How to start an LLC in California
Last reviewed . General information, not legal or tax advice.
To start an LLC in California, file Articles of Organization (Form LLC-1) with the Secretary of State, online through bizfile Online, for $70. File a Statement of Information within 90 days ($20) and every two years after. Every LLC organized or doing business in California also owes the Franchise Tax Board an $800 annual tax.
What are the steps to form an LLC in California?
Check that the name is available
Since 2021 an LLC name must be distinguishable in the Secretary of State's records from other LLCs and not likely to mislead the public. The online Business Search is only a preliminary check, and the state does not compare names against trademarks or county fictitious business names.
Reserve the name if you need time
A reservation holds the name for 60 days. The Secretary of State advises against ordering signs or stationery, or making financial commitments, until the formation is actually filed.
Name an agent for service of process
California's term for a registered agent. It must be an individual who lives in California or a corporation registered as a 1505 corporate agent; the LLC cannot be its own agent. The agent's name and street address become public record.
File Form LLC-1 and pay $70
File the Articles of Organization online at bizfile Online, which the Secretary of State recommends for a faster response, or on the PDF form. The online form meets the minimum legal requirements, and you can attach extra provisions.
File the Statement of Information within 90 days
Form LLC-12 costs $20 and lists the LLC's addresses, managers or members and agent. After the first one, it is due every two years, and whenever the agent resigns or is no longer valid.
Pay the first $800 tax and get an EIN
The first annual tax is due by the 15th day of the 4th month after you file with the Secretary of State. Apply for a free EIN with the IRS, and keep your operating agreement with the LLC; the state does not file it.
What does a California LLC cost each year?
The state filing fees are small. The tax is not. According to the Franchise Tax Board, every LLC doing business or organized in California pays an annual tax of $800, and keeps paying it even in a year with no business until it cancels. A worked example from the Board: an LLC registered on June 18 owed its first $800 by September 15. Later payments are due by the 15th day of the 4th month of each tax year, with voucher FTB 3522.
The first-year exemption you may read about applied only to tax years beginning in 2021 through 2023, so a new LLC today pays from year one. Larger LLCs also owe an LLC fee on top of the tax, estimated and paid by the 15th day of the 6th month of the tax year (form FTB 3536):
| Total California income | LLC fee |
|---|---|
| Under $250,000 | No fee |
| $250,000 to $499,999 | $900 |
| $500,000 to $999,999 | $2,500 |
| $1,000,000 to $4,999,999 | $6,000 |
| $5,000,000 or more | $11,790 |
Add the Secretary of State's $20 Statement of Information every two years. Missing it is costly: the Secretary of State imposes a $250 penalty, which the Franchise Tax Board collects.
How does California tax an LLC's income?
An LLC must have the same tax classification for California as it has for federal purposes. With one member it is a disregarded entity by default; with two or more, a partnership; or it can be taxed as a corporation if it elects that federally.
An LLC that is doing business in California or registered with the Secretary of State files the Board's Form 568, the Limited Liability Company Return of Income, by the original due date, along with paying the annual tax and any LLC fee. To keep the LLC active, the Board lists two duties: file the Statement of Information with the Secretary of State, and file and pay state income taxes.
What mistakes do new California LLC owners make?
- Paying a stranger to file the Statement of Information. The Secretary of State warns of letters asking businesses to send $495 or similar sums to private companies. The state's own fee for the statement is $20 or $25, it can be filed online, and no business has to go through another company to file.
- Forming before you are ready. The $800 is owed for every year the LLC exists. The Board notes that an LLC canceled within one year of organizing, with the short form cancellation (Form LLC-4/8), is not subject to the $800 for its first tax year.
- Assuming the state checks your brand. Name approval looks only at other LLCs on record. Trademarks are a separate question; see business names, DBAs and trademarks.
- Filing a DBA with the state. California fictitious business names are filed with the county where the principal place of business is located, not with the Secretary of State.
- Forgetting local licenses. The Secretary of State points to the CalGOLD database, which lists the agencies that issue business licenses and permits at every level of government. See business licenses and permits.
Frequently asked questions
How much does it cost to start an LLC in California?
The Secretary of State charges $70 for Form LLC-1 and $20 for the Statement of Information due within 90 days. The bigger cost is the Franchise Tax Board's $800 annual tax, due by the 15th day of the 4th month after filing and every year after. LLCs with $250,000 or more of California income also pay an LLC fee.
Do I have to pay the $800 if my LLC made no money?
Yes. The Franchise Tax Board says the $800 annual tax is due every year an LLC is organized or doing business in California, even if it is not conducting business, until the LLC is canceled. The first-year exemption covered only tax years beginning in 2021 through 2023, so it does not help a new LLC.
Who can be the agent for service of process for a California LLC?
Either an individual who lives in California, including an owner, or a corporation with a current Corporate Registered Agent (1505) certificate on file. The LLC cannot act as its own agent. Remember that the agent's name and physical street address are public, so some owners prefer to use a registered corporate agent.
Where do I file a DBA for a California LLC?
With the county, not the state. The Secretary of State says fictitious business names are filed with the county where the business's principal place of business is located, and each county sets its own requirements. The Secretary of State also does not compare LLC names against fictitious business names, so check the county's records too.
Sources
- Limited Liability Companies: California (Domestic) forms and fees, California Secretary of State. https://www.sos.ca.gov/business-programs/business-entities/forms/limited-liability-companies-california-domestic
- Limited Liability Companies: Statement of Information, California Secretary of State. https://www.sos.ca.gov/business-programs/business-entities/forms/limited-liability-companies-statement-information
- Name Reservations, California Secretary of State. https://www.sos.ca.gov/business-programs/business-entities/name-reservations/
- Business Entities Frequently Asked Questions, California Secretary of State. https://www.sos.ca.gov/business-programs/business-entities/faqs/
- Limited liability company, California Franchise Tax Board. https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html
This guide is general information, not legal or tax advice. Rules differ by state and city and change over time, so confirm the details with the official sources above or a licensed professional.