How to Start an LLC in California Step-by-Step Guide
Starting a California LLC, step-by-step
Here are the seven steps to establishing an LLC in California:
- Choose a Unique name for the LLC
- Appoint a Registered Agent
- File the Articles of organization
- Create an Operating Agreement
- Get an EIN (Employer Identification Number)
- File a Statement of Information
- File the $800 Annual Franchise Tax and Estimated Fee
If you want to form your LLC yourself, follow our comprehensive guide below at no cost.
How much does it cost to start a California LLC?
$70 for the initial filing of an LLC
Every LLC that is doing business or organized in California must pay an annual tax of $800.
$20 - Due within 90 days of forming your LLC and then every two years is for your statement of information fee.
How long does it take to get an LLC in California?
In California, It can take around 8 days if you file online, and around 3 weeks to get an LLC if you file by mail.
For further details on LLC expenses, Explore the specifics of LLC costs in California.
See "How Long Does It Take to Form an LLC in California" to find out how long it will take to get your LLC approved and to make sure there are no delays.
Need to save time?
Consider hiring a professional to set up your LLC: Northwest Registered Agent offers LLC formation services starting at $39 plus the state fee.
(Find out why Northwest is the top choice for LLC formation)
Here are the steps to forming an LLC in California
1. Search for your Limited Liability Company (LLC) Name
First, search your business name. Entity Search tool to ensure it's unique and not already in use.
This is necessary because two businesses in the state cannot share the same name.
Second, check domain availability for an online presence Select a name that is memorable to the customer and best suited for the brand.
We'll explore the specifics of naming an LLC in California in greater detail.
How do I check if my desired LLC name is available?
You can check the availability of your desired LLC name by searching the California Secretary of State business search. You'll perform a California Business Search using the California Business Search tool to see if your name is unique.
What are the naming requirements for a California LLC?
The name must include "Limited Liability Company," "LLC," or "L.L.C." It must be distinguishable from other business names registered in California and should not contain restricted words without approval.
Can I reserve a name for my LLC?
Yes, you can reserve a name for up to 120 days by filing a Name Reservation application with a $10 cost.
2. Choose a California Registered Agent
The next step is to select the California Registered Agent.
Your LLC's registered agent in California may be an individual or group designated to receive official notices and legal communications on behalf of your LLC. They must reside in the state at their physical address in order to perform this duty effectively.
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Who is eligible to serve as an LLC Registered Agent?
Your LLC's registered agent can be you.
- A trusted friend or family member
- A professional Registered Agent Service
- You
They must have a physical address in California, as PO Boxes are strictly unacceptable.
The Registered Agent's details are available to the public in state records.
What is a Registered Agent?
A Registered Agent is a person or entity designated to receive legal documents and official government communications on behalf of the LLC.
Who can be a Registered Agent in California?
The Registered Agent can be an individual resident of California or a business entity authorized to do business in California. The agent must have a physical street address in California (no P.O. boxes).
Can I act as my Registered Agent?
Yes, if you meet the residency and physical address requirements, you can act as your Registered Agent.
3. File California LLC Articles of Organization
Prepare and submit the Articles of Organization to the California Secretary of State.
Guide for completing the articles. Including details like your name and registered agents.
Filing the California LLC Articles of Organization costs $70 when submitted online. This is a one-time cost to create your LLC.
If you want to file this yourself, see our step-by-step guide: ?.
How do I file the Articles of Organization?
You can file the Articles of Organization online or by mail with the California Secretary of State, Business and Professional Licensing. The filing fee is $70.
What information is required in the Articles of Organization?
The Articles of Organization must include the LLC’s name, principal office address, registered agent information, and the names and addresses of the organizers.
How long does it take to process the Articles of Organization?
Processing times can vary. Online filings are typically processed within a few business days, while mail filings may take longer.
4. Create a California LLC Operating Agreement
A California LLC Operating Agreement is like a companion document to the Articles of Organization. The Articles create your LLC, while the Operating Agreement explains who owns it.
Banks may require it to open your LLC business bank account, and it is important in court to prove your LLC is running correctly.
That's why we recommend that all LLCs, including Single-Member LLCs, have an Operating Agreement.
