Starting a California LLC, step-by-step
Starting a California LLC costs $70. And it takes 8 days to get an LLC in California.
Here are the 7 steps to forming an LLC in California:
- Choose an LLC Name
- Select a Registered Agent
- File Articles of Organization
- Create an Operating Agreement
- Get an EIN
- File a Statement of Information
- File the $800 Annual Franchise Tax & Estimated Fee
If you want to form your LLC yourself, follow our free guide to the LLC formation process below.
If you want someone to take care of it for you, we recommend hiring Northwest Registered Agent
(We recommend Northwest. We've reviewed all the top companies in the industry. And Northwest is our #1 pick for prices, customer support, and address privacy. Check out Northwest vs LegalZoom to learn more.)
How much does it cost to start an LLC in California?
It costs $70 to start an LLC in California.
And then it costs $820 every 2 years.
What are these fees for?
- The $70 is to file the Articles of Organization – the document that creates a California LLC.
- The $20 every 2 years is for your Statement of Information – a mandatory filing that keeps your LLC in good standing.
- The $800 every year is for your Annual Franchise Tax – a mandatory filing for the privilege of doing business in the state of California.
To learn more about LLC Costs, see LLC Costs in California.
How long does it take to get an LLC in California?
If you file your LLC by mail, it will be approved in 8 business days (plus mail time).
But if you file online, your LLC will be approved in 8 business days.
Please see How long does it take to get an LLC in California to check for any delays.
Here are the steps to forming an LLC in California
1. Search your LLC Name
Search your California LLC Name to make sure it’s available in the state.
You need to do this because two businesses in the state can’t have the same name.
First, search your business name and compare it to existing businesses in California. You can make sure the LLC Name you want is unique from existing businesses using the Business Entities Search.
Second, familiarize yourself with the naming rules in California (so your California LLC gets approved).
We’ll explain both in more detail here: California LLC Name.
2. Choose a California Registered Agent
The next step is to choose a California Registered Agent.
A California Registered Agent is a person or company who accepts legal mail and state notices on behalf of your California Limited Liability Company.
Who can be an LLC Registered Agent?
You have 3 options for who can be the Registered Agent:
- A friend or family member
- A Registered Agent Service
California law requires that the Registered Agent for your LLC have a physical street address in California. PO Boxes aren’t allowed.
And the Registered Agent’s name and address will be listed on public records.
If you don’t have an address in California, or you want more privacy, you can hire a Registered Agent Service for your LLC.
We recommend Northwest Registered Agent
Our favorite feature about Northwest is they’ll let you use their office address throughout your LLC filing. This way, you can keep your address off public records.
They’ll also scan any mail sent to your LLC and upload it to your online account.
Northwest has excellent customer service, and they’re who we trust to be our own Registered Agent.
3. File California LLC Articles of Organization
To start an LLC, you need to file the California Articles of Organization.
This gets filed with the California Secretary of State.
The California Articles of Organization costs $70 if you file online.
This is a one-time fee to create your LLC.
If you want to file this yourself, see our step-by-step guide: California Articles of Organization.
Or, you can hire a company to do it for you.
4. Create a California LLC Operating Agreement
A California LLC Operating Agreement serves as a “companion” document to the Articles of Organization.
The Articles of Organization creates your California LLC, and the Operating Agreement shows who owns the LLC.
Additionally, some banks require an Operating Agreement when you open an LLC bank account.
And having an Operating Agreement will be very helpful if you ever end up in court. Reason being, it helps prove that your LLC is being run properly.
That’s why we recommend that all LLCs have an Operating Agreement – including Single-Member LLCs.
Furthermore, an Operating Agreement is an “internal document“. Meaning, you don’t need to file it with the state or the IRS (Internal Revenue Service). Just keep a copy with your business records.
You can download a free template below.
Then, learn how to fill it out by watching our step-by-step California Operating Agreement video.
5. Get an EIN for your LLC
The next step is to get a California EIN Number from the IRS for your LLC.
Note: An EIN Number is also called a Federal Tax ID Number or Federal Employer Identification Number.
An EIN Number is used to:
- identify your LLC for tax purposes
- open a business bank account
- apply for business licenses and permits
How much does an EIN cost?
Getting an EIN Number from the IRS is completely free.
How long does it take to get an EIN?
If you apply online, it takes 15 minutes.
If you apply by mail or fax, it can take 1-3 months.
How can I get an EIN?
US Citizens/US Residents: If you have an SSN or ITIN, you can apply for an EIN online. Follow these instructions: Apply for an EIN online.
Non-US Residents: You can’t get an EIN online, but you can still get one by fax or by mail. Follow these instructions: How to get an EIN without an SSN or ITIN.
6. File your California LLC Statement of Information
All California LLCs must file a Statement of Information every 2 years.
The Statement of Information keeps your LLC in good standing with the state.
Note: This filing is sometimes also called a Biennial Report.
How much does a California LLC Statement of Information cost?
The Statement of Information filing fee is $20 every 2 years.
When is the Statement of Information due?
Your first Statement of Information is due within 90 days of your LLC being approved.
For example, if your LLC was approved on May 15, 2023, your first Statement of Information is due by August 13, 2023.
After that, your ongoing Statement of Information is due every 2 years by your LLC’s Anniversary Date.
How do I file my LLC Statement of Information?
You can file your LLC’s Statement of Information online or by mail. We recommend the online filing because it’s easier to complete.
