Starting a California LLC is Easy
It’s easy to form a limited liability company (LLC) in California online yourself. Just follow these steps:
- Name Your LLC
- Choose A Registered Agent
- File CA Formation Documents
- File Initial Statement of Information
- Create an Operating Agreement
- Get an EIN
Follow our How to Start an LLC in California guide below to get started today.
For more information on how to form an LLC in any state, visit our How to Start an LLC guide.
Step 1: Create A Name For Your California LLC
Before you do a California LLC registration, you'll need to come up with a name. Your business name needs to be catchy for branding purposes and legitimate for legal purposes.
We go into depth on this topic in our LLC naming guide. We’ll go over the basics below.
Naming Your LLC
First, brainstorm some possibilities. Use our LLC name generator to get the ideas flowing.
Next, make sure your name meets California LLC guidelines:
- Contains the words limited liability company, limited company, LLC, or L.L.C.
- Doesn't contain the words bank, trust, trustee, credit union, or insurer
- Is distinguishable from any other entity or fictitious business name (DBA) registered in California
- Complies with the full list of California naming guidelines.
Next, do a California name search with the California Secretary of State to find out if your name is available.
If your business name is available and meets all guidelines, you’ll be able to register it as a California LLC when you file your California Articles of Organization with the Department of Licensing and Regulatory Affairs.
Is the URL available? Before you commit 100% to a name, check to see if there’s a good web domain available.
We recommend buying your domain right away because even if launching a business website isn’t on your radar right now, it will be soon.
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Once you register a domain name for your LLC, consider setting up a business phone system to establish credibility and enhance your customer service. Nextiva provides a plethora of useful features and a quick, easy setup. Try Nextiva.
Using a California Fictitious Business Name (DBA)
A California DBA (doing business as), also known as a fictitious business name, is any registered name that a business operates under that isn't its legal business name. A fictitious business name can be used by any type of business, including a sole proprietorship, partnership, or limited liability company (LLC).
Learn how to get a DBA in our California DBA guide.
Step 2: Appoint a California Agent for Service of Process
When you file your Articles of Organization, you'll need to list a registered agent, known as an agent for service of process in California.
Your registered agent can be a person or a registered agent service. You can act as your own registered agent, but many business owners choose to use a registered agent service.
Here are a few things to think about before you decide to act as your own registered agent:
- You’ll need to be available during normal (9 am - 5 pm) business hours at the address you provide
- If you run your business from home, you’ll have to make your personal address public
- You could be served with a lawsuit in front of your family or coworkers
Recommended: Northwest Registered Agent offers a free year of registered agent services when you form your LLC ($29 plus state fees).
Step 3: File the Articles of Organization
It’s time to officially form your LLC by filing the LLC-1 Articles of Organization with the California Secretary of State.
Recommended: Now is a good time to decide if your California LLC will be member-managed vs manager-managed.
You'll need to know the following information to complete each "Article":
- Entity name
- Name and address of the agent for service of process
- Management structure
For more detailed help with completing the form, visit our California Articles of Organization guide.
Mail Your Certificate of Formation:
Secretary of State
Business Entities Filings
P.O. Box 944228
Sacramento, CA 94244
Or submit it in person at:
Secretary of State
1500 11th St.
Sacramento, CA 95814
How long does it take to get a California LLC approved? The standard processing time is 5 days.
Note: California has waived formation filing fees from July 1, 2022, to June 30, 2023.
Step 4: File the Initial Statement of Information
You'll need to file an Initial Statement of Information (Form LLC-12) with the California Secretary of State within 90 days of forming your LLC. This can be done online, in person, or by mail.
Mail to California Secretary of State:
Secretary of State, Statement of Information Unit
P.O. Box 944230
Sacramento, CA 94244
Submit In Person:
California Secretary of State Sacramento Office
1500 11th Street
Sacramento, CA 95814
Step 5: Create A California LLC Operating Agreement
Creating a California LLC operating agreement is the only way to legally lock down your LLC’s management and ownership structure. Having an operating agreement in place will give you something to return to if a dispute or lawsuit arises.
Even single-member LLCs benefit from having an operating agreement.
Your operating agreement should outline the following:
- Each member’s responsibilities
- How new members will be admitted
- How existing members may transfer or terminate their membership
- How profits and dividends will be distributed
You can add as many provisions as you want, as long as they don't conflict with California law. Take a look at our What is an Operating Agreement guide to learn more.
Download a template or create a custom Free Operating Agreement using our tool.
Step 6: Obtain An EIN (Employer Identification Number) For Your LLC
An Employer Identification Number (EIN) is like a Social Security number (SSN) for your company. The IRS and the state of California will use this number to track your business activity.
Your EIN will come in handy when it’s time to:
- Open a business bank account
- File Federal and State taxes
- Hire employees
The best way to get an EIN for your LLC in California is by using the free online application on the IRS website.
Read our Get an EIN guide for instructions.
