How to Start an LLC in California

A California LLC is one of the most simple, cost-effective, and quick business structures to form. Even so, navigating the formation process can seem daunting without clear guidance and an actionable plan.

In this How to Start an LLC in California guide, we’ll break down everything you need to know to form your LLC, from the steps you’ll need to take to get started to maintaining your business structure.

LLC California

In order to form an LLC in California, you’ll need to complete the following steps:

1. Name Your California LLC
2. Pick a California Registered Agent
3. Submit the Articles of Organization
4. Create a California LLC Operating Agreement
5. Get an EIN
6. File Your BOI Report

In the sections below, we’ve broken down each of these steps in more detail.

Step 1: Name Your California LLC

The first thing you’ll need to do before getting started is picking the right name for your LLC. This is important because your business’s name will need to represent your brand accurately, as well as be as memorable as possible.

In California, all LLC names need to abide by the following statutory guidelines in order to be accepted by the Secretary of State:

• Must include the phrase “Limited Liability Company”, which can be abbreviated as either “LLC” or “L.L.C.”. The words “Limited” and “Company” can also be written as “Ltd.” and “Co.”
• Cannot include the terms “bank”, “corp”, “corporation”, “incorporated”, “trust”, “trustee”, or any words implying it issues insurance policies or takes on insurance risks
• Must be written in either the English alphabet, numbers, or any of the symbols included in Section 21002(b) of the California Code of Regulations
• Must be deemed distinguishable from all names of existing business entities registered in the state of California. The following rules will apply when determining whether a name is distinct or not:
• Changes in capitalization (e.g., upper and lower case letters), font, and typeface are not considered distinct
• Accent marks above letters will not make a proposed name unique where it is otherwise identical to the legal name of an existing California business entity
• Subscript and superscript characters are deemed to be the same as standard characters
• Must not mislead the public with a false implication of either:
• Government affiliation
• The LLC’s entity type
• The purpose for the LLC’s formation

The California Secretary of State has summarized all the relevant naming requirements for business entities of the California Corporations Code in its Name Regulations & Additional Statutory Requirements and Restrictions document.

Keep in mind that even though picking an LLC name in itself has no cost, there are certain fees that can be associated with the overall process.

Reserve an LLC Name

If you’re not yet ready to launch your business and still need a little more time, you can choose to reserve your desired LLC name for later by submitting a Name Reservation Request Form to the Secretary of State ($10 fee). This will keep anyone from being able to take the name you plan to use for 60 days.

You can list up to three names on this form (ranking them in order of which you prefer most), but only the first name that’s available for use will be reserved.

Note: We always recommend checking whether a name is available for use in advance by conducting a Business Name Search on the State of California website.

Register a Fictitious Business Name

Another potential cost associated with naming your LLC is a “doing business as” (or DBA) name — known as a fictitious business name in California. This is essentially a nickname that you can choose to register for your business to operate under — particularly if you’re not content with your LLC’s legal name.

Registering a DBA name can be done by filing a Fictitious Business Name Form with your LLC’s local county clerk’s office. The specific submission process and requirements can vary between counties, but it will typically cost between $10 and $100 in order to submit.

Buy a Domain Name

Finally, you’ll want to focus on securing a good domain name (which is your website’s address) for your business. For this, try to focus on choosing one that’s easy for customers to remember, relevant to your business, and accurately reflects your brand.

After confirming the domain name you want to use is actually available, you can purchase it through a trusted registrar.

Step 2: Pick an Agent for Service of Process

The next step you’ll need to take toward forming your LLC is to pick an agent for service of process, which is also commonly referred to as a registered agent (RA) in many other states.

This is an individual or business entity that accepts legal correspondence on behalf of your business, such as service of process, notice of lawsuits, and official government communications; you’re required to continuously maintain one as long as your LLC is active.

Your agent for service of process can be an individual or business entity, but will need to satisfy the following requirements:

• Have a physical address located in California and be available during normal business hours
• If an individual, must be at least 18 years old and a full-time resident within the state
• If a business entity, must be compliant with the California Corporations Code, permitted to operate in California, and be in good standing with the Secretary of State

You can choose to act as your own agent for service of process if you’re looking to save money — though we don’t typically recommend this as you’re much more likely to suffer fines and penalties due to non-compliance than if you just hire a professional service.

You’ll also lose any anonymity your LLC would have given you since your name, address, and contact information will be publicly available.

Note: To have a look at some of our other top recommendations, you can also check out our Best Registered Agent Service of 2024 guide.

