Forming an LLC in California: A Step-by-Step Guide
California LLCs fall under stricter business regulations than some other states. They also may pay more in taxes compared with other business types in California.
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California houses 4.34 million small businesses as of 2025, according to the U.S. Small Business Administration . That's the highest among all other U.S. states. California also has one of the highest levels of business regulation in the country. This means there are a lot of rules to know and follow to set up a limited liability company (LLC) in California.
How to start an LLC in California
To set up an LLC in California, you must register your company with the California Secretary of State. The Secretary of State defines the rules and fees for businesses that want to register as LLCs.
Step 1: Choose a name for your California LLC
The first step to form a California LLC is to choose a business name. Under California law, LLCs cannot choose a name that’s so similar to another business’s name that it would cause confusion among the public.
Names for California LLCs must end with “Limited Liability Company,” “LLC” or “L.L.C.” The word “Limited” can be abbreviated as “Ltd.” and “Company” can be abbreviated as “Co.” Your LLC’s name cannot contain any of the following words: bank, trust, trustee, incorporated, inc., corporation, corp, insurer or insurance company.
You can search LLC names that are currently on file with the Secretary of State using the online business search tool. You can then reserve a business name for up to 60 days while you complete other steps for setting up your business. You have three options for the process of reserving a name:
- Complete the form online. Submit the $10 reservation fee plus a $10 online processing fee.
- Mail in a Name Reservation Request form, along with a $10 reservation fee.
- Drop the form off in person. This requires the $10 reservation fee plus a $10 handling fee.
A name availability search or name reservation isn’t required to form your LLC, but it can give you some peace of mind that you’ve chosen a legal name for your business. Understand, though, that the Secretary of State granting a name reservation request doesn’t guarantee that the name complies with trademark laws. It’s up to you or your business attorney to understand all name requirements and choose an appropriate name for the LLC.
Step 2: Select an agent for service of process
Every LLC in California must have an agent for service of process. In many other states, this is called a registered agent. It’s an individual or company that accepts legal and official documents on your business’s behalf.
In California, the rules for individuals to be agents for service of process are as follows:
- Must be 18 years or older.
- Must be a California resident with a physical address in California (no P.O. boxes).
- Available to accept documents during normal business hours.
As long as you comply with these rules, you or another member of your LLC can serve as registered agent. However, this often gets tricky. For example, if you’re out sick one day and can’t accept a legal document at the business address that’s on file, you could run into legal trouble with the state. For this reason, many business owners choose state-approved online legal services to serve as their registered agent.
Step 3: Draft an LLC operating agreement
The state of California requires members of an LLC to enter into an operating agreement. This should contain the following types of information:
- The purpose of the LLC, including products or services offered.
- Names and addresses of all the members (and the manager, if there is one).
- Financial contributions of each member.
- Each member’s ownership interest in the company and division of profits and losses.
- Procedures for admitting new members.
- Procedures for electing a manager if the LLC is manager-managed.
- Meeting schedule and procedures.
- Dissolution procedures.
You won’t file your operating agreement with the state. Rather, you should store it with other important business records.
Step 4: File articles of organization
The next step to form your LLC is to file articles of organization with the state of California. You can file this form online only.
In California, LLC articles of organization must include the following:
- LLC name.
- Address of the LLC’s California office.
- Registered agent (agent for service of process) information.
- Whether the LLC will be member-managed or managed-managed.
- Name and signature of the organizer who is filling out the form (this usually is, but need not be, a member or manager of the LLC).
The filing fee for articles of organization is $70. Make sure you’re filling out the correct form for your company. Domestic LLCs — LLCs that are based in and organized under the laws of California — must fill out Form LLC-1. Foreign LLCs — those that are formed under the laws of another state but want to do business in California — must fill out Form LLC-5.
Currently, the state of California generally takes about one week to process your articles The state regularly updates processing times on its website.
Step 5: File your initial Statement of Information
LLCs in California must file a Statement of Information with the Secretary of State within 90 days of formation and every two years after that. Currently the state accepts this form online only. It requires a $20 filing fee.
In some other states, this is called an annual report. California is unique in its 90-day initial filing requirement, and it can be an easy deadline to miss if you’re not careful. Failing to meet the 90-day initial filing deadline can result in a fine of $250 and even suspension of your business. So don’t delay on completing this step.
The purpose of the Statement of Information is to ensure that all information about the company that’s on file with the state is accurate and up to date. If your business’s address or registered agent information has changed, for example, the Statement of Information is where you’d indicate that.
Maintaining good standing for your California LLC
If you’ve reached this point, congratulations! You’re now authorized to do business in California as an LLC. But there are still a few more steps you need to follow to ensure that your LLC remains in good standing with the state.
Apply for an EIN
While a single-member LLC can get away with filing taxes using only their Social Security number, we and the IRS strongly recommend getting an employer identification number (EIN) regardless. There are many upsides to having one, including the ability to open a business bank account and apply for a business credit card. Plus, it’s free to apply for one.
You are required to have an EIN if you meet the following criteria:
- You have more than one owner.
- You have employees.
- You choose to be taxed as a corporation.
Obtain California business licenses and permits
Virtually every small business operating in California needs to get a business license. The basic business license in California is a general business license, also known as a business tax certificate. Cities and counties issue these licenses. If you do business in more than one location, you’ll need multiple licenses.
California issues professional licenses for certain regulated professions, like doctors and architects. However, LLCs are not allowed to provide professional services. Professionals must form business structures such as corporations or limited liability partnerships instead.
Businesses in California that sell or lease merchandise must apply for a seller’s permit. This comes from the California Department of Tax and Fee Administration. If you’re doing business under a trade name that’s different from your LLC’s legal name, then you’ll also need to file for a "doing business as" name.
The Governor’s Office of Business and Economic Development has more information about permits that are required for California LLCs.
Comply with tax obligations
LLCs formed in California, as well as LLCs formed out of state that are registered to do business in California, are required to pay four main types of taxes. The first is an $800 annual franchise tax that all LLCs must pay. The second is a gross receipts tax that varies based on the total revenue of the LLC:
- $0 to $249,999 total revenue = no gross receipts tax.
- $250,000 to $499,999 gross revenue = $900.
- $500,000 to $999,999 gross revenue = $2,500.
- $1 million to $4,999,999 gross revenue = $6,000.
- $5 million + gross revenue = $11,790.
Members of LLCs must also pay personal state income taxes on their share of the LLC’s profits. Unless an LLC elects to be taxed as a corporation, the income of the LLC passes through to the owner’s personal income tax return.
LLCs with employees must withhold payroll taxes from their employees’ wages and pay the employer share of payroll taxes. Employer payroll taxes in California are 3.5% for the first two to three years. After that, the rate varies based on industry and a number of other factors.
Note that there may be other tax obligations for your LLC. For example, if your LLC elects to be taxed as a corporation, then you would follow California’s corporate tax rules. Businesses must also collect sales taxes for certain products and services.
LLCs members must also pay 15.3% self-employment taxes to cover social security and medicare obligations. And if you have employees, you must withhold social security and medicare taxes from your employees and pay the employer share of these taxes.
How much does an LLC cost in California?
The costs of setting up your California LLC will vary depending on your business. But generally you can expect to pay anywhere between $90 and $140 to form your LLC in California.
- $70 for articles of organization.
- $20 for statement of information.
- $10 or $20 for a name reservation, depending on how you file.
- $30 for certificate of amendment.
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- 1. U.S. Small Business Administration Office of Advocacy. New Advocacy Report Shows the Number of Small Businesses in the U.S. Exceeds 36 million. Accessed Feb 18, 2026.
