To get an LLC in California, you file Articles of Organization with the Secretary of State for $70, submit an initial Statement of Information within 90 days for $20, get a free federal Employer Identification Number from the IRS, and plan for the $800 annual franchise tax that every California LLC owes from its first year forward. The paperwork is straightforward. The ongoing cost is what surprises people, because that $800 is due whether or not the business ever earns a dollar.
Pick a Name That Clears State Rules
Your LLC’s name must include “limited liability company” or an abbreviation such as “LLC” or “L.L.C.” You can shorten “Limited” to “Ltd.” and “Company” to “Co.”1California Secretary of State. Business Entity Name Regulations and Additional Statutory Requirements The name also has to be distinguishable from every entity already on file. A name that is identical or deceptively similar to an existing registration gets rejected.
Run a free check on the Secretary of State’s bizfile Online portal before you file anything.2California Secretary of State. Online Business Services If you need time to lock in a name while you finish other steps, you can reserve one for 60 days for $10. In-person submission of the reservation adds a $10 special handling fee.
File the Articles of Organization
The Articles of Organization (Form LLC-1) is what legally creates your LLC. The requirements come from California Corporations Code Section 17701.08.3California Legislative Information. California Corporations Code 17701-08 The form asks for three key things:
- Your full LLC name, including the required designator.
- A registered agent for service of process, who must be a person or registered corporate agent with a physical California street address. A P.O. box does not qualify.4California Legislative Information. California Corporations Code 17701-13
- Whether the LLC is member-managed, meaning all owners share decision-making, or manager-managed, meaning one or more designated managers run the business. That choice decides who has legal authority to bind the company.
The filing fee is $70. Filing online through bizfile Online typically moves faster than mailing paper to Sacramento.5California Secretary of State. bizfile – California Secretary of State Once the Secretary of State accepts the filing, you get back a stamped copy or acknowledgment. Keep it. You will need it to open a business bank account and to apply for local licenses.
File the Initial Statement of Information Within 90 Days
Within 90 days of your Articles being filed, you have to submit a Statement of Information (Form LLC-12) and pay $20.6California Secretary of State. Statements of Information Filing Tips The form lists each manager (or every member if there are no managers), the LLC’s principal office address (physical street address, not a P.O. box), and a short description of what the business does.
Miss the 90-day deadline and you can trigger penalties and eventually have the LLC’s powers suspended. After the first filing, you file again every two years inside a six-month window tied to the month the LLC was formed, and the $20 fee applies each time.6California Secretary of State. Statements of Information Filing Tips
Get a Free EIN from the IRS
An Employer Identification Number is the business equivalent of a Social Security number. You need one to open a business bank account and to handle tax filings. The IRS issues EINs at no cost. If a site asks for a fee, it is not the IRS.7Internal Revenue Service. Get an Employer Identification Number
Apply online once your LLC is on file with the Secretary of State. The IRS tool issues the number immediately, but the session times out after 15 minutes of inactivity and cannot be saved partway through. Have the Social Security number or ITIN of the responsible party ready, and print the confirmation page before closing the browser. That printout is your official record until the IRS mails the formal letter.
Put an Operating Agreement in Writing
California requires every LLC to have an operating agreement among its members.8California Secretary of State. Starting a Business – Entity Types You do not file it with the state. It is an internal document that controls how the business runs. The statute allows oral or implied agreements, but relying on anything other than a written one invites disputes.9California Legislative Information. California Corporations Code 17701-02 – Definitions
Without a written agreement, California’s default rules fill in every gap, and those defaults rarely match what members actually intended. A written agreement lets you spell out:
- How profits and losses are divided among members.
- Which decisions need a simple majority and which need unanimous approval.
- What happens when a member wants out, dies, or sells their interest.
- Who can sign contracts, hire employees, or take on debt.
Even a single-member LLC benefits from one. It reinforces the legal separation between the owner and the business, which is the whole point of forming an LLC.
Budget for the $800 Franchise Tax and Possibly More
Every LLC organized or doing business in California owes an $800 annual franchise tax to the Franchise Tax Board, regardless of income.10Franchise Tax Board. Limited Liability Company It applies even if the LLC has zero revenue and keeps running every year until the LLC is formally cancelled. The first payment is due by the 15th day of the fourth month after you file your Articles of Organization.
A temporary waiver that exempted new LLCs formed between January 1, 2021 and January 1, 2024 has expired. LLCs formed in 2026 owe the full $800 in year one.10Franchise Tax Board. Limited Liability Company The only narrow escape: if you cancel the LLC within 12 months of formation using the short-form process and never actually did business, the first-year tax does not apply.
LLCs with California-source income of $250,000 or more owe an additional gross receipts fee on top of the $800:11California Legislative Information. California Revenue and Taxation Code 17941-17946
- $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 is based on total income, not profit, which hits hard when revenue is high but margins are thin. It is reported on Form 3536 and paid as an estimate by the 15th day of the sixth month of the current tax year.12Franchise Tax Board. FTB Pub 3556 – Limited Liability Company Filing Information
For federal purposes, the IRS does not treat an LLC as its own tax category. A single-member LLC is a disregarded entity, with income flowing to the owner’s personal return. A multi-member LLC is taxed as a partnership by default. You can elect corporate or S-corporation treatment by filing IRS Form 8832 or Form 2553, but once you make a change you generally cannot switch again for 60 months.13Internal Revenue Service. Limited Liability Company – Possible Repercussions
Register as an Employer If You’ll Have Staff
If your LLC hires employees, you must register with the California Employment Development Department within 15 days of paying more than $100 in wages during a calendar quarter.14EDD – CA.gov. Am I Required to Register as an Employer? Household employers hit the threshold at $750 in cash wages per quarter. Registering with the EDD brings in state payroll taxes: unemployment insurance, disability insurance, and the employment training tax.
Most California cities and counties also require a local business license or tax certificate before you start operating. Fees and rules vary by jurisdiction, so check with your city clerk’s office early.
You Probably Don’t Owe a Federal Beneficial Ownership Report
The federal Corporate Transparency Act originally required most new LLCs to file a Beneficial Ownership Information report with FinCEN. In March 2025, FinCEN published an interim final rule exempting all domestic companies from the requirement. Only entities formed under foreign law and registered to do business in a U.S. state are still required to report.15Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting If older guidance says your California LLC has to file a BOI report, disregard it.
Close the LLC Properly If It Doesn’t Work Out
If the business ends, you have to formally cancel the LLC. Skipping this step keeps the $800 franchise tax accruing year after year. The standard route is two filings with the Secretary of State: a Certificate of Dissolution (Form LLC-3) to signal winding down, then a Certificate of Cancellation (Form LLC-4/7) to terminate the entity. Neither filing carries a state fee.16California Secretary of State. LLC Certificate of Dissolution, Certificate of Cancellation
If your LLC was formed less than 12 months ago and never conducted business, accumulated debts, or acquired assets, you can use the Short Form Cancellation (Form LLC-4/8) instead.17California Secretary of State. LLC Short Form Cancellation Certificate – Form LLC-4/8 This is also free and avoids the first-year franchise tax. Either way, file all final returns with the Franchise Tax Board before or alongside the cancellation.