How to start a web design business in California

Building websites for clients is one of the simplest service businesses to start in California: no state license is required for web design, startup costs are low, and every business in the state needs an online presence. But California layers more registration, tax, and contract rules on small businesses than most states. This guide covers what a California web designer or small agency needs to set up, from the Secretary of State to the Franchise Tax Board (FTB).

1. Choose a business structure

Sole proprietorship

The simplest option: no state formation filing. If you operate under any name other than your own legal surname, file a Fictitious Business Name (FBN) statement with the county clerk where your principal place of business is located, then publish it in an adjudicated local newspaper as required by state law and file proof of publication. An FBN statement generally expires after five years.

LLC

An LLC separates business liabilities from personal assets (when properly maintained) and is the most common choice for designers who sign client contracts.

• Articles of Organization (Form LLC-1) with the California Secretary of State through bizfile Online: currently $70.
• Statement of Information (Form LLC-12): due within 90 days of formation and every two years after; currently $20.
• $800 annual minimum franchise tax to the FTB, owed every year the LLC exists — including the first year for LLCs formed in 2024 or later. LLCs with California gross receipts above $250,000 also owe an additional LLC fee.

Because of the $800 minimum tax, many new freelancers start as sole proprietors and form an LLC once revenue and client risk justify it. Professional liability insurance can protect you either way. See the California business guide for more on formation and the FTB.

2. Local licenses and permits

• City business license or business tax registration: most California cities require one even for home-based freelancers — for example, Los Angeles requires a Business Tax Registration Certificate and San Francisco requires business registration with the Treasurer and Tax Collector.
• Home occupation permit: some cities require one for home-based businesses; client visits and signage may be restricted.
• County license: in unincorporated areas, check with the county.

3. Taxes for California web designers

• Income tax: sole proprietors report business income on their personal returns (federal Schedule C and California Form 540) and generally make quarterly estimated payments to the IRS and FTB. Self-employment tax applies federally.
• Sales tax: California generally does not tax services, and custom website design delivered electronically is generally not subject to sales tax. Sales of tangible items — printed materials, hardware, or software delivered on physical media — can be taxable and may require a seller's permit from the California Department of Tax and Fee Administration (CDTFA). If you resell goods, get guidance from the CDTFA.
• Local business taxes: some cities tax gross receipts; your city registration will tell you.

4. Hiring help: AB 5 and the ABC test

California's AB 5 (as amended by AB 2257) uses the "ABC test" to decide whether workers are employees or independent contractors. Subcontracting to other freelancers is common in web design, and the law includes a business-to-business exemption and some professional-services exemptions (which can cover certain marketing and graphic-design work) — but each has detailed conditions. Misclassification is expensive, so review the rules with the Employment Development Department (EDD) or an employment lawyer before you bring on regular help.

5. Contracts and intellectual property

• Use a written agreement covering scope, timeline, revisions, payment schedule, hosting and maintenance responsibilities, and what happens if the project is cancelled.
• Be precise about ownership. Under federal copyright law, work created by an independent contractor generally belongs to the contractor unless it is assigned in writing or qualifies as a "work made for hire." In California, "work made for hire" language in a contract with an individual can have employment-law consequences (see Labor Code §3351.5(c)), so many designers use an explicit copyright assignment on final payment instead. Ask a California attorney which approach fits.
• License third-party assets properly — themes, plugins, fonts, and stock photos — and document who holds each license.
• Limit your liability and state that the client is responsible for the legal accuracy of content they supply (privacy policy, claims, prices), while you are responsible for the build.

6. Build client sites that comply with California law

California clients face some of the strictest website rules in the country, and building them in is a real selling point:

• Accessibility: build to WCAG 2.1 AA. California's Unruh Civil Rights Act provides statutory damages of at least $4,000 per violation, and website claims are frequently filed in the state. See the accessibility guide.
• Privacy: CalOPPA requires a privacy policy on commercial sites that collect personal information from Californians; larger clients may be covered by the CCPA/CPRA, including the "Do Not Sell or Share" link and Global Privacy Control support. See state privacy laws.
• Pricing: California's SB 478 requires advertised prices to include all mandatory fees (other than government taxes and shipping).

Selling websites to hotels and other hospitality businesses

Hotels are a strong niche for California web designers, but their sites carry specific rules:

• Accessible reservations: federal ADA regulations for places of lodging require reservation systems to identify and describe accessible features of the hotel and rooms in enough detail for guests to judge whether they meet their needs, and to let guests reserve accessible rooms the same way as other rooms.
• All-in pricing: California's AB 537 requires hotels and short-term rentals to show the total price including mandatory fees, and SB 478 covers advertised prices generally.
• Third-party booking engines: check that the client's reservation widget meets these rules — it's often the least accessible part of a hotel site.

7. Insurance and operations

• Professional liability (errors and omissions) covers claims that your work caused a client financial loss.
• General liability covers bodily injury and property damage, which can matter for client-site visits or a coworking lease.
• Cyber liability is worth considering if you host sites or hold client logins.
• Keep a written operations manual: onboarding checklist, credential handling, backups, update schedule, and offboarding steps. It makes the business easier to delegate — or sell — later.

Startup checklist

1. Pick a structure (sole proprietorship with FBN, or LLC) and register.
2. Get your city business license or tax registration.
3. Get a free EIN from the IRS and open a separate business bank account.
4. Set aside money for quarterly estimated taxes (and the $800 FTB minimum tax for an LLC).
5. Write a standard client agreement with clear IP terms.
6. Buy professional liability insurance.
7. Build your own site to the standards you'll sell — accessible, fast, and compliant.

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Frequently asked questions