How to Start an HVAC Business in California

Last updated: February 23, 2026

Starting an HVAC business in California is a high-demand opportunity – the state’s extreme inland heat, strict energy efficiency standards, and massive housing stock create year-round work for heating, ventilation, and air conditioning contractors. But California is also one of the most heavily regulated states for contractors. You need a C-20 license from the Contractors State License Board (CSLB), a $25,000 contractor’s license bond, mandatory workers’ compensation insurance (even with zero employees), and EPA certification before you can legally operate.

This guide covers every requirement, cost, and step to legally start and operate an HVAC business in California, whether you’re launching as a solo service contractor or building a full-service installation company.

HVAC Business Requirements in California at a Glance

How to Start an HVAC Business in California (Step by Step)

Step 1: Meet CSLB Experience Requirements (4 Years in HVAC)

California requires a minimum of 4 years of journey-level experience in the C-20 (Warm-Air Heating, Ventilating and Air-Conditioning) trade before you can apply for a contractor license. Qualifying experience includes:

• Employment under a licensed C-20 contractor – the most common path
• Military HVAC training – documented MOS/rating in HVAC systems
• Education credits – accredited trade school or apprenticeship programs may substitute for a portion of experience (typically up to 3 years of credit)

The CSLB verifies experience thoroughly. You’ll need to provide employer names, dates of employment, and a detailed description of the work you performed. Former employers or supervisors may be contacted to verify your claims.

Step 2: Pass CSLB Licensing Exams

You must pass two proctored exams administered by the CSLB:

• Business and Law Exam – covers California contractor law, business management, estimating, contracts, and safety regulations
• C-20 Trade Exam – covers warm-air heating, ventilating, and air-conditioning systems installation, repair, and maintenance

Key details:

• Application fee: $450 (non-refundable, due at time of application)
• Exam scheduling: CSLB schedules your exams after reviewing your application
• Passing score: 72% on each exam
• Study resources: The CSLB publishes study guides, and several California-specific exam prep courses are available

C-20 classification scope: The C-20 license covers installation, service, and repair of warm-air heating systems, ventilating systems, and air-conditioning systems. This includes ductwork, thermostats, controls, and related components.

Step 3: Get EPA Section 608 Certification

Federal law requires EPA Section 608 certification for anyone who purchases, handles, or disposes of refrigerants. This is non-negotiable for HVAC work.

• Certification types: Type I (small appliances), Type II (high-pressure), Type III (low-pressure), and Universal (all types)
• Recommended level: Universal certification (covers all equipment types)
• Exam cost: $25-$150 depending on testing provider
• Duration: Lifetime certification – no renewal required
• 2026 update: Exam questions now include A2L (mildly flammable) refrigerants as the industry transitions away from high-GWP refrigerants

Step 4: Form Your California LLC

File your Articles of Organization online with the California Secretary of State. Filing fee: $70. Processing takes 3-5 business days.

Within 90 days of formation, you must file a Statement of Information with the Secretary of State ($20). This is required every 2 years thereafter.

Your LLC name must include “LLC,” “L.L.C.,” or “Limited Liability Company” and must be distinguishable from existing entities on file. You’ll need a California Agent for Service of Process with a physical street address in the state – you can serve as your own agent if you have a California address.

Franchise Tax: California charges an $800 annual franchise tax for LLCs. However, the first taxable year is exempt (the exemption applies to LLCs formed on or after January 1, 2021). The $800 tax is due by the 15th day of the 4th month of your LLC’s tax year (typically April 15) starting in your second year.

If you want to operate under a different name (e.g., “Golden State HVAC” instead of “Golden State HVAC LLC”), file a Fictitious Business Name Statement with your county clerk ($10-$100 depending on county, plus publication fees).

Step 5: Get Your Federal EIN

Apply for a free Employer Identification Number at IRS.gov. You’ll receive it immediately when applying online. You need this to open a business bank account, and it’s required on your CSLB application.

Step 6: Get Your Contractor’s License Bond

California requires all licensed contractors to post a $25,000 contractor’s license bond. This was increased from $15,000 effective January 1, 2023, under SB 607.

• Bond amount: $25,000 (mandatory for all contractors)
• Annual premium: ~$100-$500/year depending on your credit score (typically 1-3% of the bond face value)
• Purpose: Protects consumers – they can file a claim against your bond if you fail to fulfill contractual obligations

Bond of Qualifying Individual: If the Responsible Managing Employee (RME) or Responsible Managing Officer (RMO) listed on your license owns less than 10% of the business, an additional $25,000 Bond of Qualifying Individual is required. This bond protects the business if the qualifying individual acts improperly.

Step 7: Get Insurance

Workers’ Compensation Insurance (Mandatory – No Exemption for C-20)

This is one of the most important California-specific requirements for HVAC contractors. C-20 contractors must carry workers’ compensation insurance even with zero employees. There is no exemption available for the C-20 classification.

