legal existence from the Secretary of State, registers with state tax agencies, and then adds whatever licenses and permits its activity requires. In practice, that means three layers:

• State: Register your entity with the Secretary of State. Register with the CDTFA if you sell taxable goods, and with the Employment Development Department (EDD) if you have employees.
• City or county: Get the short-term rental registration or permit for your address, plus any local business tax registration certificate.
• Other agencies: Licensed trades, such as contractors, are regulated by state boards. You only need these if your project or business activity calls for them.

What You Need Before You Start

Gather these materials before you start the paperwork. A missing document can stall an application.

• The exact property address and the zoning information for its parcel, from the city or county website
• Your deed or signed lease, plus any HOA covenants, conditions and rules
• Written landlord approval, if you rent the unit you plan to list (required in Los Angeles)
• Documents that show where you live, such as a driver's license, voter registration or tax return, for cities that require a primary residence (San Francisco and Los Angeles)
• Formation documents for your entity: Articles of Organization (Form LLC-1) or Articles of Incorporation, plus a federal EIN from the IRS
• An active transient occupancy tax (TOT) certificate, which San Diego requires before you can apply
• A separate bank account and a booking log that records every night rented, so you can prove you stayed under any day cap
• An insurance quote from an agent who has written short-term rental coverage

Step 1: Check the Address With the City or County

Do this before you buy or list. Whether a short-term rental is allowed depends on that city's zoning and registration rules, or on the county's rules if the property is in an unincorporated area. Ask the city or county planning department three questions in writing: Is a short-term rental allowed at this address? What registration or license applies? Are there caps on nights, unit counts or residency requirements?

A permit from one city does not carry over to a neighboring one. If the property is near a city boundary, confirm which jurisdiction governs the parcel. Get the answer in writing if you can, because a verbal answer will not help you if enforcement begins later.

Step 2: Read Your Lease and HOA Rules

Zoning is not the only rule that can block a listing. If you rent the unit, your lease may prohibit subletting or short-term occupancy, and you will need your landlord's written approval in Los Angeles. If the property is in an HOA, read the covenants, conditions and rules. Some associations restrict rentals or set minimum stay lengths, and an HOA can enforce its rules even when the city allows the rental.

Step 3: Choose Your Business Structure

You can operate as a sole proprietor, but many hosts form an LLC to separate the rental from personal assets. Here are the state costs to plan for, using the 2026 figures:

• Articles of Organization (Form LLC-1): $70. Online filings are normally processed within about 5 business days or less. Paper filings take 10 or more business days. Expedited options are $350 (24 hours), $750 (same day if received by 9:30 a.m.) and $500 (4-hour drop-off, precleared).
• Name reservation: $10, which holds the name for 60 days. The name must include "limited liability company," "L.L.C." or "LLC," and it cannot include words such as "bank," "trust" or "corporation."
• Registered agent: Every California LLC must keep an agent for service of process, either an individual who lives in California or a corporation with the required certificate. The LLC must also keep an office in California.
• Statement of Information (Form LLC-12): $20, due within 90 days of filing the articles, then every two years during the six-month window ending on the last day of the anniversary month. The FTB assesses a $250 penalty if it is missed after a Secretary of State notice.
• Franchise tax: An LLC organized or registered in 2024 through 2026 owes the $800 minimum annual franchise tax from its first year. If your first taxable year begins in 2027, 2028 or 2029, the first-year amount may be $400 under RTC 17941(g)(2), so confirm it with the Franchise Tax Board (FTB).
• LLC fee: Once California-source total income reaches $250,000, $500,000, $1,000,000 or $5,000,000, the LLC fee is $900, $2,500, $6,000 or $11,790, respectively.

Corporations pay different fees. Stock corporation Articles of Incorporation cost $100, and the Statement of Information (Form SI-550) costs $25 every year, due within 90 days of filing and then annually. A newly incorporated corporation owes no $800 minimum in its first taxable year. California does not allow a domestic series LLC, so if you plan to hold several properties, you will need a separate LLC for each or a different structure. Ask a CPA or attorney which setup fits your plans.

