How to Start a General Contractor Business in California

October 29, 2026

Starting a general contractor business in California means working through two systems at once. The Secretary of State forms your company, and the Contractors State License Board (CSLB) licenses the construction work. Most delays come from doing these steps out of order, so this guide follows the sequence most contractors use. It focuses on the business side and gives the headline license numbers. The full CSLB process is covered in our contractor license guide.

This article is informational, not legal or tax advice. Fees, deadlines, and rules change, so confirm every figure with the agency before you file. Talk with a qualified attorney or CPA if your ownership, partners, or tax situation is complicated.

What You Need Before You Start

Gather these items before you file anything. Missing one usually stalls the process at the worst possible moment.

• A business name, checked for availability in the bizfile Online business search
• A California registered agent and, for an LLC, a California office
• Experience records for your qualifier: four years of journey-level experience within the last ten years, with dates, employers, and job descriptions
• A business bank account and a credit card for filing fees
• A surety bond agent for the $25,000 contractor bond, plus the extra $100,000 bond if you form an LLC
• An insurance agent who can place liability coverage of at least $1,000,000 aggregate
• A list of officers, members, and personnel you will name on the application
• Access to a Live Scan location, to be used after CSLB accepts your application

Step-by-Step Instructions

Step 1: Pick the License Class That Matches Your Work

California offers several general contractor classes. Your class controls which jobs you can take as prime contractor, so choose it before you form the company.

• Class B General Building: covers a structure that needs at least two unrelated building trades or crafts, or doing or superintending the whole or part of it (Business and Professions Code 7057). A B contractor may take a prime contract or subcontract for a framing or carpentry project. For other trades, a B contractor may take a prime contract only if the contract requires at least two unrelated trades other than framing or carpentry, or the contractor holds the specialty license or subcontracts that work to a properly licensed contractor (BPC 7057(b)).
• Class B-2 Residential Remodeling: covers improvements to an existing residential wood-frame structure that use at least three unrelated trades (BPC 7057.5). It lets you take a prime contract for trades such as drywall, finish carpentry, flooring, insulation, painting, plastering, roof repair, siding, and tiling, and for installing or replacing fixtures such as dimmers, faucets, and air filters.
• Class A General Engineering: covers fixed works that need specialized engineering knowledge, such as roads, pipelines, and grading.

A license covers its class and no more. If a project calls for electrical, plumbing, or HVAC work, subcontract it to a licensed specialty contractor. Remodelers who do mostly kitchens, baths, and interior finish work often find Class B-2 fits their business. Builders of new structures usually need Class B.

Step 2: Choose Your Entity and File With the Secretary of State

Most owners form either an LLC or a corporation. You file through bizfile Online at https://bizfileonline.sos.ca.gov/. Online filings are normally processed within about 5 business days or less. Paper filings take 10 or more business days. Expedited options are a 24-hour filing for $350, a same-day filing for $750 if received by 9:30 a.m., and a 4-hour drop-off filing for $500 that must be precleared.

• LLC: Articles of Organization (Form LLC-1), $70. California does not allow a domestic series LLC. An LLC cannot render a licensed professional service, since professional corporations are used for that work.
• Corporation: Articles of Incorporation, $100.

Your entity choice changes your tax bill, so model both options with a CPA. Every LLC organized or registered in California in 2024 through 2026 owes the $800 minimum annual franchise tax from its first 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. An LLC whose first taxable year begins in 2027, 2028, or 2029 may pay $400 in year one under RTC 17941(g)(2), so confirm that amount with the Franchise Tax Board before you budget it. A newly incorporated or qualified corporation or S corporation owes no $800 in its first taxable year. After that, corporations pay 8.84% corporate income tax (10.84% for banks), and S corporations pay 1.5% of net income with an $800 minimum.

Step 3: Clear Your Name, Registered Agent, and Office

An LLC name must contain 'limited liability company,' 'L.L.C.,' or 'LLC.' 'Limited' may be shortened to 'Ltd.' and 'company' to 'Co.' The name may not contain 'bank,' 'trust,' 'trustee,' 'incorporated,' 'inc.,' 'corporation,' or 'corp.' A corporation name needs no designator, since only close corporations use one.

To hold a name while you prepare paperwork, reserve it for $10. The reservation lasts 60 days and cannot be renewed for consecutive periods. Reservations are made at https://www.sos.ca.gov/business-programs/business-entities/name-availability.

Every California LLC and corporation must keep an 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. That office does not need to be where business activity takes place.