Steps After Forming an LLC in California
After forming your California LLC, it's important to:
Open A Business Bank Account
A business bank account helps separate personal expenses and company expenses, which is required to maintain your California LLC's corporate veil. A corporate veil protects your personal assets from creditors in potential lawsuits against your LLC or Business.
Learn more by reading this guide to Banking for Entrepreneurs. For a multi-member LLC, you'll also want to set up capital accounts for LLC members. We also recommend checking out our review of the best business bank accounts.
Get A Business Credit Card
A business credit card will help separate personal and business expenses while building your company's credit history. A strong credit history will be useful for raising capital in the form of venture capital, angel investment, or small business loans.
Set Up Business Accounting
Hiring a business accountant is one of the best ways to ensure you’re taking advantage of LLC tax benefits; possibly saving you and your business thousands of dollars per year.
When forming an LLC in California, it’s a good idea to start a relationship with a business accountant as soon as you start your business to help set your company up for success.
Get Business Insurance
Keep Your Company Compliant
Research California Business Licenses and Permits
To operate an LLC in California, you will need to comply with federal, state, and local government regulations such as health permits, building permits, and signage permits.
Business licensing and permit requirements vary from state to state. To get started, visit our How to Get a Business License in California guide. To help facilitate this process, you can also utilize a business license service.
File Your California LLC Statement of Information
California LLCs must file either Form LLC-12: Statement of Information or Form LLC-12NC: Statement of Information - No Change every two years with the Secretary of State. The filing fee for both form types is $20 and can be filed online, by mail, or in person.
Understand California State Tax Requirements
California businesses selling a physical product are generally required to register for a seller’s permit through the California Taxation website. Visit our California Sales Tax guide to learn more about seller’s permits and California sales tax.
If you have employees in California, you will need to register for employer taxes, including unemployment insurance tax and employee withholding tax, through the California Employment Development Department’s e-Services for Business portal.
Businesses in California must also pay an annual tax of $800 for doing business in the state, regardless of whether your LLC is conducting any business activity. What’s more, LLCs must pay a fee based on their annual revenue, which starts at $900.
Understand Your California LLC’s Federal Tax Requirements
Most California LLCs will need to report their income to the Internal Revenue Service (IRS) each year using Form 1065: Partnership Return (multi-member LLCs) or Form 1040 - Schedule C (single-member LLCs).
How you pay yourself will affect your federal taxes. Visit our guide to learn more about how to pay yourself from your LLC.
Know Your California LLC’s Federal Tax Election Options
Pass-through taxation entails a business’s profits passing through to the LLC member’s individual tax returns. Like a sole proprietorship, an LLC is taxed as a pass-through entity, also known as a disregarded entity.
Once this process is completed and after any tax-deductible expenses are taken out, the LLC members pay self-employment taxes and income tax on their portion of the business income.
Alternatively, California LLCs can choose to elect to be taxed as an S corporation (S corp) or C corporation (C corp). If S corporation tax status is elected, LLC members can be taxed as employees of the business, potentially reducing tax burden.
More LLC Resources
- California Foreign LLCs: Forming a foreign LLC allows your company to operate as one entity in multiple states. Download the California foreign LLC form to get started.
- California Certificate of Good Standing: A certificate of good standing verifies that your LLC was legally formed. To order, follow our California certificate of good standing guide.
- Dissolving a California LLC: If you are ready to dissolve your LLC, follow the steps in our California LLC Dissolution Guide.
- LLC Legal Forms: TRUiC offers a number of free LLC legal forms including operating agreements, LLC resolutions, and hiring documents.
California LLC FAQs
What's the difference between a California limited liability company and a sole proprietorship?
In California, the two most common business entities are the California limited liability company (LLC) and the sole proprietorship. Both have their pros and cons.
The most important difference between an LLC and a sole proprietorship is that an LLC offers limited liability protection to its owners. This means that if the LLC gets sued or defaults on a debt, the owners' personal assets can be protected. In a sole proprietorship, the owner is personally liable for any debts or lawsuits against the business.
Learn more in our LLC vs Sole Proprietorship guide.
What is the California Franchise Tax Board?
The California Franchise Tax Board (FTB) is a state agency that administers two major taxes in California: the personal income tax, annual franchise tax, and the corporation tax.
Learn more in our LLC Taxes By State guide.
What are the California LLC documents that must be submitted to the California Secretary of State?
The Articles of Organization is the most important document that must be submitted to the California Secretary of State in order to establish limited liability status for an LLC in California. It must include the name and contact information of the LLC, the name and address of its registered agent, and the name and address of its members or managers.
The Statement of Information must also be filed within 90 days of formation, and it includes additional contact information as well as information about the company's finances.
Learn more in our California LLC Formation Checklist.
How much does an LLC cost in California?
If you're thinking about starting an LLC in California, you'll need to file Articles of Organization with the Secretary of State. There is a filing fee of $70, which is payable by credit card or check. You'll also need to appoint a registered agent for your LLC. This can be done by appointing an individual who resides in California, or by appointing a commercial registered agent service.
Learn more in our Cost to Form an LLC in California guide.