Check name availability on the Secretary of State's business search before you file, and use bizfile Online to file.

Step 4: Register a Fictitious Business Name if Needed

If you operate under any name other than your legal name or the LLC's exact name, you need a Fictitious Business Name Statement. File it with the County Clerk-Recorder in the county of your principal place of business. The statutory fee is $10 plus $2 per additional name or owner, under Business and Professions Code 17929, but counties charge more, and the newspaper publication fee is separate. The filing must happen within 40 days of starting the business. You must publish it in a newspaper once a week for four weeks, and it expires after five years.

Step 5: Register for Taxes

Register with the CDTFA if you sell taxable goods, such as supplies or merchandise sold to guests. The seller's permit is free, and the resale certificate does not have a required form. The statewide sales tax base rate is 7.25%, and district taxes raise city rates to between 7.25% and 11.75%. Ask the CDTFA whether your activity requires a seller's permit.

Register with the EDD if you hire anyone, including a regular cleaner you put on payroll. Transient occupancy tax is a local lodging tax, not a state one. Each city sets its own TOT rules and registration process. Check with the city's tax office for the rate and registration steps before you take a booking, and expect to file returns on a schedule the city sets.

Step 6: Check the City Business Tax and Registration

Most California cities charge a local business tax or require a registration certificate. Of the 483 cities, 445 report revenue from one. There is no common formula, so the amount and the rules depend on the city. Counties generally license only regulated activities. Ask the city clerk or tax office whether a business tax applies to your short-term rental on top of the rental registration.

Step 7: Apply for the Short-Term Rental Registration

This is the step that decides whether you can operate at all. Each city runs its own process, and the three examples below show the range. Some cities limit who can qualify, so do not assume approval is available. Confirm eligibility before you buy the property, and confirm the current processing time with the city, since these timelines change.

Step 8: Prepare the Property and Insurance

Ask the local building and fire departments which inspections or safety requirements apply to a rental unit. Requirements vary by city, so do not rely on a general checklist. If you plan renovations, note that the Contractors State License Board (CSLB) threshold for a required contractor license is $1,000. Confirm with CSLB whether your project needs a licensed contractor before work starts.

Talk to an insurance agent who writes short-term rental policies. A standard homeowners policy may exclude paid lodging, and a gap in coverage is expensive to discover after a guest claim.

Worked Example 1: San Diego (Short-Term Residential Occupancy Ordinance)

The City of San Diego requires a license for any stay under one month, and operating without one has been unlawful since May 1, 2023. The city sorts short-term rentals into four tiers, and the tier you fit determines your license.

• Tier 1, part-time: The unit is rented 20 days or fewer a year. The host does not need to live on site.
• Tier 2, home sharing: Rooms are rented more than 20 days a year while the host lives on site. The host may be away during a whole-home rental for up to 90 days a year.
• Tier 3, whole home: The entire home is rented more than 20 days a year with the host not on site, outside Mission Beach.
• Tier 4, Mission Beach whole home: The waitlist application period for this tier is closed.

Tier	Application fee	License fee	Notes
Tier 1, part-time	$33	$193	Renew at the same amounts
Tier 2, home sharing	$33	$284	Renew at the same amounts
Tier 3, whole home	$41	$1,129	Must be used at least 90 days a year
Tier 4, Mission Beach	$41	$1,129	Waitlist application period closed; must be used at least 90 days a year

A host may hold one license at a time for one dwelling, and licenses cannot be transferred. Licenses last two years, and fees are not refundable. An active TOT certificate is required before you apply, so register with the city's tax office first.

Worked Example 2: San Francisco (Office of Short-Term Rentals)

San Francisco is the strictest of the three. Only a permanent resident can register, which means the host lives in the unit at least 275 nights a year. The unit must be the host's primary residence.

• Un-hosted nights: A permanent resident may rent the unit un-hosted, meaning the guest stays while the host is away, for no more than 90 nights a year.
• Application fee: $925.
• Registration with the Office of Short-Term Rentals: You must register even if you already have a business registration and pay hotel tax.
• Penalties: A notice of violation can carry penalties of $484 per day per residential unit.
• Denied applications: If your application is denied, you must stop hosting, even while you appeal.

