Starting an LLC in California is a popular choice for entrepreneurs because it offers personal liability protection and flexible taxation. At LLC Tutorial When you start an LLC in California, you shield your personal assets (home, car, savings) from business debts or legal actions, much like a corporation doessos.ca.gov. California LLCs also benefit from pass-through taxation, meaning the business itself doesn’t pay federal income tax – instead, profits “pass through” to the owners’ personal tax returnsirs.gov. These advantages make forming an LLC in California especially attractive. In this guide, we’ll walk through how to start an LLC in California step by step, explain the requirements and fees, and provide tips for staying in good standing.
Why Start an LLC in California?
Forming an LLC in California gives your new business a solid foundation. A California LLC generally provides limited liability protection comparable to a corporationsos.ca.gov, which means the LLC’s owners (members) are not personally responsible for most business debts. In other words, creditors and litigants can usually only go after the assets of the LLC, not your personal bank accounts or property. This protection applies whether you have a single-member LLC or multiple members.
Another benefit when you start an LLC in California is tax flexibility. By default, a single-member LLC is taxed like a sole proprietorship and a multi-member LLC is taxed like a partnershipirs.gov. In either case, the LLC itself does not pay federal income tax. Instead, profits and losses flow through to the members, who report them on their individual tax returns.
California honors this same federal pass-through treatment for state income taxes. (However, note that LLCs must also pay the California annual franchise tax below.) If it makes sense for your situation, you can also elect to have the IRS treat your California LLC as a C-corporation or an S-corporation (using IRS Form 8832 or 2553) to change the tax outcome.
Finally, forming an LLC in California is relatively straightforward thanks to online filing and clear guidance from state agencies. The state provides resources for each step of formation. Now let’s look at the specific steps to start an LLC in California.
Steps to Start an LLC in California
Below is the step-by-step process to start an LLC in California. Follow each step in order. Keep your business goals and timeline in mind as you proceed. Throughout, remember that every mention of “start an LLC in California” refers to these formation steps.
Step 1: Choose a Name to Start an LLC in California
To start an LLC in California, you must first pick a unique business name that complies with state rules. The name of your LLC must include the phrase “Limited Liability Company” or the abbreviation “LLC” or “L.L.C.”bpd.cdn.sos.ca.gov. You may also use “Ltd. Liability Co.” if you abbreviate “Limited” and “Company” as “Ltd.” and “Co.” respectively. For example, “Sunrise Consulting LLC” or “Golden State Trading Ltd. Liability Co.” are acceptable formats.
Next, make sure the name is distinguishable from existing entities on record with the California Secretary of State. California Corporations Code requires that your LLC’s proposed name be set apart from all other LLCs, corporations, and partnerships already registered in the statesos.ca.gov. In practical terms, this means no two businesses can have the exact same name (ignoring punctuation and capitalization), and the name cannot be deceptively similar to another on filesos.ca.gov.
Use the California SOS Business Search tool to check name availability (visit the Secretary of State’s “Business Search” portal). If your first choice is taken, try variations. Avoid restricted words like “Bank” or “Insurance” unless you have proper authorization or licensing. Once you find an available name that meets the rules, you can reserve it for a short period with the SOS (optional) or proceed to the next step.
Step 2: Appoint a Registered Agent in California start an LLC in California
Every LLC formed in California must designate a registered agent. A registered agent (also called “agent for service of process”) is a person or business entity responsible for receiving official legal and tax documents on behalf of the LLC.
To serve as the LLC’s registered agent in California, the person or company must meet these requirements:
- Be a California resident or entity: The agent must have a physical street address in California and be available during normal business hours. PO boxes are not allowed.
- Be 18 or older: Individuals must be adults.
- Not be the LLC itself: An LLC cannot act as its own agent; it must be a natural person or a registered agent company
You have a few options for your registered agent:
- You can choose yourself or an owner as the agent (if you live in California and meet the above criteria).
- You can appoint a friend or relative who is a California resident.
- You can hire a professional registered agent service. This is popular if you don’t have a California address or value privacy (the agent’s address is public record, not yours).