Step 3: Submit Your Articles of Organization

In California, the Articles of Organization is the filing document that you’ll need to submit with the Secretary of State in order to officially register your LLC (this is also referred to as the Certificate of Formation in other states).

It costs $70 to file this document with the California Secretary of State, regardless of whether you’re creating a domestic or foreign business entity.

To complete your Articles of Organization, you’ll need to be prepared with the following information on-hand:

• The personal info of your LLC’s contact person (e.g., their full name and phone number)
• Your LLC’s name, entity number (if applicable), and primary business address
• Your LLC’s agent of service of process information
• Whether your LLC will be run by members or managers 
• Your organizer’s signature

There are three main ways by which you can file this document with the California Secretary of State: online, by mail or in-person.

Online Filings

We almost always recommend filing your Articles of Organization online with California’s bizfile Online system as it’s a quick and hassle-free way to do so.

Mail Filings

You’re also able to file a paper application by mail if you choose, which is done by downloading and filling out Form LLC-1.

Once this is done, you’ll need to mail Form LLC-1 to the following address, along with a check or money order for the filing fee:

Secretary of State
Business Entities Filings
P.O. Box 944228
Sacramento, CA 94244

In-Person Filings

Finally, you can also submit your LLC’s Articles of Organization in-person by bringing the completed and filled out Form LLC-1 to the following address:

1500 11th St., 3rd Fl.
Sacramento, CA 95814

This can be done Monday to Friday at any time between 8:00 am and 5:00 pm Pacific Time (PT).

Note: Be aware that in-person filings will carry an additional special handling fee of $15 — this provides expedited processing.

Step 4: Create a California LLC Operating Agreement

Once this is completed, the next step you’ll need to take is to create an operating agreement.

This is an internal document that clearly outlines the ownership and management structure of your company in order to reduce potential future conflict.

Unlike many other states, creating a written operating agreement is a legal requirement for all California LLCs. With that being said, it’s only an internal document and doesn’t need to be filed with the California Secretary of State.

A number of companies provide drafting services for operating agreements online, typically for a fee of around a few hundred dollars. However, it’s quite easy to sort this out by yourself if you want to save money, and you can even find a number of free templates online to help with this.

Note: For more information on the provisions for operating agreements, refer to California Corporations Code § 17701.10.

Step 5: Get an EIN

Even though it’s not a legal requirement (unless your LLC has employees or multiple members), all California LLCs should apply for an Employer Identification Number (EIN).

This is a free, nine-digit number used by the IRS to identify your business and keep track of its tax reporting — much like a Social Security Number (SSN) for individuals.

You’ll need an EIN to be able to:

• Hire employees
• Open a separate business bank account
• Apply for some business licenses/permits
• Establish a line of credit

On top of this, using an EIN instead of a Social Security Number (SSN) helps to protect your personal information and safeguard your anonymity as the business owner of your LLC.

You can quickly apply for an EIN for your LLC online through the IRS website. You’re also able to submit a paper application using Form SS-4 either via fax to (855) 641-6935, or by mailing it to the following address:

Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999

Note: Don’t worry if you don’t already have an SSN, it’s not necessary to have one in order to apply for an EIN — instead, you can just leave Section 7b of the application blank and call the IRS on (267) 941-1099.

Step 6: File the Initial Statement of Information

After submitting your California LLC Articles of Organization and being legally formed, you’ll be required to file a Statement of Information with the California Secretary of State within 90 days.

This filing, which costs $20, will update the state’s records on essential pieces of information regarding your business, such as the address of its principal place of business, whether it’s manager or member-manager, and the name and address of its agent for service of process.

This statement can be filed in one of two ways:

• Electronically: Using California’s bizfile Online Platform
• By Mail or In-Person: Using Form LLC-12

More detailed instructions on how to complete this step can be found on the first few pages of Form LLC-12 itself.

Note: Your LLC must either be “active” or “suspended/forfeited” on the California Secretary of State’s records to be able to file this statement. If you’re unsure about your LLC’s status, you can easily check it online with a Business Search.

Step 7: File a BOI Report

Starting January 2024, the vast majority of LLC owners will be required to file a Beneficial Ownership Information (BOI) Report with the US Financial Crimes Enforcement Network (FinCEN).

This is part of an initiative by the U.S. government to stop individuals and entities engaging in illegal or unethical activities from being able to conceal this using “opaque ownership structures”, like shell companies, to hide their true identities.

Existing LLCs will be able to file this report anytime between January 1, 2024, and January 1, 2025, while new LLCs will have up to 90 days after the date they were initially formed to do so (30 days for LLCs formed after the start of 2025).