Step 4: Register a Fictitious Business Name if Needed

If you will operate as something other than your legal name or your LLC or corporation name, such as 'Smith Builders,' you need a Fictitious Business Name Statement. File it with the county clerk-recorder in the county of your principal place of business. If you have no place of business in California, file in Sacramento County. You must file within 40 days of starting to do business, publish the statement in a newspaper once a week for four weeks, and renew it after five years, when it expires.

The statutory fee is $10, plus $2 for each additional name or owner (Business and Professions Code 17929). Counties charge more. For example, Tehama County charges $31, plus $5 for each additional name. The newspaper publication fee is separate. Details are at https://www.sos.ca.gov/business-programs/business-entities/fictitious-business-names.

Step 5: Line Up Your Qualifier

Your company qualifies for the license through a responsible managing employee or officer, called the qualifier. The qualifier needs four years of journey-level experience within the last ten years. The qualifier must actively work in the classification, at least 32 hours a week or 80 percent of the business hours, whichever is less. Document each job with dates, your role, and the trade work you performed, because you will describe that experience on the application.

Step 6: Apply to CSLB and Complete Fingerprinting

The CSLB application fee is $450. The initial license fee is $200 for a sole owner and $350 for other entities. That makes the application plus initial license $650 for a sole owner and $800 for an LLC or corporation, before bonds and fingerprints. The exams are covered in our contractor license guide.

Do not send fingerprints with the application. After CSLB accepts the application, you complete fingerprinting at a Live Scan site. The costs are $32 for the Department of Justice, $17 for the FBI, and the Live Scan site's own fee. Check your application status on the CSLB website at https://www.cslb.ca.gov/. Plan around that status, not a fixed timeline, because processing times vary.

Step 7: Post Your Bonds and Insurance

Every contractor needs a $25,000 contractor bond. An LLC also needs an additional $100,000 bond (BPC 7071.6.5). Your company needs liability insurance of at least $1,000,000 aggregate covering up to five listed personnel (BPC 7071.19). If a qualifier owns less than 10 percent of the company, that qualifier needs a separate $25,000 bond. Request quotes early so bonding and insurance do not hold up your application.

Step 8: Handle Workers' Compensation

If you have any employees, you need workers' compensation coverage (Labor Code 3700). If you have no employees, a sole owner holding a Class B license may file an exemption through December 31, 2027. Starting January 1, 2028, the exemption survives only for no-employee joint ventures (BPC 7125; SB 1455). Certain license classes are excluded, so confirm your situation with CSLB before you rely on the exemption.

Step 9: Register With State Tax and Employment Agencies

• CDTFA: If you sell taxable goods, register for a seller's permit, which is free. The statewide base sales tax rate is 7.25%, and city rates with district taxes run from 7.25% to 11.75%. Whether your billing triggers registration depends on how you sell materials and labor, so confirm with the California Department of Tax and Fee Administration at https://www.cdtfa.ca.gov/. The seller's permit application is at https://www.cdtfa.ca.gov/taxes-and-fees/sales-use-tax.htm. A resale certificate has no required form, but keep a copy of every one you give a supplier.
• EDD: Register with the Employment Development Department before your first payroll. The state minimum wage is $16.90 in 2026 and $17.40 from January 1, 2027, according to a secondary source, so verify both figures with the state before you set pay rates.
• Franchise Tax Board: Handle the LLC franchise tax and LLC fee described in Step 2.

Step 10: Check Local Business Tax and Permits

California has no general statewide business license. The Secretary of State issues none, and the CDTFA seller's permit is not a business license. Most cities charge a local business tax or registration certificate. Of the state's 483 cities, 445 report revenue from one, and there is no common formula, so the answer depends on your city. Counties license only regulated activities. Call the finance or revenue office for each city where you will work, and ask the county and city building departments which permits your planned jobs require. Your trade license comes from CSLB, which is the state board that regulates contractors.

Step 11: Set Up Written Contract and Payment Practices

Home improvement contracts must be in writing and must state the price in dollars and cents. A down payment may not exceed the lesser of $1,000 or 10 percent of the contract. Payments may not run ahead of the work completed. You may require a lien release with each payment (BPC 7159.5). If you use home improvement salespeople, each one must be registered, with a $200 application fee.

Manage subcontractors with written agreements and proof of their licenses. Handle change orders in writing, and collect lien releases with each payment. Have an attorney review your contract templates and subcontractor agreements, since this article does not provide them.

