To form an LLC in California, you need to take the following steps. For more information on how to form an LLC in any state, see Nolo's article How to Form an LLC.
You need an LLC name that's unique. The name you choose must not be:
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.
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.
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).
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.
Every California LLC must have an agent for service of process (called registered agent in other states) in California. This is an individual or company 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 a member, manager, or officer of the LLC, but doesn't need to be affiliated with the LLC.
The California Secretary of State maintains a list of private service companies (commercial registered agents) that will act as agent for service of process for a fee.
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 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.
An LLC operating agreement is not required by the Secretary of State, but is highly advisable. If you've already formed an LLC, Nolo offers an LLC operating agreement that you can create online. For help creating an LLC and an operating agreement, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo) or use Nolo’s Online LLC.
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. You can file the statement online or print it out and mail or hand deliver it to the Secretary of State. The filing fee is $20.
The Statement of Information must include:
All LLCs and foreign LLCs must pay California taxes to the California Franchise Tax Board (FTB) if:
Annual minimum tax: All LLCs doing business in California must pay an annual minimum franchise tax of $800. You submit the annual tax to the Franchise Tax Board using Form 3522, Limited Liability Company Tax Voucher.
Additional taxes: LLCs with net income over $250,000 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 (April 15 for most LLCs). You can find the Limited Liability Company Tax Booklet, which includes Forms 568 and 3522, on the California Franchise Tax Board's website.
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 Filings Requirements in California.
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).
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 (registered agent) 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.