Keep in mind that failure to file your LLC’s BOI report on time can result in exorbitantly high fines (i.e., $591 per day) or even jail time (up to two years).

Note: Not every LLC owner is required to file a BOI report. For example, companies with more than 20 full-time employees, accounting firms, and banks are exempt. For a full list of filing exemptions, you can have a look at FinCEN’s website.

How to Maintain Your California LLC

In order to keep operating legally in the state of California, there are a couple of things you’ll likely need to take care of, including:

• Filing a Statement of Information Biennially
• Paying LLC franchise taxes
• Paying the Annual LLC Fee

Don’t worry if you’re not sure how to complete each of these steps, as we’ve detailed all the information you’ll need to know in the sections below.

File a Statement of Information

In order to stay in good standing with the Secretary of State, all California LLCs are required to submit a Statement of Information biennially (every two years).

Each LLC must file this statement within a six month period that ends on the last day of the month your business was initially formed in. For example, if your LLC was formed in January, it would have between the first day of August and the last day of January to submit this statement.

Depending on whether there have been any changes in your LLC’s key information since your lasted completed Statement of Information, you’ll be required to submit one of the following forms:

• Form LLC-12: Changes have been made
• Form LLC-12NC: No changes have been made

Similar to the initial statement of information, each biennial filing must be accompanied by a $20 processing fee (unless you decide to submit it in-person, which costs $35 instead).

The California Secretary of State typically recommends filing this statement online for faster service. However, if you plan to complete this form by hand instead, you’ll be required to fill out the document legibly in blue or black ink.

Note: If you haven’t filed this statement by your LLC’s deadline you’ll be provided a notice of delinquency; if you still fail to meet this requirement within 60 days of receiving this, it will result in a $250 penalty fine in accordance with California Corporations Code Sections 17713.07(b).

Pay LLC Franchise Tax

Regardless of your LLC’s level of income, it will be obligated to pay an annual franchise tax of $800.

For your first year of operation, this is due by the 15th of the fourth month following the date you officially formed your business, but for every subsequent year it’s due by the fourth month following the start of your taxable year.

It’s generally recommended to pay this tax online through the California Franchise Tax Board’s Web Pay platform, as it’s very quick and easy to do.

However, you can also do so by mailing a check or money order to the following address:

Franchise Tax Board
PO Box 942857
Sacramento CA 94257-0631

Regardless of how you choose to pay this tax, you’ll need to accompany your payment with LLC Tax Voucher (FTB 3522).

Note: You’ll be required to pay franchise tax until you officially cancel your LLC, even if it isn’t operating.

Pay the Annual LLC Fee

In California, any LLC that earns over $250,000 in gross annual revenue will also be required to pay an annual fee to the California Franchise Tax Board.

The exact fee you’ll be required to pay (if applicable) will vary according to the following thresholds:

Gross Annual Revenue	Annual LLC Fee
$250,000 and $499,999	$900
$500,000 and $999,999	$2,500
$1 million and $4.99 million	$6,000
$5 million or more	$11,790

This fee is due by the 15th day of the sixth month of your LLC’s taxable year. You can submit the payment by mail using Form 3536. Besides the standard $800 franchise tax, this additional fee ensures your LLC remains in good standing if it generates significant income.

California vs Other States

While California is a solid option when it comes to selecting a state in which to form an LLC, there are perhaps more competitive choices available to aspiring business owners, particularly if they’re on a budget.

One of the key benefits of starting your business in California is the robust business environment and large consumer base it will immediately give you access to — which is extremely important in both the short and long term.

With that said, forming an LLC in California does have a big drawback: the cost. Compared to other popular states for business formation (e.g., Delaware, Wyoming, and Texas), California is incredibly expensive due to its annual franchise tax of $800 that must be paid by all LLCs.

Even though its initial startup fee of $70 may be lower than states like Texas ($300) or Delaware ($100), the latter are far cheaper states to run an LLC in due to their favorable taxation systems and low ongoing costs.

Regardless, keep in mind that the best state to form your LLC is almost always the state that you will be operating in; this is because otherwise you’ll likely be required to register as a foreign LLC in your home state, meaning that you’ll need to pay registration and maintenance fees twice.

California Secretary of State Contact Information

Mailing Address:
Business Entities Filings
P.O. Box 944228
Sacramento, CA 94244

Physical Address:
1500 11th Street
Sacramento, California 95814
Monday to Friday: 8 a.m. – 5 p.m.

Contact Information:

Email: Secretary of State, Business Programs Division, Limited Liability Companies
Phone: (916) 653-6814