Operating Agreement is essential in legal proceedings because it serves as evidence that your LLC operates by proper governance practices, bolstering your defense in court.
An Operating Agreement is an internal document, so you don’t need to file it with the California Secretary of State or the IRS. Just keep a copy in your business records for your reference.
Need to save time?
Consider hiring a professional to set up your LLC: Northwest Registered Agent offers LLC formation services starting at $39 plus the state fee.
(Find out why Northwest is the top choice for LLC formation)
What is an Operating Agreement?
An Operating Agreement is a document that outlines the ownership, management structure, and operating procedures of the LLC.
Is an Operating Agreement required in California?
While not legally required, it is highly recommended to have an Operating Agreement to establish clear rules and prevent disputes.
What should be included in an Operating Agreement?
The Operating Agreement should include details on member roles and responsibilities, voting rights, profit distribution, management structure, and procedures for adding or removing members.
5. Get an EIN
A California EIN is also called a federal tax ID number or federal employer identification number.
An EIN (Employer Identification Number) is needed for:
- Identifying tax purposes
- Apply for licenses and permits
- To open the business bank accounts
How do I apply for an EIN?
You can apply for an EIN online through the IRS, by mail, or by fax.
How much does an EIN cost?
Obtaining an EIN from the IRS comes at no cost. The application process is free.
How much time does it take to receive an EIN?
When applying online, it takes around 15 minutes.
If you choose to apply by mail or fax, it can take between 1 to 3 months.
Why do I need an EIN for my LLC?
An EIN is required for federal tax purposes, hiring employees, opening a business bank account, and fulfilling other business-related requirements.
How can I obtain an EIN?
For US Citizens or Residents: If you possess an SSN or ITIN, you are eligible to apply for an EIN online. Simply follow these steps: Apply for an EIN online.
For Non-US Residents: You are unable to obtain an EIN online, but you can still acquire one through fax or mail. Follow these steps to get an EIN without an SSN or ITIN.
6. File your Statement of Information
The "Statement of Information" (Form LLC-12) must be filed every two years.
This filing ensures your LLC remains in good standing with the state.
Keep in mind: This form is occasionally referred to as a Biennial Report.
How much is the cost of filing the LLC Statement of Information?
The cost for filing the LLC Statement of Information in California is $20.
When is the Statement of Information Deadline?
Their first Statement of Information within 90 days of forming or first registering their company with the state.
How do I file my Statement of Information?
To file your LLC's Statement of Information in California, log in to the Secretary of State's business portal, find your LLC, complete the form with accurate details, pay the $20 fee online, and receive confirmation once processed.
7. File the $800 Annual Franchise Tax and Estimated Fee
Every LLC operating or organized in California must pay an annual tax of $800.
This tax is due each year, even if your LLC is inactive until you officially cancel your LLC.
You have until the 15th day of the 4th month from your Secretary of State filing date to pay the first-year annual tax.
When is the $800 Annual Franchise Tax due?
The annual Franchise Tax is due 15th day of the fourth month after the beginning of the tax year.
How much does the LLC Estimated Fee cost?
If your LLC is projected to have over $250,000 in gross annual receipts, you must file and pay an Estimated Fee using Form 3536. If your LLC's gross annual receipts are expected to be $250,000 or less, you do not need to file Form 3536.
What Should I Do after the LLC is Approved?
Business bank account for California LLC
Opening a business bank account for your California LLC is essential to keep personal and business finances separate. This separation helps maintain accurate financial records, simplifies tax filing, and protects your assets in case of legal issues.
California Licenses and Permits
California LLCs may require various licenses and permits depending on their location, industry, and business activities.
Taxes for California LLC
California LLCs are subject to several taxes, including federal and state income taxes, sales taxes (if applicable), and payroll taxes if the LLC has employees. Understanding and complying with these tax obligations is crucial to avoiding penalties and maintaining good standing with tax authorities.
Annual Report Requirement
California LLCs must file an Annual Report each year to the California Secretary of State. This report updates the state with any changes to the LLC's business details and requires payment of a filing fee. Keeping this report current ensures that your LLC remains in good standing and compliant with state regulations.