Step 12: Calendar Your Ongoing Filings

An LLC files its Statement of Information (Form LLC-12) for $20. The first filing is due within 90 days of filing the articles, and then every two years during the six-month window ending on the last day of the anniversary month. A corporation files its Statement of Information (Form SI-550) for $25 each year, due within 90 days of filing the articles and then every year. If an LLC misses its filing, the Franchise Tax Board assesses a $250 penalty after the Secretary of State sends a notice. CSLB renewal costs $450 or $700 every two years.

Required Fees at a Glance

This table lists government and bond costs only. It is not a startup budget, and you should confirm each figure on the agency page before you file.

Item	Cost	Paid to
Articles of Organization (LLC-1)	$70	Secretary of State
Articles of Incorporation	$100	Secretary of State
Name reservation	$10, lasts 60 days	Secretary of State
Fictitious business name	$10 statutory, plus $2 per additional name or owner; counties often charge more; newspaper publication is separate	County clerk-recorder and newspaper
CSLB application	$450	CSLB
CSLB initial license	$200 for a sole owner; $350 for an LLC, corporation, or other entity	CSLB
Contractor bond	$25,000	Surety company
Additional LLC bond	$100,000	Surety company
Liability insurance	At least $1,000,000 aggregate for up to five listed personnel	Insurer
Fingerprints	$32 DOJ, $17 FBI, plus the Live Scan site fee	DOJ, FBI, and Live Scan site
Statement of Information	LLC $20 every two years; corporation $25 every year	Secretary of State
CSLB renewal	$450 or $700 every two years	CSLB
LLC franchise tax	$800 minimum annual tax from the first year for 2024 through 2026 formations	Franchise Tax Board
LLC fee	$900, $2,500, $6,000, or $11,790 at California-source total income of $250,000, $500,000, $1,000,000, or $5,000,000	Franchise Tax Board

Expected Results

Working through these steps in order can help you avoid the most common causes of delay, such as an unavailable name, a qualifier with weak experience records, or a bond that was not ready when the application needed it. A completed checklist does not guarantee CSLB approval, and results depend on your experience records and the accuracy of your application. A well-prepared applicant may end up with a formed entity, an accepted application, and the bonds, insurance, and registrations needed to bid legally. This article makes no promise about your bidding success, pricing, or income, which depend on your market and your work.

Tips for Getting It Right

• Collect your qualifier's experience records before you start the CSLB application. Reconstructing dates from memory slows everything down.
• Ask your bond agent and insurer for quotes in the same week you file with the Secretary of State, so you can see the full cost picture early.
• Use an expedited Secretary of State option only when a deadline requires it. The 24-hour option costs $350, the same-day option costs $750, and the 4-hour option costs $500.
• Put every filing deadline on a calendar the day you form the entity, including the Statement of Information and CSLB renewal.
• Use the California Small Business Development Center network at https://californiasbdc.org/ for business advising before you commit to a structure.

Common Mistakes to Avoid

• Assuming a statewide business license exists. California has none. Your real obligations are the entity filing, CSLB licensing, state tax registrations, and local business tax.
• Treating the license threshold as $500. The contractor license threshold is $1,000.
• Forgetting the LLC bond and insurance. An LLC needs the extra $100,000 bond and the $1,000,000 aggregate insurance in addition to the $25,000 bond.
• Sending fingerprints with the application. Fingerprinting happens after CSLB accepts the application.
• Relying on a workers' compensation exemption without checking it. The no-employee exemption for a Class B owner ends its general availability after December 31, 2027, and certain classes are excluded.
• Taking a prime contract outside your class. A Class B contractor may not take a prime contract for other trades unless the contract meets the BPC 7057(b) conditions. Subcontract the rest to licensed specialists.
• Skipping the fictitious business name publication. A DBA is not complete until the newspaper publication runs once a week for four weeks.
• Working without a license. An unlicensed contractor cannot sue to collect payment, and the owner can recover what was paid (BPC 7031). A first conviction for unlicensed contracting carries a fine up to $5,000, up to six months in jail, or both (BPC 7028).
• Taking deposits without a written contract. Residential home improvement contracts must be in writing, with the price stated in dollars and cents and the down payment capped as described in Step 11.

When to Bring In Professionals

An attorney can help you choose between an LLC and a corporation, draft contracts, and review liability exposure. A CPA can model the franchise tax, LLC fee, and sales tax consequences for your billing method. A licensed insurance agent and surety agent can confirm that your coverage and bonds meet CSLB requirements. Use these professionals before you file, because fixing an entity choice or contract later costs more than planning it now.