How to Start an LLC in California

Last updated on 03 Apr 2025

How to Form an LLC in California | Complete Guide

A Step-by-Step Guide

How to Form an LLC in California

Forming an LLC in California is a wise choice for safeguarding your personal assets while building a legitimate business. With the LLC structure, members enjoy limited liability, whereby their personal assets are protected from business debts and legal liabilities. Follow our comprehensive guide to ensure a smooth and efficient process.

Key Benefits

Liability Protection

An LLC provides its owners with liability protection, safeguarding personal assets from business debts and legal liabilities.

Tax Flexibility

Enjoy pass-through taxation where profits and losses are taxed on the owners' individual tax returns, avoiding double taxation.

Simple Management

Operate your business with little administrative hassle while maintaining the professional credibility and legal protections of a formal business entity.

Formation Process

Select a Distinctive Name for Your LLC

The initial step in forming your California LLC is to select a distinctive name that adheres to California state regulations. Your LLC name cannot be too close to any other business names currently registered in California.

Availability Check: Verify whether your preferred name is available by conducting a name search on the website of the California Secretary of State.
Required Words: Your name for your LLC should contain the words "Limited Liability Company" or an abbreviation such as "LLC," "L.L.C.," or "Limited."
Restricted Words: Some words such as "Agency," "Board," "Bureau," "Commission," "Department," or "Municipal" are not allowed, since they may confuse people into believing that your company is a government institution.
Government Terms: The name should not be similar to the names of government institutions (such as "State Department" or "FBI").
Domain Name: It's a good idea to check if your domain name is available for future use, even if you're not going to build a site right away.

Choose an Agent for Service of Process

The state of California mandates that each LLC have an "Agent for Service of Process." The agent receives official documents, government communications, and tax notices on behalf of your LLC.

Self-Appointment

Your Service of Process Agent can be you (if you are a California resident), another manager or member of the LLC, or a registered agent service professional. The agent needs to have a California physical address and be present during regular business hours.

Professional Service

The hiring of a registered agent service is a favorite among many due to the fact that they keep you in compliance and private and deal with the legal documents for you.

Recommended Registered Agent Services

ZenBusiness

ZenBusiness is one of the highest-rated services to create LLCs in California. They provide a seamless LLC registration process and register agent services from $199/year. ZenBusiness also provides an easy-to-access virtual dashboard to your company documents.

Quick LLC formation and compliance services
5-star reviews
Simple access to legal documents through a virtual dashboard

Northwest Registered Agent

Northwest Registered Agent is a reputable provider with an emphasis on data privacy and security. They provide LLC registration and registered agent services in all 50 states, including California.

A+ Better Business Bureau rating
Emphasizes data privacy
Low-cost registered agent services at $125 per year

File Articles of Organization with the California Secretary of State

After you have a name and an agent, the next thing to do is to form your LLC officially by filing the Articles of Organization with the California Secretary of State. You can file online or by mail. The fee for filing to form an LLC is $70.

Online Filing

You can file the Articles of Organization on the California Secretary of State's online portal. Online filings are normally processed within 5 business days.

Mail Filing

If you decide to file by mail, send your Articles of Organization to:

California Secretary of State
Business Programs Division
P.O. Box 944230
Sacramento, CA 94244-2300

Mail filings could take 2-3 weeks.

Processing Time and Fees

Standard Filing Fee: $70
Processing Time: Online filings (5 business days), Mail filings (2-3 weeks)
Expedited Processing: Available for additional fees, including same-day processing ($750), 4-hour processing ($500), or 24-hour processing ($350)
Annual Franchise Tax: $800 annually, with the first payment due within three months of forming your LLC

Secure an Employer Identification Number (EIN)

Once you have created your LLC, you'll have to get an Employer Identification Number (EIN) from the IRS. This is for tax purposes, employee hiring, and establishing a business bank account.

Application Process: You can apply for an EIN online via the IRS website without any charge.
New EIN Required: If you are converting a sole proprietorship into an LLC, you need to get a new EIN from the IRS.
Benefits: An EIN allows you to open business bank accounts, hire employees, and establish business credit.

Pay the Necessary Fees and Adhere to State Regulations

California imposes a franchise tax of $800 annually on LLCs. The first payment is due within three months of forming your LLC.

Franchise Tax: $800 annual fee due by the 15th day of the 4th month after forming your LLC
Statement of Information: Form LLC-12 must be filed within 90 days of forming your LLC and every two years thereafter
Statement of Information Fee: $20 filing fee
Professional Restrictions: In California, specific licensed professionals (such as attorneys, physicians, and accountants) are prohibited from creating an LLC. Rather, they have to create a Professional Corporation (PC) or a Professional Limited Liability Partnership (PLLP).

After Formation

Once you have your LLC registered, take these important steps to maintain good standing and protect your business:

Open a Business Bank Account

Keep your business and personal finances separate to safeguard your personal assets. Having a business bank account also assists you in tracking expenses and managing the finances of your LLC.

Set Up Accounting and Bookkeeping

Employ an expert accountant or utilize accounting software to monitor your finances and be compliant with tax regulations. This is essential for managing your LLC's financial health.

Obtain Business Insurance

Although not necessary, business insurance (e.g., general liability insurance) can assist in defending your LLC against lawsuits and claims. This provides an additional layer of protection beyond the LLC structure.

Meet Ongoing Requirements

Don't forget to file your Statement of Information every two years and maintain your LLC in good standing by paying the franchise tax annually. Failure to meet these requirements can result in penalties or dissolution of your LLC.

FAQs

How much does it cost to register an LLC in California?

The Articles of Organization filing fee is $70. There is also a franchise tax of $800 annually payable within three months of LLC incorporation.

Do I require a DBA (Doing Business As) name for my LLC?

No, you can operate under your LLC's business name in California. If you wish to use another name for business, however, you'll have to file a DBA, or fictitious business name.

How quickly can an LLC be formed in California?

Online submissions are usually processed within 5 business days. Paper submissions take 2-3 weeks, but expedited services are available for quicker processing: same-day processing ($750), 4-hour processing ($500), or 24-hour processing ($350).

Can I serve as my own registered agent in California?

Yes, you may act as your own Agent for Service of Process provided you maintain a California street address and are accessible during business hours.

Can a professional (e.g., attorney, physician) create an LLC in California?

In California, specific licensed professionals (such as attorneys, physicians, and accountants) are prohibited from creating an LLC. Rather, they have to create a Professional Corporation (PC) or a Professional Limited Liability Partnership (PLLP). Get in touch with a legal professional to ensure your qualification.

How much is the franchise tax for California LLCs?

California LLCs are required to pay an $800 annual franchise tax. This fee is due by the 15th day of the 4th month after forming your LLC and must be paid every year to keep your LLC in good standing.

Is it possible to expedite the processing of my LLC formation in California?

Yes, California offers expedited processing for an additional fee. You can receive same-day processing for an extra $750, 4-hour processing for an additional $500, or 24-hour processing for $350.

Ready to Start Your California LLC?

Take the first step toward establishing your business with the protection and benefits of an LLC structure. Our comprehensive guide makes the process simple and straightforward.

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