California LLC

How to Form an LLC in California

Quick Start Guide ← you are here
This Quick Start Guide is a brief overview of how to form an LLC in California.

Detailed Lessons:

 

California LLC Costs:
California state fee: $70
Statement of information: $20 (every two years)
Annual franchise tax: $800 (every year)

Need help?
Hire a reliable service to form your California LLC:
IncFile ($49 + state fee) or LegalZoom ($149 + state fee)


How to Form an LLC in CaliforniaA California Limited Liability Company (LLC) is a legal business structure used to protect your personal assets (home, car, bank account) in the event your company is sued.

A California LLC can be used to operate a business, or an LLC can be used to hold your assets (such as real estate, vehicles, boats, and aircraft).

If you’d like to form an LLC in California yourself, follow our Quick Start Guide below (the brief overview), or click the detailed lessons above.

Need to save time? Hire a reliable service to form your California LLC:
IncFile ($49 + state fee) or LegalZoom ($149 + state fee)

1. LLC Name

• The first step in forming your LLC is to make sure your desired name is available for use.

• Your desired LLC name needs to be unique among all the existing businesses registered in California.

Search your California LLC name here: https://businesssearch.sos.ca.gov/

Designator: your LLC name must end with a proper designator. California law allows for the following: “LLC” (most common), “L.L.C.”, “Limited Liability Company”, “Limited Liability Co.”, “Ltd. Liability Company”, or “Ltd. Liability Co.”.

• Grab your domain name as well:

GoDaddy Domain Search:

2. California Registered Agent

• When forming an LLC in California, you need to select a Registered Agent (a person or company who agrees to receive legal mail for your LLC in case of a lawsuit).

• You cannot use a PO Box address for the Registered Agent. Instead, the address must be a street address, and it must be located in the state of California.

Who can be your Registered Agent in California?

1) You can serve as the LLC’s Registered Agent
2) A friend or relative can serve as the LLC’s Registered Agent
3) You can hire a Commercial Registered Agent

Commercial Registered Agents in California: IncFile (for $99/year) or Northwest Registered Agent (for $125/year). IncFile is cheaper, but their support is not as good as Northwest Registered Agent.

3. Articles of Organization

Official CA LLC form: Articles of Organization (Form LLC-1)

CA LLC filing fee: $70

Filing methods: by mail or walk-in ($15 extra)

File online: Currently, California does not have an online filing option for LLCs. Most people file by mail.

Mailing address:

Secretary of State
Business Entities
PO Box 944228
Sacramento, CA 94244-2280

LLC approval time: 10-15 business days, not including mail time. See the California Secretary of State’s processing times page. It’s updated daily. To speed things up a bit, you can also overnight your Articles of Organization and payment to the state.

What you get back: a stamped and approved copy of your Articles of Organization and a Welcome Letter.

Expedited filing: speedier processing times are available, but documents must be delivered in-person in Sacramento, and expedited fees range from $250 to $500. More details here.

Licensed professionals: California law prohibits certain businesses offering “professional services” from operating as an LLC or a PLLC (Professional LLC). See this page for details.

Need to save time? Have a professional LLC service file for you:
IncFile ($49 + state fee) or LegalZoom ($149 + state fee)

4. LLC Operating Agreement

• Your LLC Operating Agreement is an internal document, meaning, you’ll just keep a copy with your business records. It does not get sent to the California Secretary of State, or to any other agency.

• An Operating Agreement is where the member/members (owners) are listed, as well as their percentage of ownership. This document also spells out how profits and losses are distributed, how the LLC is managed, and how taxes are paid.

• Single-member California LLCs should still have an LLC Operating Agreement, as this is best practice.

Download a free LLC Operating Agreement: PDF | Google Doc | Microsoft Word

5. Federal Tax ID Number (EIN)

• Federal Tax ID Numbers, also known as EINs, are issued by the IRS to LLCs. It’s like the equivalent of a social security number for an individual.

• EINs are used for opening bank accounts, filing taxes, and handling payroll, if applicable.

Synonyms: The following are all the same thing: Federal Tax Number, Federal Employer Number, FEIN, Federal Tax ID Number, EIN, Employer Identification Number.

Please wait for LLC approval: Apply for your EIN only after your California LLC is approved.

