How to Start an LLC in California

If you want to form a limited liability company (LLC) in California, you need to legally register your business with the state. In addition, you'll need to decide how you want to manage your LLC, create organizational documents, register for taxes, and file initial reports. We'll take you through the eight steps to start your California LLC.

For more information on how to form an LLC in any state, check out our article on how to start an LLC.

1. Choose a Name for Your California LLC

When you form your LLC, you'll need to select a name for your business. You should be aware of California's naming laws around LLCs.

LLC name must be distinguishable. You must choose a name for your LLC that's unique. It can't be the same as, or too similar to, the name of a domestic or foreign LLC that's registered or reserved with the California Secretary of State (SOS) records. You can check to see whether your business name is available by searching the SOS's business name database. (Cal. Corp. Code § 17701.08 (2024).)

LLC name must include an entity designator. Under California law, an LLC's name must contain either "limited liability company," "L.L.C.," or "LLC." The words "limited" and "company" can be abbreviated to "ltd." and "co." (Cal. Corp. Code § 17701.08 (2024).)

Name reservation. Before you register your business, you can reserve your business name for up to 60 days. You can reserve a business name online using bizfile Online or by mailing a Name Reservation Request form to the SOS. As of 2024, the fee to reserve a name is $10.

Using a fictitious business name. You can do business under a name that's different from your LLC's legal name listed in its articles of organization. This alternative name is sometimes called a "fictitious business name," "trade name," or "DBA" (short for doing business as). If your LLC uses a DBA, you must file a fictitious business name statement with the county recorder in the county of your LLC's principal place of business. You must also publish your statement in a local newspaper once a week for four consecutive weeks and file proof of the publication with your county. Your fictitious business name statement is good for five years and can be renewed. (Cal. Bus. & Prof. Code §§ 17900 and following (2024).)

For more guidance on your LLC's name, check out the business entity names webpage of the SOS website and the SOS's business entity name publication.

2. Choose a California Registered Agent

Every California LLC must have an agent for service of process (usually called a "registered agent"). A registered agent is an individual or certified corporation that agrees to accept legal papers on the LLC's behalf—for instance, if it's sued. An LLC can't serve as its own agent for service of process. The agent should agree to accept service of process on behalf of the LLC 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 can be a member, manager, or officer of the LLC, but doesn't need to be affiliated with the LLC.

(Cal. Corp. Code § 17701.13 (2024).)

The SOS maintains a list of private service companies (commercial registered agents) that will act as agents for service of process for a fee.

3. Decide on Member vs. Manager Management

LLCs have two different types of management structures:

• A member-managed LLC is when the LLC is managed by the LLC's members (owners).
• A manager-managed LLC is when the LLC is managed by a designated manager or managers.

Most small multi-member LLCs choose to be managed directly by their members. But LLCs can appoint a manager or small group of managers to manage the LLC—somewhat like how a board of directors oversees a corporation.

Managers vote on key issues such as taking out a loan, purchasing real estate, or changing strategic plans. In a manager-managed LLC, managers can be LLC members or nonmembers.

4. File Articles of Organization With the SOS

You can form a California LLC by filing articles of organization with the SOS. The articles must include:

• a statement that the LLC is organized for a lawful purpose
• the name of the LLC
• the address of the LLC's principal office
• the mailing address of the LLC if different from the principal office address
• the name and address of the LLC's registered agent, and
• information on how the LLC will be managed (whether member-managed or manager-managed).

(Cal. Corp. Code § 17702.01 (2024).)

You can file your articles online through bizfile Online. You can also hand deliver or mail in a completed Form LLC-1 to the SOS. As of 2024, the filing fee is $70.

5. Prepare an Operating Agreement

Unlike most states, California requires every LLC to have an operating agreement. An operating agreement is an internal document that lays out how the LLC is run and managed. You don't need to file the agreement with the state.

An operating agreement governs:

• the relations among the LLC members as members and between the members and the LLC
• the powers, rights, and duties of the LLC's managers
• the activities of the LLC and the conduct of those activities, and
• the means and conditions for amending the operating agreement.

(Cal. Corp. Code § 17701.10 (2024).)

Apart from being legally required, an operating agreement comes with many advantages. For example, it can help preserve your limited liability by showing that your LLC is truly a separate business entity from the owners.

If you've already formed an LLC, we offer an LLC operating agreement that you can create online.

6. File Initial and Biennial Reports

Every California and non-California LLC registered in California must file a Statement of Information (Form LLC-12) with the SOS within 90 days after filing their articles of organization.

After the initial statement, a Statement of Information must be filed every two years (biennial). The filing period is the calendar month when the original articles of organization were filed and the prior five calendar months. For example, if you filed your articles in March, you must file your biennial reports every subsequent two years between October 1 and March 31.

You can file the statement online through bizfile Online or mail or hand deliver Form LLC-12 to the SOS. As of 2024, the filing fee for these reports is $20. (In-person submissions have an additional $15 handling fee.)

(Cal. Corp. Code § 17702.09 (2024).)

For more, read about LLC biennial report and tax filing requirements in California.

7. Comply With Other Tax and Regulatory Requirements

You'll need to comply with any other tax and regulatory requirements that apply to your LLC. These might include the following:

EIN. If your LLC has more than one member, it must obtain a federal employer identification number (EIN), even if it has no employees. If you form a single-member LLC, you must obtain an EIN for your LLC only if either you elect to have your business taxed as a corporation instead of a sole proprietorship (disregarded entity) or your single-member LLC has employees. You can get an EIN by completing an online EIN application on the IRS website. There's no filing fee.

Business licenses. Depending on what type of business your LLC is engaged in and where it's located, you might need to obtain other local and state business licenses and permits. 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'll be selling goods and collecting sales tax or if you have employees—you'll need to register with the appropriate California taxing authority. For instance, if you'll be collecting sales tax, you'll have to register with the California Department of Tax and Fee Administration. For employer taxes, register with the California Employment Development Department (EDD).

Annual minimum franchise tax. All LLCs doing business in California must pay an annual minimum franchise tax of $800 (figure as of 2024). You submit the annual tax to the FTB using Form 3522 (LLC Tax Voucher). Depending on your LLC's income, you could owe more. The LLC webpage on the FTB website has more information about LLC taxes in California, including links to the necessary forms and fee schedules.

Read our California state business income tax article for more details and guidance.

Additional Information About California LLCs

The SOS has a lot of information to help you form your business. Check out the SOS's starting a business webpage for details on how to create your LLC. You can also find helpful topics on the left side of the webpage, such as name reservations; forms, samples, and fees; filing tips; frequently asked questions; and resources.

You can also use our online LLC formation service to start your LLC. Just answer a few questions about the company you want to form and we'll do the paperwork for you.

If you'd like personalized legal help, talk to a California business attorney. They can help you choose a name, set up your LLC, draft your formation documents, and guide you through state laws, regulations, and requirements.