Follow our step-by-step guide here: California LLC Statement of Information.
7. File your $800 Annual Franchise Tax & Estimated Fee
All California LLCs must pay a fee called the $800 Annual Franchise Tax. The state requires LLCs to file this fee every year – regardless of total revenue or activity,
Usually, this is due shortly after the LLC was approved. However, due to California Assembly Bill 85, LLCs formed between 2021 and 2024 don’t have to pay the $800 franchise tax for their 1st year in business.
When your franchise tax is due, you’ll be sending your payment to the California Franchise Tax Board (not the California Secretary of State).
How much does a California LLC Annual Franchise Tax cost?
Your Annual Franchise Tax costs $800 per year.
When is the $800 Annual Franchise Tax due?
Your first Annual Franchise Tax report and $800 payment are due 4.5 months after your LLC is approved. That said, the state counts the month your LLC was formed as “month 1” in their calendar math.
For example, if your LLC was approved on May 15, 2023, your first $800 Annual Franchise Tax report is due by August 27, 2023.
After that, your ongoing Annual Franchise Tax is due every year by April 15th every year – starting the year after your LLC is formed).
How do I file my $800 Annual Franchise Tax with the California Franchise Tax Board?
The $800 Annual Franchise Tax is paid using Form 3522.
How much does a California LLC Estimated Fee cost?
If your California LLC will have over $250,000 in gross annual receipts (total revenue), you must also file and pay an Estimated Fee using Form 3536.
If your LLC won’t have more than $250,000 in gross annual receipts (total revenue), then you don’t need to file Form 3536.
When is the LLC Estimated Fee due?
Your first Estimated Fee is due by the “15th day of the 6th month” after your LLC is approved.
For example, if your California LLC is approved in May of 2023, then May is “month 1”. 6.5 months after that is October. And the 15th day would make your Estimated Fee due October 15, 2023.
After that first due date, any ongoing Estimated Fees must be paid and filed by June 15th each year.
How do I file my LLC Estimated Fee?
You pay your LLC Estimated Fee using Form 3536.
Learn more about the Annual Franchise Tax and Estimated Fee in our guide: California LLC Annual Fee.
What do I do after my LLC is approved?
After your California LLC is approved, there are some additional steps.
Open an LLC business bank account
You’ll want to open a business bank account for your LLC.
This makes accounting and record-keeping much easier for your business finances.
Having a separate business bank account also maintains your personal liability protection. This is because it keeps your business finances separate from your personal finances.
Get California business licenses and permits
Good news, California doesn’t have a state general business license.
However, depending on where your LLC is located, you may need a local business license or permit.
For example, if you want to start a daycare, you may need a business license from the city or county.
You can learn more on our California Business License page.
LLCs don’t pay federal taxes. Instead, the LLC Members pay the taxes for the LLC.
Said another way, the owners pay taxes for the LLC as a part of their personal tax return.
How will my LLC be taxed?
By default, a California LLC is taxed by the IRS based on the number of owners your LLC has:
- A Single-Member LLC is taxed like a Sole Proprietorship.
- A Multi-Member LLC is taxed like a Partnership.
Alternatively, you can ask the IRS to tax your LLC like a C-Corporation or S-Corporation.
Married Couples: Instead of having your LLC taxed as a Partnership, married couples can elect to be taxed as a Single-Member LLC (aka Qualified Joint Venture). This is allowed in California because California is a community property state.
Besides federal income taxes, there are also state and local income taxes – and sales tax.
Learn more about taxes and the appropriate California taxing authority for each in California LLC Taxes.
How to Start an LLC in California FAQs
Can I start an LLC online in California?
Yes, you can file your LLC online in California. The Articles of Organization filing fee is $70.
When you start your LLC online, it will be approved in 8 business days.
What are the benefits of an LLC?
The first benefit of an LLC is protecting your personal assets. Meaning, if your business entity is sued, your personal assets – like your home, cars, and bank accounts – are protected.
This protection applies to all LLC owners (called LLC Members). It doesn’t matter if you have a Single-Member LLC or Multi-Member LLC. All of the LLC owners are protected from the business debts and liabilities.
This type of protection wouldn’t apply if you operate as a Sole Proprietorship or Partnership. With these types of informal business structures, the owners aren’t protected in the event of a lawsuit. For that reason, Limited Liability Companies (LLCs) are a much more popular business structure.
Another benefit is LLC pass-through taxation. This means the LLC itself doesn’t pay federal income taxes. Instead, the profits “pass through” to the LLC Members. And the Members pay the taxes on their personal tax return.
And California state income taxes are very similar, since the state honors the federal tax treatment of your LLC.
To learn more, please see How are LLCs taxed.
Is California a good state to start an LLC?
Whether California is a good state to start an LLC depends on where you live – and where you’re doing business.
Meaning, if you live in or do business in California, then you should start your LLC in California. While many websites talk about tax rates and advantages of certain states, none of that applies if it’s not the state where you live and do business.
For example, if you form an LLC in Nevada, but live in and conduct business in California, you’ll also need to register your Nevada LLC in California (and pay extra fees). And you’ll end up paying California taxes anyway. This ends up leading to more costs and more headaches with no advantages.
In summary, if you live in and conduct business in California, then yes, California is a good state to start a business. If you don’t live in and do business in California, then no, California isn’t a good state to start a business.
Real estate exception: If you’re purchasing real estate outside of California, you should form your LLC in the state where the property is located.
For more information, please see Best State to Form an LLC.