Fee: $0. EINs are free from the IRS. You can obtain an EIN:

– by mail, use Form SS-4
– by fax, 855-641-6935
– or online (fastest method)

If you are a non-US resident or don’t have a social security number: You can’t get an EIN online. You can get an EIN without a social security number though if you apply by mail or fax (fax has a faster approval time). Complete Form SS-4 and write “Foreign” on line 7b.

If your LLC is owned by another LLC/company: You can’t get an EIN online. You’ll need to mail or fax Form SS-4 instead.

6. Initial & Ongoing Statements of Information

• All LLCs in California must file an Initial Statement of Information within 90 days of the LLC being formed.

Download Initial Statement of Information: Form LLC-12

Statement of Information filing fee: $20

Penalty if not filed: $250 penalty if late. Eventually your LLC will be shut down by the state if you do not comply with this requirement.

Filing methods: by mail (most common) or walk-in.

Mailing Address:

Secretary of State
Statement of Information Unit
PO Box 944230
Sacramento, CA 94244-2300

Ongoing Statements of Information: You need to file a Statement of Information every 2 years (“biennially”). They are due by the anniversary date of your LLC’s approval. You can find this date on your approved Articles of Organization.

Forms: If there are no changes from your last Statement of Information, use Form LLC-12NC. If you are making changes, use Form LLC-12.

Processing times: 10-15 business days, not including mail time.

What you get back: You don’t get anything back by default. If you’d like a stamped copy of your Statement of Information, send an extra $1 ($21 total) and use the Mail Submission Cover Sheet (found inside the Articles of Organization) and write “Please return a plain copy to the address below”.

7. $800 Annual Franchise Tax & Estimated Fee

All California LLCs – regardless of income or activity – must pay an $800 Franchise Tax fee every year.

• Payment is not made with the Secretary of State, but instead with the California Franchise Tax Board.

• We get a lot of questions about how to avoid this. Long story short, LLCs in California cannot avoid the $800 fee. And if you’re thinking of forming an LLC out of state to avoid this fee, think again (see here and here).

Form: The $800 Annual Franchise Tax is paid using Form 3522.

Due date: This gets a little tricky, so please read the following twice:

– The Annual Franchise Tax is paid for the current year (unlike income taxes, which are paid for the prior year).

– Your first $800 payment is due by the 15th day of the 4th month after your LLC is filed. Then every year going forward, it’s due by April 15th.

First payment example: If your LLC is formed November 10th 2017, your first payment is due by February 15th, 2018 (paying for the 2017 tax year). Your next payment is then due 2 months later, by April 15th, 2018 (paying for the 2018 tax year).

Avoid back-to-back $800 payments: For the above reason, if you’re forming your LLC late in the year – October, November, or December – and you don’t need the business operating right away, it’s better to form in January (or file it now, but use January 1st as the “effective date”). This way, your first payment is due April 15th and there are no back-to-back payments.

LLC Estimated Fee: If your LLC has over $250,000 in gross income, you also must also file and pay an Estimated Fee (Form 3536).

8. Business Licenses and/or Permits

• Depending on your LLC’s location and the industry it engages in, you may need to obtain certain business licenses and/or permits. To find out your LLC’s requirements, you can contact the city, town, or county where your business is located. They’ll be able to direct you to the proper government agencies.

Need to save time? If you’d rather rather not do the research to determine your business license and permit requirements, we recommend hiring IncFile. They’ll take care of everything for $99.

9. Taxes

Federal taxes: California LLCs have “pass through” taxation. Income or losses are usually listed on a Schedule C and filed together with your personal tax return.

California state and local taxes: Your LLC also needs to register and pay taxes with the California Franchise Tax Board (FTB), as well as your local municipality (city, town, county, etc.).

Form 568: All LLCs in California will need to file Form 568 (LLC Return of Income), as well as additional Forms with the FTB depending on how income is earned.

Recommendation: hire an accountant after your California LLC is formed. Read our how to find an accountant guide, or check out Thumbtack.

10. LLC Bank Account

Maintain liability protection: opening a separate bank account for your California LLC to keep your personal assets separate from your business assets is not only helpful from an asset protection strategy, it also makes bookkeeping and accounting easier.

Items needed to open an account: Approved California Articles of Organization, EIN Confirmation Letter, and Driver’s License.