To start an LLC in California, California law simply requires the LLC to maintain an on-file agent who can accept in-person service of process. While there isn’t a specific authoritative source to cite here, industry guidance (e.g. Northwest Registered Agent) notes that registered agents are required by law in California and must have a California street address
Step 3: File Articles of Organization with the California SOS
The official formation of your LLC happens when you file Articles of Organization (Form LLC-1) with the California Secretary of State (SOS). This is the critical step to start an LLC in California. You will submit basic information about your LLC on the form, including the business name, the address of the LLC’s principal office, the name and address of your registered agent, and whether the LLC will be managed by members or managers.
You can file online or by mail: California offers an online portal (bizfileOnline) for fast processing. The SOS recommends filing online, but you may also download Form LLC-1 from the SOS website and mail it in. As noted by the California SOS, “To form an LLC in California, go to bizfileOnline.sos.ca.gov, log in, select Register a Business under the Business Entities tile, Articles of Organization – CA LLC and follow the prompts to complete and submit”sos.ca.gov.
To start an LLC in California There is a one-time filing fee of $70 for the Articles of Organization. This is paid to the Secretary of State when you file. If you file online, the fee is collected immediately. If by mail, include a check or money order with your completed form.
After you submit the Articles of Organization and the SOS processes it, your LLC officially exists under California law. The state will issue a stamped filing copy and an LLC number. Current processing times (as of 2025) show that online filings are typically approved within a couple of business days, while mailed filings take longersos.ca.gov.
Step 4: Draft an Operating Agreement
Once your LLC is officially filed, the next step is to create an Operating Agreement. California requires that LLCs have an operating agreement documenting the company’s internal rulessos.ca.gov. This legal document outlines ownership percentages, member roles, management structure (member-managed vs. manager-managed), voting rights, profit distributions, and other important details of how the LLC is run. Even though the SOS does not file or review your Operating Agreement, the law (Cal. Corp. Code §17701.10) expects each LLC to maintain one in its recordssos.ca.gov.
You should prepare the Operating Agreement right after filing your Articles of Organization to start an LLC in California. It is an internal document (not submitted to the state) but is very important. A well-drafted agreement clarifies what happens if a member leaves, how new members are added, how decisions are made, etc. It’s especially useful if you have multiple members, but even single-member LLCs benefit from having one (it can help preserve limited liability in court by showing you treat the LLC as a separate entity).
To start an LLC in California You can find many free or paid templates online for California LLC Operating Agreements. Make sure yours includes the state-required language and fits your situation. Once signed, keep it with your LLC records. Remember, having an Operating Agreement is highly recommended (and essentially required), but there is no filing with the SOS or IRS. Bankers often ask for it when you open a business account.
Step 5: Get an EIN for Your LLC
After your LLC is formed, you’ll need an Employer Identification Number (EIN) from the IRS. Think of the EIN as a Social Security Number for your business – it identifies your LLC for tax and reporting purposes. You’ll use the EIN to open a business bank account, hire employees, and file federal taxes.
The good news: obtaining an EIN is free. The IRS provides an online application on its website. You can complete it in about 15 minutes if you (or the responsible party) have a Social Security Number or Individual Taxpayer Identification Numberirs.gov. The IRS tool will issue your EIN immediately upon completion. (The IRS explicitly warns, “You never have to pay a fee for an EIN”irs.gov, so be wary of third-party websites that charge for this service.) If you don’t have an SSN/ITIN or the LLC is foreign-owned, you can still get an EIN by fax or mail using Form SS-4.
To start an LLC in California and properly operate it, make sure to apply for an EIN from the IRS soon after formation. It’s often done online at irs.gov by searching “Apply for an Employer Identification Number”irs.gov. Once you have the EIN, keep that information with your business records.
Step 6: File Your Statement of Information
Within 90 days of filing the Articles of Organization, California law requires your LLC to file an Initial Statement of Information (Form LLC-12) with the Secretary of Statedir.ca.gov. This is sometimes called an LLC “biennial report.” The form updates the state on key info such as your LLC’s address, the names/addresses of members or managers, and the registered agent.