• Effective: January 1, 2023 – the workers’ comp exemption was removed for C-20 and other high-risk contractor classifications
• Coverage must be active before your license is issued
• Cost: Varies based on payroll and classification code. Sole proprietors with no employees can expect to pay $750-$2,500/year for minimum coverage
• Proof required: CSLB requires a Certificate of Workers’ Compensation Insurance or a certified copy of your policy

Why no exemption? The C-20 classification is considered high-risk due to the physical nature of the work (rooftop units, crawl spaces, electrical work, refrigerant handling). California eliminated the workers’ comp exemption for several contractor classifications to ensure injured workers always have coverage.

General Liability Insurance

While not technically required by the CSLB for licensure, general liability insurance is practically essential for any operating HVAC business. Most commercial clients, general contractors, and property managers require proof of coverage before hiring you.

• Recommended coverage: $1,000,000 per occurrence / $2,000,000 aggregate
• Average cost in California: $800-$2,500/year depending on revenue and services

Commercial Auto Insurance

Essential for HVAC businesses – you’ll be driving to job sites daily with tools, equipment, and refrigerants.

• Average cost in California: $1,800-$3,000/year per vehicle
• Covers service vans/trucks, tools in transit, and third-party liability

Step 8: Apply for Your CSLB C-20 License

Once you’ve passed both exams and have your bond and insurance in place, the CSLB will process your license.

License fees:

• Initial license (Sole Owner): $200
• Initial license (Non-Sole Owner): $350
• License duration: 2-year term
• Active renewal (Sole Owner): $450 every 2 years
• Active renewal (Non-Sole Owner): $700 every 2 years

Qualifier options: Your license must have a qualifying individual who passes the exams and meets the experience requirements. This can be:

• RMO (Responsible Managing Officer) – an officer, member, or manager of the business entity who qualifies the license
• RME (Responsible Managing Employee) – a W-2 employee who qualifies the license. If the RME owns less than 10%, the additional $25,000 bond is required

Step 9: Get Local Permits and Business License

Most California cities and counties require contractors to hold a local business license before performing work in their jurisdiction.

• Cost: $50-$300 depending on your city/county
• Multiple jurisdictions: If you work across several cities, you may need a business license in each one (some cities have reciprocal agreements)
• Renewal: Typically annual
• Permit pulling: For HVAC installation work, you’ll also need to pull mechanical permits from the local building department on a per-job basis

Cost to Start an HVAC Business in California

Solo Contractor (Service and Repair)

Small HVAC Company (Install + Service, 2-5 Employees)

Related California Business Guides

• Starting a Business in California: Complete Guide

← Back to all California business guides

Frequently Asked Questions

What license do I need for HVAC in California?

You need a C-20 (Warm-Air Heating, Ventilating and Air-Conditioning) contractor license issued by the Contractors State License Board (CSLB). This requires a minimum of 4 years of journey-level experience in the C-20 trade, passing the Business and Law exam and the C-20 Trade exam, posting a $25,000 contractor’s license bond, and carrying workers’ compensation insurance. The application fee is $450 (non-refundable) and the initial license fee is $200 (Sole Owner) or $350 (Non-Sole Owner).

Do C-20 contractors need workers’ comp with no employees?

Yes. As of January 1, 2023, C-20 contractors in California must carry workers’ compensation insurance even with zero employees. There is no exemption available for the C-20 classification. This applies regardless of whether you operate as a sole proprietor or LLC. Coverage must be active before the CSLB will issue your license.

How much is the CSLB contractor bond?

California requires a $25,000 contractor’s license bond for all licensed contractors. This amount was increased from $15,000 effective January 1, 2023, under SB 607. The annual premium you pay to a surety company is typically $100-$500 depending on your credit (about 1-3% of the face value). If the qualifying individual on your license owns less than 10% of the business, an additional $25,000 Bond of Qualifying Individual is required.

Do I need EPA certification for HVAC work?

Yes. EPA Section 608 certification is federally required for anyone who purchases, handles, or disposes of refrigerants. Universal certification is recommended because it covers all equipment types (Types I through IV). The exam costs $25-$150 and grants a lifetime certification with no renewal required. As of 2026, exam questions include A2L (mildly flammable) refrigerants.

How much does it cost to start an HVAC business in California?

A solo contractor focused on service and repair can expect startup costs of approximately $16,000-$30,000, including CSLB licensing, a used service van, basic tools, bonds, and mandatory insurance. A small HVAC company with 2-5 employees doing installations and service typically costs $50,000-$110,000+ due to multiple vehicles, install-grade equipment, higher insurance premiums, and inventory.

What is the California franchise tax for LLCs?

California charges an $800 annual franchise tax for LLCs, payable to the Franchise Tax Board. The first taxable year is exempt for LLCs formed on or after January 1, 2021. Starting in your second year, the $800 is due by the 15th day of the 4th month of your tax year (typically April 15). This is in addition to any income tax your LLC may owe. LLC formation itself costs only $70 with the Secretary of State, plus $20 for the required Statement of Information.