How to Start an Ecommerce or Online Store Business in California

October 29, 2026

Starting an online store in California is mostly a paperwork sequence, and the order matters. You register your entity with the Secretary of State, register with the California Department of Tax and Fee Administration (CDTFA) for a seller's permit, set up sales tax correctly, then handle pricing, privacy, and local rules. This guide follows that order and uses fees and deadlines from official agency sources. Where a figure may change, it tells you which agency to confirm it with.

Disclaimer: This article is informational content, not legal or tax advice. Laws, rates, and thresholds change. Confirm current figures on the agency sites linked below, and talk with a qualified attorney or CPA if your situation is complex, for example if you import goods, sell in other states, or store inventory outside California.

What You Need Before You Start

Gather these items before you open any filing portal:

• Your business name, checked on the Secretary of State's business search
• A California address for the business. A home address works, and it also serves as a place of business for your seller's permit.
• An agent for service of process: either an individual who resides in California or a corporation that holds a Corporations Code 1505 certificate
• A federal Employer Identification Number (EIN) from the IRS, which is free to obtain
• A business bank account and a bookkeeping system that records sales tax separately for each order
• A product list showing what you sell, where it is made or sourced, and whether any product may contain a chemical listed under Proposition 65

Step 1: Choose a Structure and Reserve Your Name

Most online sellers form a limited liability company (LLC), though a corporation is also an option. A sole proprietor can sell without filing with the Secretary of State, but still needs a seller's permit and may need a fictitious business name statement. An LLC separates business and personal liability in many situations, but that protection depends on how you run the company, so ask a professional before you rely on it.

An LLC name must include the words limited liability company, L.L.C., or LLC. "Limited" may be shortened to Ltd. and "company" to Co. The name cannot contain bank, trust, trustee, incorporated, inc., corporation, or corp. If you need time to prepare your filings, you can reserve the name for $10. The reservation lasts 60 days and cannot be renewed for consecutive periods. California does not allow a domestic series LLC, so plan on a single LLC for each store.

Check the name rules and reservation details on the Secretary of State name availability page.

Step 2: File Formation Documents with the Secretary of State

File Articles of Organization (Form LLC-1) for an LLC, or Articles of Incorporation for a corporation, through bizFile Online. The LLC filing fee is $70. Corporation articles cost $100.

Online filings are normally processed within about 5 business days or less. Paper filings take 10 or more business days. If you need speed, the Secretary of State offers these expedite options: 24-hour for $350, same-day for $750 if received by 9:30 a.m., and 4-hour for $500, which is drop-off only and requires a precleared filing.

Every California 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 may pay $400 in year one under Revenue and Taxation Code 17941(g)(2), so confirm that amount with the Franchise Tax Board (FTB). On top of the $800, 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, respectively. A newly incorporated corporation or S corporation owes no $800 minimum in its first taxable year.

Step 3: Appoint an Agent, Keep a California Office, and Get Your EIN

Your LLC or corporation must keep an agent for service of process and an office in California. The office does not have to be a place of business activity. A corporate agent holds a Corporations Code 1505 certificate, and no address is entered for it. Once your entity exists, apply for your federal EIN with the IRS, since the application uses your legal business name.

Step 4: Register for a California Seller's Permit

Any seller of tangible goods in California needs a seller's permit from the CDTFA. The permit is issued for each place of business under Revenue and Taxation Code 6066 and 6067, and it is free. A home-based seller has a place of business at home, so you need one even if you never open a storefront. Apply through the CDTFA website, and review the sales and use tax page before you do.

The seller's permit is not a business license. California has no general statewide business license, and the Secretary of State issues none. The permit lets you collect and report sales tax, and you still need the local and trade-specific steps in Step 9. When you buy inventory for resale, give your supplier a resale certificate. No specific state form is required for it.

Step 5: Set Up California Sales Tax for Online Orders

The California state base rate is 7.25%. District taxes are added on top, so city rates run from 7.25% to 11.75%. The highest city rate is 11.75 percent, in Palmdale and Lancaster. The rates below reflect CDTFA's rates effective October 1, 2026.

City	Combined sales tax rate
Los Angeles	10.25%
San Francisco	8.625%
San Diego	7.75%
Sacramento	8.75%

When you ship to a California buyer, you collect tax at the rate for the delivery location, not the rate where your warehouse sits. Ask CDTFA how destination rates apply to your specific deliveries rather than assuming a rate.

Where you are based determines when your obligation starts:

• California-based sellers have a physical presence in the state from day one and must collect California sales tax on taxable sales.
• Out-of-state sellers must collect California tax once their sales of tangible goods delivered into California pass $500,000 (Revenue and Taxation Code 6203). Check with CDTFA for how that measuring period works before you reach the line.

Marketplaces. If you sell through a marketplace facilitator such as Amazon or Etsy, the platform collects and remits sales tax on sales made through it. That does not cover your own website. Tax on orders you take directly through your store is still your responsibility, so set up collection for those sales too. Check CDTFA for the measuring period and details.