Shop around: there are many banks that charge monthly fees for California LLC business checking accounts, but there a handful that don’t. You’ll need to call a few banks in your area and shop your options.

Debit card: Your bank will issue a debit card (usually on the spot) when you open the account.

Credit card: Start building business credit for your LLC. We recommend creditcards.com for finding business credit cards.

California State Agencies

CA Secretary of State
CA Business Entities
916-653-3794 (LLC Unit)
213-897-3062 (LA Office)
8:00am – 5:00pm, M-F

CA Franchise Tax Board
7:00am – 5:00pm, M-F
Tip: call as early as possible to avoid long hold times
Additional contact info here

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Matt Horwitz
Founder & Educator at LLC University
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! We teach people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your entrepreneurial journey.

20 Comments

  1. Mike Manon February 27, 2017

    Hi,
    I have another question about EIN.
    We are going to open an multi-member LLC where all three members are foreign nationals but 1 member has SSN and other two members do not have SSN/ITIN.
    When filing for EIN, do we need to provide SSN/ITIN of ALL the members or can we just get the EIN based on one member’s SSN?

    Thanks,
    Mike.

    reply
    • Matt Horwitz February 28, 2017

      Hi Mike, only one person’s information is on file with the IRS. They are referred to as the “responsible party”. You can use this person’s SSN to apply, but you don’t have to.

      You can have another member (one without an SSN) be the responsible party… you just can’t get the EIN online if that’s the case. Instead, you’ll need to mail or fax Form SS-4 to the IRS and write “Foreign” on line 7b. Fax applications are much faster than mail.

      In your case though, and based on your question, it sounds like having the individual with the SSN be the responsible party and obtaining the EIN online will be the easiest route. Hope that helps! Let me know if you need anything else.

      reply
  2. Brian April 3, 2017

    Hi,

    I have a question regarding “$800 Annual Franchise Tax & Estimated Fee” in CA. Do you still have to pay this even if you are a single-member LLC? I also read somewhere you can avoid paying this until you pay taxes and there’s only a small penalty fee for not paying by the deadline, any insight?

    Thank you!
    Brian

    reply
    • Matt Horwitz April 5, 2017

      Hi Brian, all LLCs, regardless of the number of members (single-member LLCs and multi-member LLCs), and regardless of activity or income, must file the $800 Annual Franchise Tax and the Estimated Tax (if applicable). I’m not 100% certain about the “technique” you mention, but I would not recommend it. The California Franchise Tax Board (FTB) does impose penalties: 5% of the unpaid tax or fee, plus 0.5% on the unpaid tax or fee for each month or part of a month it remains unpaid. The maximum penalty is 25% of the unpaid tax or fee (Revenue and Tax Code Section 19132). Further, the FTB will send 2-3 reminder notices, before they eventually suspended your LLC.

      FYI, in addition to the $800 Annual Franchise Tax & Estimated Fee (if applicable), you must also file Form 568 (LLC Return of Income), and any other filings that are due to the FTB based on how you derive your income. Apologies for the bum news ;) Hope this helps though.

      reply
  3. Mike D April 8, 2017

    For SMLLC, can I use the LLC EIN on form W-9? The form asks to put member SSN, but I do not want to share that, any suggestion?

    reply
    • Matt Horwitz April 8, 2017

      Hi Mike, for SMLLC on W9 you can use either your SSN or EIN. So if you want some privacy on the SSN part, use the EIN. Hope that helps!

      reply
      • Mike D April 9, 2017

        Thanks Matt,
        Just want to clarify, do you suggest to get another EIN for myself or the EIN that’s attached to the LLC is fine?

        Thanks for setting up this site, much appreciated on all the info!

        reply
        • Matt Horwitz April 18, 2017

          Hi Mike, apologies for the slow reply. Your comment accidentally went into the spam folder. I don’t fully understand your question and what you mean by “get another EIN for myself”. As far as the LLC goes, you just need 1 EIN for the LLC. Hope that helps.

          reply
          • Mike D May 17, 2017

            Hi Matt,
            It’s related to the W9 instruction (pg3), which seems to ask disregarded SMLLC to use only the owner’s SSN.

