To sell crafts in California, you generally need a business license from your city or county and a free seller’s permit from the California Department of Tax and Fee Administration (CDTFA). If you work out of your house, most cities also require a home occupation permit, and if you sell under any name other than your own legal surname, you’ll need to file a fictitious business name statement with your county clerk. Which combination applies to you depends on where you live, how you sell, and what you make.
When Craft Sales Become a Business
The line between hobby and business matters because licensing kicks in the moment you’re operating for profit. The IRS asks whether you keep organized records, advertise, refine your methods to sell more, and put real time into the activity. No single factor decides it.1Internal Revenue Service. Know the Difference Between a Hobby and a Business
Federal law offers a bright line: if the activity shows a profit in three of the last five tax years, it’s presumed to be a for-profit business unless the IRS proves otherwise.2Office of the Law Revision Counsel. 26 USC 183 – Activities Not Engaged in for Profit But you don’t have to wait for that threshold. If you’re intentionally trying to make money — buying supplies to resell, listing products, tracking what sells — California treats you as a business for licensing and tax purposes right away.
Seller’s Permit From the CDTFA
Anyone selling tangible goods in California needs a seller’s permit from the CDTFA. Handmade jewelry, pottery, candles, clothing, woodwork, and similar crafts all count as tangible personal property subject to sales tax. The permit itself is free, though the CDTFA may require a refundable security deposit at registration to cover any unpaid taxes if you later close.3California Department of Tax and Fee Administration. Obtaining a Seller’s Permit
Occasional sellers still need to register. The CDTFA issues temporary seller’s permits for operations lasting 90 days or less at a single location.3California Department of Tax and Fee Administration. Obtaining a Seller’s Permit If you already hold a regular permit for your home studio, you still need a separate sub-permit for each temporary selling location such as a swap meet or craft fair. You can register online or at any CDTFA office.4California Department of Tax and Fee Administration. Operators of Swap Meets, Flea Markets, or Special Events
Collecting Sales Tax (and the Marketplace Rule)
California’s statewide base sales tax is 7.25%, and most areas add local district taxes ranging from 0.10% to 2.00%, so the combined rate depends on where the sale happens.5California Department of Tax and Fee Administration. California City and County Sales and Use Tax Rate Information When you sell at a fair or through your own website, you charge the right rate, collect the tax, and remit it to the CDTFA on your assigned filing schedule.
Sales through platforms like Etsy or Amazon Handmade work differently. Under California’s Marketplace Facilitator Act, the platform is treated as the seller for each sale it facilitates, so it collects and remits California sales tax for you.6California Department of Tax and Fee Administration. Sales and Use Tax Law – Chapter 1.7 You still need your own seller’s permit, but you don’t collect sales tax separately on marketplace transactions. New sellers sometimes charge tax on top of what the platform already collects. Don’t. For direct sales at fairs, on your own site, or in person, the collection responsibility stays with you.
City or County Business License
Nearly every California city and county requires a general business license, sometimes called a business tax certificate, for commercial activity within its borders. You get it from the city where your business is physically located, or from the county if you’re in an unincorporated area. Fees vary widely and are often tied to projected or actual revenue. Some cities charge under $50 for very small operations; others charge $100 or more. The license renews annually.
The application is usually straightforward: your business name, address, a description of what you do, and expected revenue. Many cities accept online applications. If you move or begin operating in a second jurisdiction, you’ll likely need a separate license there too.
Home Occupation Permit
If you make or store crafts at home, most California cities require a home occupation permit before you can operate from a residential address. Your local planning department issues it, and the rules exist to keep the business from disrupting the neighborhood.
Sacramento’s restrictions are typical: no exterior signage, no more than one non-resident employee working at the home, no more than eight customer visits per day, and the business must stay clearly secondary to the residential use of the property. Activities that create noise, dust, fumes, or odors detectable outside your property line are prohibited.7City of Sacramento. Home Occupations – Zoning Permit Process and Requirements Fees range from nothing in some jurisdictions to several hundred dollars.
Working quietly at a kitchen table or in a garage? These rules rarely bite. Running a woodshop with power tools or hosting a stream of buyers? Read your city’s rules carefully before you apply.
Fictitious Business Name Statement
If your business operates under any name other than your legal surname, California requires a Fictitious Business Name (FBN) statement, commonly called a DBA. If your name is Maria Lopez and you sell as “Maria Lopez Ceramics,” no filing is needed. Selling as “Golden Coast Pottery” requires an FBN.8California Office of the Small Business Advocate (CalOSBA). Setting Up Your Business in California – Section: Choose a Business Name
You file with the county clerk where your principal business address is located. Fees vary; Los Angeles County charges $26 for one business name with one registrant, plus $5 for each additional name or registrant.9Los Angeles County Registrar-Recorder/County Clerk. Fictitious Business Name (FBN) Fees Within 30 days of filing, you must publish the statement in a newspaper of general circulation in your county once a week for four consecutive weeks, then file proof of publication with the county clerk within 30 days of the last publication.8California Office of the Small Business Advocate (CalOSBA). Setting Up Your Business in California – Section: Choose a Business Name Publication usually costs another $30 to $80.