Because the residency test is strict, a host who buys an investment property and plans to rent it out will likely not qualify. Confirm your status with the Office of Short-Term Rentals before you commit money.

Worked Example 3: Los Angeles (Home-Sharing Ordinance)

Los Angeles regulates short-term rentals under its Home-Sharing Ordinance (Los Angeles Municipal Code 12.22 A.32). The ordinance allows home sharing only in the host's primary residence, which the city defines as the sole residence where the host lives more than six months of the year.

• Home sharing: Up to 120 days a year.
• Extended Home-Sharing: A separate registration that allows unlimited days.
• Term: A registration lasts one year and must be renewed annually.
• Tax registration: You need a transient occupancy registration certificate unless you list only on platforms that have a tax collection agreement with the city.
• Ineligible units: Homes under the Rent Stabilization Ordinance and units with affordable housing covenants are not eligible.
• Tenants: A tenant needs the landlord's written approval.
• Listings: The city registration number must appear in every listing.

These rules come from the adopted ordinance. Check with Los Angeles City Planning for current rules, application fees and the per-night enforcement fee, since those amounts are not stated here.

Expected Results

Results vary widely, and no one can promise a specific occupancy rate, nightly price or return. Hosts who complete the zoning check, entity setup and registration first are generally better positioned to operate without interruption, because enforcement and fines tend to hit unregistered listings hardest. Your results may depend on the city's rules, how quickly your registration is approved, your pricing, your season and how well you manage bookings and guest complaints. Build a conservative budget that includes fees, insurance, cleaning, taxes and periods when the unit sits empty.

Common Mistakes to Avoid

• Buying before checking the zoning. A property you cannot legally list is a costly rental to hold.
• Assuming a state license exists. Ask the city or county instead.
• Ignoring the lease or HOA. A city permit does not override a lease or HOA prohibition.
• Listing before registration is approved. In San Francisco, a denied host must stop hosting even while appealing.
• Missing the TOT step. San Diego requires an active TOT certificate before you apply, and Los Angeles usually requires one.
• Forgetting the registration number. Los Angeles requires the city number in every listing.
• Not tracking nights. Tier 1 caps, the Los Angeles 120-day limit and the San Francisco 90-night un-hosted limit all depend on accurate counts.
• Assuming the LLC fixes everything. An LLC does not replace local registration, tax registration or insurance.
• Missing LLC deadlines. Calendar the 90-day Statement of Information deadline and the biennial LLC-12 window, because the $250 penalty applies.

Tips

• Get answers in writing. Planning and tax staff can change their answers, and written confirmation protects you.
• Use free advising. The California Small Business Development Center network offers free business advising, and it can help you think through your setup before you spend money.
• Keep the booking log current. It supports your tax filings, your cap compliance and any city audit.
• Separate finances. Use a dedicated bank account for rental income and expenses.
• Plan for renewals. San Diego licenses last two years, and Los Angeles registrations renew annually.

Where to Confirm Current Rules

• California Secretary of State, Business Programs Division: https://www.sos.ca.gov/business-programs
• bizfile Online, for filing and searching business entities: https://bizfileonline.sos.ca.gov/
• Name availability search: https://www.sos.ca.gov/business-programs/business-entities/name-availability
• Fictitious business names: https://www.sos.ca.gov/business-programs/business-entities/fictitious-business-names
• California Department of Tax and Fee Administration: https://www.cdtfa.ca.gov/
• Sales and use tax permit information: https://www.cdtfa.ca.gov/taxes-and-fees/sales-use-tax.htm
• California Small Business Development Center network: https://californiasbdc.org/

For city and county rules, contact the planning department, tax office and business tax office for your address. For tax and entity questions, confirm current figures with the FTB and the Secretary of State. A qualified attorney or CPA can review your structure and your lease before you commit. This article is informational content, not legal or tax advice.