            “If you are a single-member LLC that is disregarded as an entity separate from its owner (see Limited Liability Company (LLC) on this page), enter the owner’s SSN
            (or EIN, if the owner has one). Do not enter the disregarded entity’s EIN.”

            reply
            • Matt Horwitz May 17, 2017

              Hey Mike, just looked back at your prior question and I see now what you were asking. It doesn’t seem like you need an EIN for yourself, and that the LLC’s EIN is enough. You’re supposed to use the SSN on W9 for disregarded/single-member LLCs, but you don’t always have to. It depends on the company you are sending the W9 to. If you don’t mind, you can just use your SSN. If you do mind, then use the LLC’s EIN.

              reply
  4. Igor April 19, 2017

    Hi Matt,
    First of all your website is the most informative i have ever found. Great job on exposing the hidden lies on various uneccessary services and things that as a new business owner or developer would come across when creating an LLC.

    1. My partner and I have a plan on building an e-commerce (small gift shop online). I have heard that if you create a business, you would need to hire a lawyer to do your LLC Operating Agreement so you won’t get into issues later on. Is that true? Or when do you need a lawyer when forming an LLC?

    2. Say i would like to build an e-commerce (gift shop: popular books) business location would be in CA. When would you need a lawyer?

    reply
    • Matt Horwitz April 19, 2017

      Hi Igor, thank you very much for the kind words :) I’m glad you are finding the website useful! In regards to both of your questions, there is no set rule for when to hire/speak to an attorney, however, if you’re thinking about it, I’d advise making a few phone calls to see if it’s something you need. You don’t HAVE TO hire an attorney for your LLC’s Operating Agreement, but it’s a good idea, especially if you have uncertainties, or would prefer to have an advisor to run your questions by. I recommend making a few calls and searching on Avvo: https://www.avvo.com/business-lawyer/ca.html. Hope that helps!

      reply
  5. Alex April 25, 2017

    Hello Matt, thank you for the clear guide. I’m curious about the CA form 568 ‘Date business started in CA’ line item. If I were to form an LLC, let’s say in 2014, but open for business jan of 2016 (and don’t generate any revenue before then or have costs), do I need to file a form 568 for each year or just starting in 2016, and what would be the date to fill in for ‘date business started in CA?’ Thank you, have a great day!

    reply
    • Matt Horwitz April 26, 2017

      Hey Alex, please double-check with your accountant about this, but I’m quite certain that year should be 2014… and you owe returns (and annual franchise tax) since 2014. So if you haven’t been filing, you likely have back filings due (and possible penalties) with the California FTB. Apologies I couldn’t be more specific here, but tax questions have a lot of variation to them. Best to hire a CPA for help. We have some recommendations here. Hope that helps!

      reply
  6. Jen June 10, 2017

    Hi Matt,
    Great article! This is so helpful. I have a question- when is Form 568 really due? I read “Original – 15th day of the 3rd month after the taxable tax year end”

    But when does the taxable year end? Meaning, if I incorporated in Jan. 2017, does that mean form 568 isn’t due until March 15, 2018?

    Thanks!

    reply
    • Matt Horwitz June 12, 2017

      Hey Jen, you’re welcome! Apologies for the confusion. Unless you elect a different fiscal year (which is not very common), your taxable year will end December 31, 2017. Where did you read “15th day of the 3rd month”? Form 568 will be due the 15th day of the 4th month after the end of your taxable year… aka, April 15th, 2018 in your case. Hope that helps!

      reply
  7. Jamal Smith June 22, 2017

    Hi Matt,

    I currently reside in California and plan on starting a LLC soon. All of my businesses will be internet based like voice over acting, podcasts, internet radio, and short films. Is it necessary to incorporate in California or can I choose a difference state since everything I will be offering will be internet based? Ideally I want to incorporate here in California, but if it is possible to cut costs by incorporating elsewhere then I will.

    reply
    • Matt Horwitz June 23, 2017

      Hi Jamal, although your business is internet-based (which a lot of businesses are now), you’ll likely be working from home, or somewhere from California. In that case, you are legally doing business in California, and you should form your LLC there. Forming an LLC out of state to save money will end up being much more expensive, as you’ll need to file a Foreign LLC registration in California and you’ll be paying LLC fees (and annual fees) in 2 states. We wrote more details about the “best state” here. Hope that helps!

      reply
      • Jamal Smith June 25, 2017

        Thanks Matt! This is helpful information!!

        reply
        • Matt Horwitz June 26, 2017

          You’re welcome Jamal!

          reply

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