You can file the Statement of Information online via bizfileOnline or by mail. The filing fee is $20dir.ca.gov. Remember this initial filing deadline: for example, if your LLC is approved on June 15, 2025, your first Statement of Information is due by September 13, 2025 (90 days later). After that, you must file a Statement of Information every two years. California sets the due dates based on whether your LLC formed in an odd or even year – see the SOS instructionsdir.ca.gov.
Filing the Statement of Information (LLC-12) keeps your LLC in good standing. The form can be filed online and is quick to complete, but be mindful of the deadlines. Failing to file on time can incur penalties (the SOS charges $250 for a late LLC-12)ftb.ca.gov. Keep a calendar reminder to file the biennial Statement every two years.
Step 7: Pay the $800 Annual Franchise Tax
Every LLC in California must pay an annual minimum franchise tax of $800 to the Franchise Tax Board (FTB)ftb.ca.gov. This tax is due even if your LLC does no business or loses money. Here’s how it works:
- First-Year Payment: You have until the 15th day of the 4th month after your LLC is approved to pay the first $800 taxftb.ca.gov. For instance, if your LLC is approved on July 10, 2025, the first $800 payment is due by November 15, 2025.
- Subsequent Years: Each year thereafter, the $800 tax is due by April 15 (the 4th month) of each calendar year for the prior year of operationftb.ca.gov.
- Form 3522: Use Form 3522 (LLC Tax Voucher), available on the FTB website, to send in the paymentftb.ca.gov.
Note: California briefly waived this tax for first-year LLCs organized between 2021 and 2023, but that waiver has ended. Now, as of 2024 onward, the $800 is due even in the first year of business. (If you dissolve the LLC within the first year using the short form cancellation, you may avoid the payment, but otherwise assume the tax is due.)
In addition to the $800 flat tax, very large LLCs must pay an extra fee. If your LLC’s total California gross receipts exceed $250,000 in a year, you must also file Form 3536 and pay an additional estimated feeftb.ca.gov. This fee is based on your income (for example, $900 if your income is $250k–$499k, up to $11,790 if $5M+ftb.ca.gov). File that estimated fee by the 15th day of the 6th month after the tax year starts. But if your receipts are under $250k, skip the extra fee.
In summary, after you start an LLC in California, expect to pay at least $800 per year in franchise taxftb.ca.gov. Set up your business budget accordingly and mark April 15 on your calendar for the annual payment.
Step 8: File Your California LLC Tax Return (Form 568)
After start an LLC in California the final formation step is to file the state income tax return for your LLC. In California, most LLCs use Form 568 (Limited Liability Company Return of Income). You must file Form 568 for every year your LLC is active and doing business in California, even if no tax is due.
On Form 568 you report your LLC’s income, deductions, and other details. Usually, single-member LLCs report through Schedule C on the owner’s Form 1040 (federal), and multi-member LLCs report on Form 1065, but in addition California still requires Form 568 for state purposes. If you have elected to have your LLC taxed as a corporation (C or S corp), then instead of 568 you would file Form 100 (C corp) or 100S (S corp) with Californiallcuniversity.com.
Form 568 (or 100/100S) is generally due by March 15 or April 15 each year, depending on your tax classification (for partnerships it’s March 15, for S-corps April 15, etc). Importantly, California grants an extension to file, so the deadline can extend by 6–7 months. However, any tax due still has to be paid by the original due date, even if you file on extensionllcuniversity.com. When you pay the $800 franchise tax (Form 3522), that counts as a payment on your return.
In short, when you start an LLC in California, remember to file Form 568 (or the corporate equivalent) with the FTB by the normal due date each yearftb.ca.gov. See the California LLC Tax Booklet (Form 568 instructions) for details on due dates and how to complete the form. Filing Form 568 is part of keeping your LLC compliant with California law.
After You Start an LLC in California: Next Steps
Once your California LLC is approved and formed, there are a few important tasks to handle after you start an LLC in California:
- Open a Business Bank Account: Soon after formation, open a separate business bank account for the LLC. Use your EIN to open the account. This keeps your business finances separate from personal funds, which preserves your liability protection. Most banks will require a copy of your Articles of Organization and Operating Agreement to open an LLC account.
