How to Form an LLC in California
To form an LLC in California, here's everything you need to know.
1. Choose a Name for Your LLC
Under California law, an LLC’s name must end with “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.” The words “Limited” and “Company” may be abbreviated to “Ltd.” and “Co.” The LLC’s name may not contain the words “bank,” “trust,” “trustee,” “incorporated,” “inc.,” “corporation,” “corp.,” “insurer,” “insurance company,” or any other words suggesting that it is in the insurance business. In addition, the name you choose must not be:
- the same as, or too similar to, an existing name in the California Secretary of State records, or
- misleading to the public.
Names may be checked for availability by searching the California Secretary of State’s business name database. Note that when this database is searched, names are checked only against those of other LLCs registered with the California Secretary of State.
An available name may be reserved for up to 60 days by filing a Name Reservation Request form. The form must be postal mailed or hand delivered to the California Secretary of State’s office. A $10 fee must be paid to reserve a name.
The Secretary of State provides additional, important information regarding business name availability both online and in a downloadable publication (Business Entity: Name Regulations & Additional Statutory Requirements and Restrictions).
2. File Articles of Organization with the State
A California LLC is created by filing articles of organization with the California Secretary of State’s office. Complete and file Articles of Organization, Form LLC-1. The articles of organization must include the following information: the LLC's name, its purpose, information on how it will be managed, its address, and the name and address of its registered agent.
Form LLC-1 can be completed online at the California Secretary of State’s website and then filed by postal mail or hand delivered to the Secretary of State’s office. The filing fee is $70. With hand-delivered filings at the Sacramento Secretary of State's office, you can request expedited filing for an additional fee.
All of the paperwork and procedural steps to start a limited liability company in California can be done online using Nolo's California Online LLC Formation application.
3. Appoint a Registered Agent
Every California LLC must have an agent for service of process in the state. This is an individual or corporation that agrees to accept legal papers on the LLC’s behalf if it is sued. An LLC may not serve as its own agent for service of process and only one agent can be designated. The agent should agree to accept service of process on behalf of the limited liability company prior to designation.
Individual agents must reside in California and their street address (not a P.O. box) must be listed in the LLC’s articles of organization. The agent may be affiliated with the LLC.
Corporate agents must have previously filed a California Corporations Code Section 1505 Certificate with the Secretary of State’s office. The California Secretary of State maintains a list of private service companies that can act as agent for service of process. Not all companies are on the list.
4. Prepare an Operating Agreement
An LLC operating agreement is not required in California, but is highly advisable. For help creating an LLC operating agreement, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo) or use Nolo’s Online LLC. The LLC operating agreement is not filed with the California Secretary of State.
5. Publication Requirements
There are no publication requirements in California.
6. File a Statement of Information With the State
Every California and foreign LLC registered in California must file a Statement of Information, Form LLC-12, with the California Secretary of State within 90 days after filing their articles of organization (Form LLC-1). Thereafter, a Statement of Information must be filed every two years during the applicable filing period. The filing period is the calendar month during which the original articles of organization (or Application for Registration by a foreign LLC) were filed and the prior five calendar months. For example, if you filed your articles of organization on September 15 of an odd-numbered year, you should file statements of information every other year at some point between April 1 and September 30 of each subsequent odd-numbered year.
Form LLC-12 is available on the California Secretary of State's website. The initial Form LLC-12 must be filed by mail or hand delivered. Subsequent filings can be completed and filed online as well as by mail or hand delivery. The filing fee is $20.
The Statement of Information must include:
- the LLC’s name and California Secretary of State file number
- the name and address of the LLC’s agent for service of process
- the street address of the LLC’s principal executive office
- the LLC’s mailing address, if different from the street address of its principal executive office
- the name and complete business or residence addresses of any manager or managers and chief executive officer, if any; if no manager has been elected or appointed, the name and business or residence address of each member
- a valid email address, if the LLC chooses to receive renewal notices and any other notifications from the secretary of state by electronic mail instead of by United States mail, and
- the general type of business that is the LLC’s principal business activity (for example, manufacturer of aircraft; wholesale liquor distributor, or retail department store).
7. Pay Your State Tax Obligations
All LLCs and foreign LLCs must pay California taxes to the California Franchise Tax Board (FTB) if:
- they are organized in California, registered in California, or conduct business in California, and
- they have not elected to be taxed as corporations--that is, they are taxed as partnerships or sole proprietorships (disregarded entities). LLCs taxed as corporations must comply with California’s corporate tax rules.
Annual minimum tax: All LLCs doing business in California must pay an annual minimum franchise tax of $800.
Additional taxes: LLCs with income over certain levels must pay an additional fee based on their total annual income.
Filing procedures: All LLCs must file California Form 568, Limited Liability Company Return of Income, by the 15th day of the 4th month after the close of the LLC’s taxable year. For details and tax forms, see the California Franchise Tax Board website.
8. Comply With Other Tax and Regulatory Requirements
You will need to comply with any other tax and regulatory requirements that apply to your LLC. These may include:
EIN: If your LLC has more than one member, you will need to get an IRS Employer Identification Number (EIN) for it, even if the LLC has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online application on the IRS website or by filing IRS Form SS-4 . There is no filing fee.
Business licenses: Depending on what type of business your LLC is engaged in and where it is located, you may need to obtain other local and state business licenses. For more information, go to CalGold on the California Office of Business and Economic Development website.
Sales and employer taxes: In some cases, for example if you will be selling goods and collecting sales tax or if you have employees, you’ll need to register with the appropriate California taxing authority. For example, if you will be collecting sales tax, you'll have to register with California State Board of Equalization (BOE), which you can do online or in person at a BOE field office. For employer taxes, register with the California Employment Development Department (EDD). For more information on state LLC tax registration, check Nolo's article LLC Annual Report and Tax Filing Requirements: A 50-State Guide.
9. Special California Rules for Professional Services
Under California law, LLCs cannot be formed to provide professional services. Professional services include any service that requires a professional state license. If you don’t know whether your service requires a state license, see the California Department of Consumer Affairs website. As an alternative to forming an LLC, California professionals may form limited liability partnerships (LLPs). For details, see the California Franchise Tax website.
10. Foreign LLCs Doing Business in California
All LLCs organized outside of California must register with the California Secretary of State to do business in California. To register, you must file Form LLC-5, Application to Register a Foreign Limited Liability Company and pay a $70 fee. The form must be filed by postal mail or may be dropped off in person for an additional fee. The LLC must appoint a California agent for service of process and provide a certificate of good standing from the agency where the LLC was originally formed. For details, see the business entities section of the Secretary of State’s website.
For information on other California business entities, see Nolo's section on Starting a Business in California.