Do you have to pay the $800 California LLC fee the first year?
In California, you have to pay an $800 Franchise Tax beginning the second-year your LLC is in business. You must continue paying an $800 Franchise Tax every year thereafter. You do not have to pay an $800 Franchise Tax your first year in business. You must submit form FTB 3522 when filing this Franchise Tax fee.
In addition to paying an $800 Franchise Tax if your LLC estimates earning more than $250,000 it must pay an estimated tax, filing FTB 3536. The amount of this estimated tax varies based on how much your company estimates earning beyond the $250,000 in annual earnings.
To send these documents by mail:
Franchise Tax Board
PO Box 942857
Sacramento, CA 94257-0531
Is an LLC worth it in California?
There are a lot of factors to consider when deciding whether or not to form an LLC in California. One key factor is personal liability. LLC members are not, under most circumstances, personally liable for the debts and obligations of the company.
This is not the case for sole proprietorships – owners of sole proprietorships are personally liable for all business debts and obligations.
Overall, an LLC can be a great option for businesses operating in California because of the limited personal liability protections in place.
Learn more in our 5 Best Questions to Ask Before Starting an LLC guide.
Do I need a registered agent for my LLC?
If you are a business owner, you should be aware of the different types of registered agents and what services they provide. A registered agent is a person or company that agrees to receive legal documents on behalf of your business.
Having a registered agent ensures that someone is always available to receive service of process during normal business hours. It also allows your LLC to have a business address instead of a residential address.
Learn more in our What does a Registered Agent Do? guide.
Do I need an LLC for hiring employees in California?
Businesses are not required to start an LLC in order to hire employees in California. But, if you plan to grow your business and would like to protect your personal assets while doing so, we recommend starting an LLC.
To learn more about the California LLC formation process and hiring employees check with the Internal Revenue Service (IRS) about obtaining an Employer Identification Number (EIN) and with the California Secretary of State when forming an LLC California business entity that plans to conduct business and hire employees.
Learn more in our How to Hire Employees guide.
Do I need a federal tax identification number for LLC formation in California?
The answer is: it depends. If your LLC has more than one owner, or if it will have employees, then you need an EIN. However, if your LLC is owned by a single member and will not have any employees, you may not need one. You can check with the California Secretary of State to find out for sure. You can get a free EIN number through the Internal Revenue Service.
Learn more in our What Is an EIN Number guide.
How do you write an operating agreement for a California LLC?
The first step in creating an operating agreement for a California LLC is to identify the members of the company and their roles. Typically, the operating agreement will identify who is responsible for managing the company and provide guidelines for making decisions. The agreement should also specify how profits and losses are to be shared among the members and outline any restrictions on the transfer of ownership interests.
Once the members have been identified, the next step is to agree on the terms of the operating agreement. This may include deciding how often meetings will be held, what types of decisions can be made without a meeting, and what qualifies as an emergency requiring immediate action. The document should also include provisions for handling disputes among members and describe how information about the company will be shared among members.
Use our free operating agreement template to get started.
How much tax does an LLC pay in California?
Sales tax is a big consideration for businesses, and California LLCs are no exception. How much tax does an LLC pay in California?
First, it's important to understand that there are two types of taxes that apply to LLCs in California: sales tax and annual franchise tax. The annual franchise tax is a flat fee of $800, while the sales tax is calculated based on the total gross receipts of the LLC. In addition, all LLCs in California are subject to federal income taxes.
The amount of sales tax an LLC pays in California depends on the type of business it conducts. For example, if an LLC sells products that are subject to sales tax, it will need to collect and pay sales tax on those products. The current statewide sales tax rate is 7.25%. Note that some local jurisdictions charge a district tax rate between 0.10% and 1.00%.
If hiring employees you will also be responsible for paying employer taxes and having the correct federal business licenses up to date.
Learn more in our California LLC Tax guide.
What is the California LLC Biennial Report?
If you have formed a California LLC, you must stay on top of your state's filing deadlines in order to stay in good standing. One such deadline is the biennial report or statement of information, due every two years.
The biennial report requires certain information about your LLC, such as its name and registered agent, and must be filed with the California Secretary of State.
If you miss the biennial report deadline, the Secretary of State reports this to the Franchise Tax Board which accesses a penalty.
Until the penalty is resolved you won't be able to transact business in California, be able to sue another business or be able to defend against another business suing your business. At worst, your LLC could be administratively dissolved.
Learn more in our California LLC Biennial Report guide.
Does a domestic LLC formed outside California need to register as a foreign LLC in California if it does business in California?
If a domestic LLC (registered in another state) is transacting business in California then it is required to register as a California foreign LLC. For example, if you register an LLC in Florida that sells jewelry and you run online display ads targeting Californians and orders start coming in, then you’re required to register as a foreign LLC in California.
LLC owners registering a California foreign LLC business structure are required to file California LLC articles of organization, acquire the right business licenses, have a California registered agent, and file a foreign LLC registration form. Taxes must be paid to the appropriate California taxing authority.