Sole Proprietor or LLC?
Most craft sellers start as sole proprietors. There’s no state filing, no formation fee, and no separate tax return. You report business income and expenses on Schedule C of your personal federal return. The only registrations you need are the permits above.
The tradeoff is personal liability. A sole proprietorship draws no legal line between you and the business, so a lawsuit or unpaid supplier can reach your personal savings and property. A California LLC creates that separation, with only the LLC’s assets generally on the table for business creditors.
That protection has a price tag. California charges every LLC an annual minimum franchise tax of $800, no matter what the business earns.10California Franchise Tax Board. Limited Liability Company LLCs above $250,000 in revenue pay an additional graduated fee. For a craft business earning a few thousand dollars a year, $800 can wipe out most of the profit. Many sellers start as sole proprietors and revisit the LLC question when revenue grows or when the products carry real injury risk.
Whichever structure you pick, open a separate bank account for the business. Keeping personal and business money apart makes bookkeeping cleaner and reinforces your legal separation if you later form an LLC.11U.S. Small Business Administration. Open a Business Bank Account Sole proprietors can open one with a Social Security number, or first request a free Employer Identification Number from the IRS.12Internal Revenue Service. Get an Employer Identification Number
Federal Taxes You’ll Also Owe
California licensing is one half. Federal tax is the other. Once your net self-employment income tops $400 in a year, you owe self-employment tax on top of regular income tax. The rate is 15.3%: 12.4% Social Security and 2.9% Medicare.13Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) The Social Security portion applies only to net earnings up to $184,200 in 2026; the Medicare portion has no cap.14Social Security Administration. What Is the Current Maximum Amount of Taxable Earnings for Social Security
Since no employer withholds from your craft income, you’re expected to send quarterly estimated payments. The deadlines are April 15, June 15, September 15, and January 15 of the following year.15Internal Revenue Service. When to Pay Estimated Tax Miss them and you get an underpayment penalty that grows with time. Many first-year sellers skip quarterlies because the numbers feel small, then face a combined bill plus penalties they didn’t budget for.
On the plus side, Schedule C lets you deduct the cost of raw materials, supplies, packaging, and shipping through cost of goods sold. Tools and equipment lasting more than a year can be depreciated or expensed under Section 179. If part of your home is used exclusively and regularly for the business, the simplified home office deduction gives you $5 per square foot up to 300 square feet, capped at $1,500.16Internal Revenue Service. Tax Guide for Small Business Booth fees, platform fees, business insurance, and mileage to fairs or supply stores are also deductible.
If You Make Children’s Products
Crafts designed for children 12 and under carry an extra layer of federal compliance that goes well beyond California licensing. The Consumer Product Safety Commission requires every domestic manufacturer of children’s products to issue a Children’s Product Certificate based on testing from a CPSC-accepted third-party laboratory, confirming compliance with all applicable safety rules including lead limits and small parts standards.17Consumer Product Safety Commission. Children’s Product Certificate Each product must also carry a permanent tracking label with the manufacturer’s name, production location and date, and batch or run number.18Consumer Product Safety Commission. Tracking Label Business Guidance
Small makers can apply to the CPSC’s Small Batch Manufacturer program for limited relief from some third-party testing, but the relief only covers lower-priority rules; high-priority safety standards still require accredited lab testing, and you must still comply with all standards and issue a CPC.19Consumer Product Safety Commission. Small Batch Manufacturers and Third Party Testing If you’re selling stuffed animals, children’s jewelry, or wooden toys, price the testing into your plans before the first sale.
Product Liability Insurance
No California law requires craft sellers to carry product liability insurance. But many craft fairs and marketplace platforms require it before they’ll let you participate. A standard craft seller’s policy usually offers $1 million per incident and $2 million aggregate. Premiums for small-scale makers are typically a few hundred dollars a year, and the cost is deductible as a business expense.
How to Register
Before you fill anything out, pull together your business name, home address, Social Security number or EIN, a description of your products, and your expected annual sales. Projected revenue matters — it drives both your local license fee and how often the CDTFA will want you to file.
The CDTFA’s online system is the fastest way to get your seller’s permit and any temporary sub-permits. Registration is free and permits are often issued almost immediately.3California Department of Tax and Fee Administration. Obtaining a Seller’s Permit For your local business license and home occupation permit, check your city or county website; many take online applications, though smaller jurisdictions may still want a mailed form or an in-person visit. Fictitious business name filings go through the county clerk.
Keep copies of every permit and confirmation number. Some jurisdictions require you to post your business license at your place of business, and fair organizers routinely ask to see your seller’s permit before you set up a booth. Sellers at swap meets and fairs must also give the event operator their business name, address, phone number, driver’s license number, product description, and seller’s permit number.4California Department of Tax and Fee Administration. Operators of Swap Meets, Flea Markets, or Special Events