- Obtain Local Licenses and Permits: California does not require a statewide general business license, but your LLC may need local or industry-specific licenses. Check with your city or county government to see if a general business license is required for your location. For example, restaurants, contractors, and professional services often need special state or local permits. In addition, if your LLC will sell taxable goods or certain services, you must register with the California Department of Tax and Fee Administration (CDTFA) for a seller’s permitcdtfa.ca.gov so you can collect and remit sales tax. (As the CDTFA notes, any retailer doing business in California must register with them and pay sales taxcdtfa.ca.gov.) Use the CalGold website (the state’s licensing database) to identify required state licenses, and check county clerk resources for fictitious business name filings if you plan to operate under a DBA.
- Stay on Top of Taxes: Remember your ongoing tax obligations. For federal taxes, the LLC’s income is reported on the owners’ returns (unless you elected corporate taxation). For California taxes, pay the $800 franchise tax and any LLC fee each yearftb.ca.govftb.ca.gov, and file Form 568 as discussed. California also has payroll taxes if you hire employees and various local taxes (like city business taxes) to consider. Consult a tax professional or the California Franchise Tax Board website to understand all the tax requirements.
- Keep Good Records: Maintain your LLC’s records carefully. Keep copies of all formation documents, the operating agreement, minutes of any important meetings (if multi-member), and financial records. Accurate records will make compliance, taxes, and any future funding or sale of the business much smoother.
By completing these steps and filings, you’ll have successfully started an LLC in California and positioned your business for ongoing compliance and growth.
Started an LLC in California: Frequently Asked Questions FAQs
Can I start an LLC in California online?
Yes. California allows you to start an LLC in California online through the Secretary of State’s bizfileOnline portalsos.ca.gov. When you start an LLC in California online, you fill out the Articles of Organization form (LLC-1) on the website. Filing online is the fastest method – the SOS typically processes online LLC filings within a couple of business dayssos.ca.gov. After submission, you’ll receive a confirmation and certified copy via email. The online filing fee of $70 is paid on the spot. Just make sure your chosen LLC name is available (check on the same site) before you file.
If you prefer or if you need certified signatures, you can also start an LLC in California by mailing the completed Form LLC-1 and fee to the Sacramento office of the Secretary of State. Mailed filings are processed in the order received, which currently takes about a weeksos.ca.gov. Either way, once the SOS approves your Articles of Organization, your LLC is officially formed.
How much does it cost to start an LLC in California?
The basic costs to start an LLC in California include state filing fees and taxes:
- Articles of Organization (SOS filing fee): $70. This one-time fee is paid when you file Form LLC-1 with the Secretary of State.
- Initial Statement of Information fee: $20. Within 90 days of formation you must file Form LLC-12 (statement of information) for $20dir.ca.gov. (Every two years thereafter you’ll pay $20 each time you file the biennial Statement.)
- California Annual Franchise Tax: $800 per year. Every California LLC must pay at least $800 to the Franchise Tax Board annuallyftb.ca.gov. The first payment is due by the 15th day of the 4th month after formation.
In total, you should budget at least $870 in the first year ($70 + $20 + $800) just in mandatory state fees and taxesftb.ca.gov. If your LLC’s annual gross receipts exceed $250,000, you’ll also pay an additional annual LLC fee (e.g. $900 if between $250k–$499k)ftb.ca.gov. Finally, if you hire a registered agent or use a formation service, that’s extra. But the official mandatory cost to the state is currently $70 + $20 + $800 as outlined above.
How long does it take to start an LLC in California?
The time to start an LLC in California depends largely on how you file:
- Online filing: If you file the Articles of Organization online to start an LLC in California, the California SOS reviews it almost immediately. As of May 2025, the SOS processing page shows online LLC formation filings being acted on within about 1–2 business dayssos.ca.gov. In practice, most online filings are approved within a few days. However, if many filings are incoming (for example, at fiscal year-end), it could take a bit longer.
- Mail filing: Paper filings take more time. The same SOS data indicates mailed LLC formation requests were processed in roughly 4–6 business dayssos.ca.gov. Plus add mailing time. So expect about one to two weeks by mail.
After approval, you’ll receive confirmation from the SOS by mail or email, and you can begin legal operations. Don’t forget the 90-day deadline to file your initial Statement of Information. In summary, you can start an LLC in California in as little as a few days if done online, or a couple of weeks if filing by mailsos.ca.gov.
