How to Get a Food Vendor's License in California

Food trucks have been popular in some cities for some years, and the movement toward mobile food establishments experienced even more momentum during the pandemic. But their popularity as eateries doesn't mean that just anyone can start selling hotdogs out of a truck in California. There are a good number of steps that a potential mobile food vendor must take before selling the first taco or sandwich, including obtaining a seller's permit and complying with state food safety rules and local permitting and licensing requirements.

A mobile food vendor refers to a special category of take-out restaurant where the owner sells to the public out of a truck, trailer, push-cart or other type of wheeled equipment during specified hours of operation. While requirements and restrictions vary from city to city regarding licenses and permits, state requirements apply everywhere in California.

The state imposes certain requirements for food safety that apply to food sold by mobile food vendors. These are set out in the California Health and Safety Code and specify, among other things, the hygiene, cleaning and sanitizing of equipment and utensils, food storage, and janitorial facilities.

Training is required for those working in a mobile food service operation. One or more employees of a mobile food vendor must get state certification in food safety. This requires that they pass a Food Safety Certification exam. All other workers who prepare, store or deal with food in a food-vending facility must obtain a Food Handler Card.

Anyone who is engaged in business in California and intends to sell tangible personal property that is subject to sales tax must obtain a California permit for sales. This applies to both businesses and individuals, to wholesalers and retailers. If the company is selling goods they make, the permit is called a California seller permit; if the food is prepared by someone else, the required permit is a reseller permit.

How to obtain a seller's permit? The California Department of Tax and Fee Administration offers online registration for the permit. The system assists users to determine the type of permits a particular business requires. There is no license fee required for a seller's or reseller's permit.

Although grocery store items are not usually subject to sales tax, hot prepared items like those sold in most food trucks is taxable. They are taxable at California’s 7.25 percent state sales tax rate, plus the local district tax rate whether they are sold as take-out or to consume on the premises. One exception is for hot baked goods, like muffins or croissants. If they are sold as to-go items, they are exempt from sales tax, but if they are sold with other hot prepared foods, the entire sale is taxable.

If a business does not separately track sales of cold food items (not taxed) and hot food items (taxed), a rule called the 80/80 rule applies. It provides that when 80 percent of a business' sales are food and 80 percent of the food sold is taxable, all of the take-out sales are taxable.

Every California business needs a general business license to operate legally in the state. This includes home businesses and small businesses, including those that plan to sell food as mobile food vendors. But the state of California does not provide business licenses; these are offered by the cities or counties in California.

If a business operates in any city or town in the state, it must apply for a business license in that location. If a business operates in an unincorporated area of the state, they must apply for a business license at the county level. Each city or unincorporated area is permitted to charge fees for businesses operating in its jurisdiction, and requiring these licenses is one way to collect taxes.

Note that business licenses are given different names in different cities in California. For example, they are termed business licenses in Anaheim, but they can also be called California business tax certificates, as they are in San Diego. A business that is going to operate in several locations will require a business license or a business tax certificate in every city.

To obtain a business license, the individual starting the business must obtain and fill out the city application form. Most cities offer downloads of these forms on their websites. Once the form is completed, the business can deliver it to city hall, together with the required tax or application fee, usually running between $50 and $100, but it also can be based on a percentage of sales. Many cities offer special licenses for small businesses or home-based businesses.

While each city provides their own form for applying for a business license, the forms are generally similar. They ask for general information like:

• Business Name.
• Address of business.
• Phone number.
• Structure of business (sole proprietor, partnership, etc.)
  
• Tax identification number (TIN) obtained from the IRS or, for a sole proprietor, the Social Security number.
• Seller's permit number.
  
• Identifying information from each individual business owner.
  
• Driver’s license number.
• Description of type of business.
  
• Number of employees, if any.

In order to legally operate a food truck in California, the company must be sure that the truck has a motor vehicle license. This license is the same whether the truck is part of a mobile food vendor operation or not.

Any business with employees also needs an Employer Identification Number (EIN) from the Internal Revenue Service. The business must comply with state and local laws regarding minimum standards for wages, hours and working conditions. They must also purchase and maintain workers' compensation insurance coverage and register with the state Employment Development Department within 15 days of paying more than $100 in wages to one or more employees.

Many county environmental health departments mandate that mobile food facilities obtain a health permit to verify that the truck is clean and the food is prepared safely. They may inspect the facility and equipment from time to time to make sure everything is done according to regulations.