Step 6: Check Whether Your Digital Products Are Taxable

Under 18 CCR 1502, prewritten software transferred to the buyer by remote telecommunications is not subject to California sales tax. Charges for remote time-sharing access to a computer are also not taxable. Software delivered on a disc or other physical media is handled differently, so do not apply the same answer to it. For other digital products, such as downloadable templates, courses, or printables, check with CDTFA rather than assuming either way.

Step 7: Price Everything All-In

California's all-in pricing rule is in Civil Code 1770(a)(29). An advertised price must include all mandatory fees or charges, other than government taxes and actual shipping costs. A mandatory service fee or handling fee cannot be left out of the advertised price and added at checkout. Shipping can appear separately, but only at its actual cost.

Test the whole checkout flow, not only the product page. The advertised price, the cart total, and every mandatory line item should tell the same story.

Step 8: Address the CCPA and Your Privacy Policy

The California Consumer Privacy Act (CCPA) applies to a business that meets one of its tests. One test is annual gross revenue above $25 million, as adjusted by the California Privacy Protection Agency. The other tests concern how many consumers' personal information the business handles and what share of revenue comes from selling or sharing personal information. Because the thresholds and penalty amounts are adjusted, look up the Agency's current figures rather than relying on any number in an older guide, including this one.

Even a small store below every threshold benefits from a clear privacy policy. Explain what you collect, such as names, email addresses, shipping addresses, payment details, and browsing data, why you collect it, and how customers can reach you with questions or requests.

Step 9: Check Local Rules and Product Rules

There is no separate ecommerce business license in California. Instead, most cities charge a local business tax or require a registration certificate, and 445 of the state's 483 cities report revenue from one. There is no common formula, so the cost depends on your city. Most cities require registration even for a home-based business, so contact your city's tax or finance office before your first sale. Counties license only regulated activities.

Some products and trades need a license from a state board. The Contractors State License Board licenses contractors, for example, and the Department of Consumer Affairs oversees many professional boards. Alcohol sales fall under the Department of Alcoholic Beverage Control (ABC). If your products may contain a chemical listed under Proposition 65, check with the Office of Environmental Health Hazard Assessment (OEHHA) on whether your product or packaging needs a warning.

Step 10: File a Fictitious Business Name If You Need One

If you sell under any name other than your LLC's legal name, you need a Fictitious Business Name Statement. Your Etsy shop name counts if it differs from your legal name. File the statement with the county clerk-recorder in the county of your principal place of business within 40 days of starting to do business. Then publish it in a newspaper once a week for four weeks. The statement expires after five years.

The statutory fee is $10 plus $2 per additional name or owner (Business and Professions Code 17929), but counties charge more than the statutory fee, and publication is a separate cost. Review the Secretary of State fictitious business name guidance, then confirm your county's current fee.

Step 11: Register with EDD If You Hire

If you pay employees, you need to register with the Employment Development Department (EDD). A part-time packer or a warehouse helper counts. Register before you run your first payroll, and confirm the payroll filing schedule with EDD.

Step 12: Calendar Your Ongoing Filings

• Statement of Information: An LLC files Form LLC-12 at $20 within 90 days of filing its articles, then every two years during the six-month window ending on the last day of the anniversary month. A corporation files Form SI-550 at $25 every year. The FTB assesses a $250 penalty after a Secretary of State notice if you miss an LLC filing.
• Franchise tax: An LLC owes the $800 minimum plus any LLC fee tier that applies to its California-source income. Confirm your first-year amount with the FTB.
• Sales tax returns: Confirm your filing frequency and due dates with CDTFA once your permit is active.

Common Mistakes to Avoid

• Skipping the seller's permit because the permit is free or because you sell from home.
• Assuming a marketplace collects tax on your own website orders. It does not.
• Applying one sales tax rate to every California order. Rates vary by city, and the highest city rate is 11.75 percent.
• Showing a low advertised price and adding a mandatory fee at checkout, which conflicts with California's all-in pricing rule.
• Treating every digital product as tax-free. Prewritten software delivered by remote telecommunications is not taxable under 18 CCR 1502, but other digital goods need a CDTFA check.
• Forgetting the city business tax registration, which most cities require even for home-based sellers.
• Letting the Statement of Information lapse, which can bring a $250 penalty.
• Using a shop name that differs from your legal name without filing a fictitious business name statement.
• Treating a privacy policy as optional because your store is small.

Expected Results

A careful setup may help you start selling on a clean compliance footing, reduce the chance of surprise tax bills, and make it easier to show customers and marketplaces that your store is legitimate. These outcomes are not guaranteed. Sales depend on your product, pricing, marketing, and market conditions, and tax and filing results depend on how closely you follow the steps above.

A realistic first milestone is an active entity, an issued seller's permit, tax rates set for the places you ship, and a checkout that shows every mandatory charge. Your first real orders then serve as a test of your shipping, tax calculations, and order records.

Next Steps

Start with the Secretary of State filing, then get your seller's permit before you launch. Confirm the figures flagged above with the agencies named in each step, and talk with a qualified attorney or CPA before you make decisions about structure, tax, or privacy compliance that depend on your specific facts.

Reminder: this article is informational content, not legal or tax advice.