What are the benefits of starting an LLC in California?
Starting an LLC in California combines protection and flexibility. The primary benefit is limited liability: as a member of a California LLC, your personal assets are shielded from the company’s debts and lawsuitssos.ca.gov. Creditors generally cannot go after your house or personal savings if your business is sued (they can only go after LLC assets). This is a powerful advantage over doing business as a sole proprietorship or general partnership, where personal liability is unlimited.
Another benefit is tax flexibility. By default, a single-member California LLC is taxed as a sole proprietorship (disregarded entity) and a multi-member LLC is taxed as a partnershipirs.gov. This means the LLC itself does not pay federal income tax; instead, profits and losses “pass through” to the owners’ personal tax returns. California follows that same pass-through treatment for state taxes. This pass-through setup avoids double taxation (unlike a C-corporation). Alternatively, you have the option to elect corporate taxation (as a C or S corp) for potential tax planning benefits, but that’s optional.
California LLCs also enjoy relatively few formalities. Unlike corporations, LLCs do not have to hold annual shareholder meetings or keep formal minute books. The compliance is more relaxed, focusing mainly on the biennial statement filings and tax payments. Overall, starting an LLC in California provides a simple structure with liability protection and tax advantages that fit most small businesses.
Do I need to file ongoing reports or taxes for my California LLC after starting it?
Yes. After you start an LLC in California, you must stay compliant with certain recurring obligations:
- Statement of Information (LLC-12): As mentioned, file the Initial Statement of Information within 90 days of formation, and then file every two years in the six-month window based on your LLC’s registration monthdir.ca.gov. Each filing costs $20dir.ca.gov. If you fail to file on time, the Secretary of State can impose a $250 penaltyftb.ca.gov and eventually suspend the LLC.
- Annual Franchise Tax: Each year, the LLC must pay the $800 minimum tax by the due date (typically April 15)ftb.ca.gov. This is required even if your LLC has no income. The first payment is due four months after formationftb.ca.gov.
- LLC Fee (if applicable): If your LLC’s California income exceeds $250,000, you must file Form 3536 and pay the additional fee by the 6th month of the tax yearftb.ca.govftb.ca.gov.
- Tax Returns: File the California LLC income tax return (Form 568) annually by the due dateftb.ca.gov. Even if you owe only the $800 tax, the return or extension should be filed. Any wages or other taxes (sales tax, payroll tax, etc.) must also be filed timely.
Staying on top of these filings – biennial reports and state taxes – is crucial after you start your LLC in California. Mark your calendar for the due dates and consider using reminders or a calendar app to track them.
What taxes will my California LLC have to pay?
A California LLC faces a few types of taxes:
- Franchise Tax: As noted, the minimum $800 annual franchise tax to the California FTB is requiredftb.ca.gov. This is paid even if the LLC breaks even or loses money.
- LLC Fee (if high revenue): An additional annual fee based on income (using Form 3536) applies for LLCs with California gross receipts over $250,000ftb.ca.gov.
- Federal Income Tax: By default, the LLC itself does not pay federal income tax. Instead, a single-member LLC’s income is reported on the owner’s personal return (Schedule C), and a multi-member LLC files Form 1065 and issues K-1s to ownersirs.gov. If the LLC elected S-corporation status, then the LLC would pass income to shareholders (Form 1120S). If it elected C-corp status, it would pay corporate tax (Form 1120).
- California Income Tax: California recognizes the federal tax classification. Single-member LLCs report via the owner’s return in CA; multi-member LLCs file Form 568ftb.ca.gov. If taxed as a corporation, you would file the state’s 100 or 100S.
- Sales Tax: If your LLC sells goods (tangible property) or certain taxable services, you must register with the CDTFA and collect California sales tax on sales to customerscdtfa.ca.gov. The current statewide sales tax is 7.25%, plus local add-ons. Sellers’ permits are free but mandatory for retailerscdtfa.ca.gov.
In sum, a newly started California LLC should plan for the $800 franchise tax plus any income-based LLC fee. Federal and state income taxes flow to the owners unless corporate status is chosen. And if you have sales or employees, register and pay those taxes too. See the IRS and FTB guidance for details on LLC taxation and paymentsftb.ca.govirs.gov.
