To form an LLC in California, you file a one-page Articles of Organization with the Secretary of State for $70, then follow through with an operating agreement, a federal EIN, a Statement of Information within 90 days, and an $800 annual franchise tax owed to the Franchise Tax Board. The state filing is the easy part. The follow-up obligations, and especially that $800 tax, are what catch first-time founders off guard.
Pick a Name That Meets State Rules
Your LLC’s name has to include a legal designator. “Limited Liability Company,” “LLC,” and “L.L.C.” are the standard choices, and California also accepts “Ltd.” for “Limited” and “Co.” for “Company.”1California Secretary of State. California Code of Regulations – Business Entity Names The name cannot be the same as, or deceptively similar to, any business already on file with the Secretary of State.
Run your top choice through the Secretary of State’s online business search before you commit. If the name is available but you’re not ready to file, you can reserve it for $10.2California Secretary of State. Business Entities Fee Schedule
One boundary to know before you spend time on this: California doesn’t let licensed professionals such as doctors, lawyers, and accountants form a standard LLC. If your work requires a professional license, you’ll need a different entity, typically a professional corporation.
File the Articles of Organization
The Articles of Organization (Form LLC-1) is the document that legally creates your LLC. It asks for your LLC’s name, its principal office address, and whether the company will be managed by all members or by designated managers.3California Secretary of State. Articles of Organization – Limited Liability Company (LLC) You also name an agent for service of process, the person or company authorized to accept legal papers on the LLC’s behalf. If you pick an individual, you must give a physical California street address. A registered corporate agent only needs its name as it appears in state records.
Think about the management structure before you file. In a member-managed LLC, every owner has authority over daily operations. In a manager-managed LLC, that authority sits with one or more designated managers. Changing this later means paying for an amendment.
How to Submit and What It Costs
The fastest route is the Secretary of State’s bizfile Online portal, which gives online submissions priority over paper.4California Secretary of State. Forms, Samples and Fees The filing fee is $70, payable by credit card.3California Secretary of State. Articles of Organization – Limited Liability Company (LLC) Once approved, you’ll get an uncertified copy of your Articles at no extra charge. A certified copy, which banks and contract partners often want, costs $5 plus $1 for the first page and $0.50 for each additional page.5California Secretary of State. Forms and Fees
You can also mail Form LLC-1 with a check or money order to the Sacramento office. Mail filings take longer, sometimes several weeks. Walk-in delivery at 1500 11th Street in Sacramento gets priority over mail but carries a $15 special handling fee on top of the $70.6California Secretary of State. Service Options Faster tiers are available at the counter for higher fees if you need same-day or 24-hour turnaround.
Draft an Operating Agreement
California law treats the operating agreement as the document that governs relationships among members, defines what managers can do, and sets the rules for how the company runs.7California Legislative Information. California Corporations Code 17701.10 Whatever your agreement doesn’t cover, state default rules cover instead, and those defaults rarely match what founders actually want. Single-member LLCs need one just as much as multi-member ones.
The agreement is private. You don’t file it with the state, but every member should sign it, and the LLC has to keep a copy at its principal office. At minimum, it should address:
- Ownership percentages, capital contributions, and shares of profits and losses
- Voting rights and any supermajority requirements
- When and how the company distributes profits
- What happens if a member wants to sell their interest or leave
- The circumstances that trigger dissolution
Get a Federal EIN
Your LLC needs a federal Employer Identification Number before it can open a business bank account, hire employees, or file federal returns. The IRS issues EINs for free through its online application, and the whole thing takes about five minutes if you have your details ready.8Internal Revenue Service. Get an Employer Identification Number The IRS recommends forming with the state first, since applying beforehand can slow things down.
The application asks you to name a “responsible party,” meaning the individual who owns or controls the LLC and directs its funds.9Internal Revenue Service. Responsible Parties and Nominees For a single-member LLC, that’s you. You’ll need the responsible party’s Social Security number or ITIN. Finish the application in one sitting, because it times out after 15 minutes of inactivity, and print the confirmation letter.
File the Statement of Information Within 90 Days
Within 90 days of the state approving your Articles, you have to submit a Statement of Information (Form LLC-12).10California Secretary of State. Instructions for Completing the Statement of Information (Form LLC-12) The fee is $20.2California Secretary of State. Business Entities Fee Schedule The form asks for your principal office address, mailing address, the names and addresses of members or managers, and a short description of what the business does.
Missing the 90-day deadline can trigger a $250 penalty and eventually cost your LLC its good standing with the state. The Secretary of State sends reminders to your registered agent, but treat those as a backup, not a plan.
After the first filing, you owe a new Statement of Information every two years, due by the last day of the month in which you originally formed. If nothing has changed, you can file a Statement of No Change (Form LLC-12NC), but the $20 fee still applies. There’s a 60-day grace period after the biennial due date before the $250 penalty kicks in.
Pay the $800 Annual Franchise Tax
This is the cost that surprises most new California LLC owners. The state charges every LLC doing business in or organized in California an $800 annual franchise tax, regardless of revenue.11Franchise Tax Board. Limited Liability Company California offered a first-year exemption for LLCs formed between January 1, 2021, and December 31, 2023, but that exemption has expired. LLCs formed in 2026 owe the full $800 in year one.
For a new LLC, the first $800 is due by the 15th day of the 4th month after you file with the Secretary of State.11Franchise Tax Board. Limited Liability Company You pay using Form 3522 (LLC Tax Voucher), either online through the Franchise Tax Board or by mailing a check.12Franchise Tax Board. 2026 Instructions for Form FTB 3522 LLC Tax Voucher In later years, the tax is due by April 15.
The Extra Fee if You Earn More Than $250,000
If your LLC’s California-source income tops $250,000, an additional annual fee stacks on top of the $800 tax:13California Legislative Information. California Revenue and Taxation Code 17942
- $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
The fee applies to total California-source income, not net profit. Run the numbers before picking an LLC over other entity types if you expect revenue above $250,000, because high-revenue, low-margin businesses can end up with a fee that feels out of proportion to what the business actually earns.
Registrations That Depend on What Your LLC Does
Filing with the Secretary of State and the Franchise Tax Board establishes your LLC. Whether you need anything else depends on the business.
Seller’s Permit
If your LLC sells or leases tangible goods in California, whether retail or wholesale, you need a seller’s permit from the California Department of Tax and Fee Administration.14California Department of Tax and Fee Administration. Frequently Asked Questions – Seller’s Permit The permit is free, though CDTFA may require a security deposit based on expected sales volume. Pure service businesses generally don’t need one.
Employer Registrations
Hiring employees adds two obligations. You must register with the California Employment Development Department within 15 days of paying more than $100 in wages during a calendar quarter.15Employment Development Department. Am I Required to Register as an Employer? EDD handles unemployment insurance, disability insurance, and state payroll tax withholding.
You also have to carry workers’ compensation insurance if you have even one employee.16California Legislative Information. California Labor Code 3700 You can buy a policy through a private insurer or, for large employers, apply for a certificate of self-insurance from the Director of Industrial Relations. Operating without coverage exposes you to criminal penalties and personal liability for workplace injuries.
Local Business License
Most California cities and counties require a separate local business license or tax certificate. Fees vary widely by location and industry, from under $50 in smaller municipalities to several hundred dollars in major cities. Check with your city clerk’s office or county business licensing department before you start operating.