Frequently asked questions about starting and running an LLC, or limited liability company.
If you want to form a limited liability company (LLC) in California, you need to take the following steps:
For more information on how to form an LLC in any state, check out our article on how to start an LLC.
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. Your name also can't be misleading to the public. (Cal. Corp. Code § 17701.08 (2023).)
You can check to see whether your business name is available by searching the SOS's business name database. 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 in a Name Reservation Request form to the SOS. As of 2023, the fee to reserve a name is $10.
Under California law, an LLC's name must contain either:
The words "limited" and "company" can be abbreviated to "ltd." and "co." In addition, the LLC's name can't contain the words "bank," "trust," "trustee," "incorporated," "inc.," "corporation," "corp.," "insurer," "insurance company," or any words suggesting that it's in the insurance business. (Cal. Corp. Code § 17701.08 (2023).)
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 if it is 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. (Cal. Corp. Code § 17701.13 (2023).)
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.
The SOS maintains a list of private service companies (commercial registered agents) that will act as agents for service of process for a fee.
A California LLC is created by filing articles of organization with the SOS. The articles must include:
(Cal. Corp. Code § 17702.01 (2023).)
LLCs can either be member-managed (managed by all the LLC's members) or manager-managed (managed by 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.
California doesn't require an LLC to have an operating agreement. While not required, it's highly recommended that you have one for your company.
An operating agreement is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how you'll manage your LLC. This document can also help preserve your limited liability by showing that your LLC is truly a separate business entity from the owners. In the absence of an operating agreement, California's LLC laws will govern how your LLC operates.
If you've already formed an LLC, we offer an LLC operating agreement that you can create online.
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 2023, the filing fee is $20. (In-person submissions have an additional $15 handling fee.)
The statement of information must include:
(Cal. Corp. Code § 17702.09 (2023).)
All LLCs and foreign LLCs must pay California taxes to the California Franchise Tax Board (FTB) if they both:
(LLCs taxed as corporations must comply with California's corporate tax rules.)
If you formed your LLC in California in 2021, 2022, or 2023, you can enjoy a one-year exemption—available for the LLC's first taxable year—from California state's $800 minimum annual franchise tax. Starting in the second taxable year, all LLCs would be subject to the annual $800 annual minimum franchise tax until they formally dissolve. The purpose of the exemption is to temporarily ease the burden of forming a new business in California.
Annual minimum tax. All LLCs doing business in California must pay an annual minimum franchise tax of $800 (figure as of 2023). You submit the annual tax to the FTB using Form 3522 (LLC Tax Voucher).
Additional taxes. LLCs with net income over $250,000 must pay an additional fee based on their total annual income (2023).
Filing procedures. Most LLCs must file California Form 568 (LLC Return of Income) by the 15th day of the third month after the close of the LLC's taxable year (March 15th for most LLCs). There's an exception for certain single-member LLCs.
The LLC webpage on the FTB website has more information about LLC taxes in California, including links to the necessary forms and fee schedules.
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). For more information on state LLC tax registration, see our article LLC biennial report and tax filing requirements in California.
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.