Is a general business license required to start an LLC in California?
California itself does not issue a statewide general business operating license for LLCs, so you do not need a state-level license to start an LLC in California. However, many local governments do require business licenses. After you start an LLC in California, check with the city and county where you operate. For example, Los Angeles, San Francisco, and many other cities have their own business tax certificates or licenses. The requirements vary by location and business activity.
Additionally, your industry may require special licensing or permits. For instance, if you’re opening a restaurant, you’ll need health permits and maybe an alcohol license. Contractors need state licenses from the Contractors State License Board. Professional services (legal, medical, engineering, etc.) often require state professional licenses. You can use the CalGold website (California government’s licensing database) to see if your particular business activity requires state permits or licenses.
Lastly, if your business is a sole proprietorship or partnership and uses a trade name (DBA), you’d file a “Fictitious Business Name Statement” at the county. An LLC doesn’t have to do this if it operates under its legal LLC name. In summary: no single license from the state is needed to start an LLC, but you may need permits or licenses from local or other agencies depending on your business.
What happens if I don’t file the required statements or taxes after starting my California LLC?
Failing to meet California’s LLC requirements can lead to penalties or even suspension of your LLC. For example, if you don’t file your Statement of Information (LLC-12) on time, the Secretary of State can impose a $250 penaltyftb.ca.gov. Continued failure can cause the SOS to suspend your LLC, meaning it loses good standing and liability protection.
Similarly, if you don’t pay the $800 franchise tax, the Franchise Tax Board will consider your LLC out of compliance. The state can suspend or forfeit the LLC’s status, and even collect back taxes with interest and penalties. A suspended LLC cannot legally do business (it can’t defend in court, for example) until you resolve the issue.
To avoid these issues, mark due dates on your calendar: the biennial Statement of Information due within 90 days of formation and every two years after, and the annual LLC tax due by April 15 (with Form 3522). Keep records of your filings and payments. Being proactive with compliance keeps your California LLC in good standing and preserves its limited liability benefits.
Can I serve as my own registered agent for my California LLC?
Yes, you can act as your own registered agent if you meet the criteria. As a California LLC member (owner), you may designate yourself as the registered agent as long as you are 18 or older and have a physical street address in California (not a P.O. box). For example, if you live in California and run the LLC from your home, you could list your home address as the LLC’s agent address.
However, keep in mind that the agent’s name and address become public record. Some business owners prefer hiring a commercial registered agent to maintain privacy. If you do serve as your own agent, remember you must be available at that address during normal business hours to receive legal mail and service of process.
Legally, the LLC itself cannot be its own agent, and a corporation (including a CA corporation) cannot simply act as the agent without qualifying first. But an individual owner or a registered agent service can. Just be sure your listed address is correct and up-to-date, because missing a lawsuit delivery because of an invalid address can cause serious trouble.
How is a California LLC taxed by default?
By default, a California LLC’s tax status depends on the number of owners. If your LLC has only one member (a single owner), it is treated as a “disregarded entity.” That means for federal and California tax purposes, it’s taxed the same as a sole proprietorship. All income and losses flow through to the owner’s personal tax return. If your LLC has two or more members, it is taxed as a partnership by default – the LLC itself files Form 568 and issues K-1s to members, who report their share on individual returns.
The IRS (and California) will classify a multi-member domestic LLC as a partnership unless an election is madeirs.gov. In contrast, a single-member LLC is not considered separate from the owner for tax purposesirs.gov. In either case, the LLC itself does not pay federal income tax as a corporation unless it files Form 8832 to elect corporate status. So “start an LLC in California” and you’ll get pass-through taxation by defaultirs.gov, which many small businesses find advantageous. Of course, you can elect corporate taxation (C-corp or S-corp) later if it makes sense for your tax planning.
Sources:
Starting a Business: Entity Type: California secretory of State, Single Member Limited Liability Companies :: Internal Revenue Service,
Since you know How to Start an LLC in California, it’s time to take the next step. At LLC Tutorial we provide free, step-by-step guides to help you form your LLC quickly and affordably