How to Form an LLC in California

This is the complete guide to forming a limited liability company in California. We cover every step from choosing your LLC name to filing your Articles of Organization with the California Secretary of State. The filing fee is only $70 — but be aware that California imposes an $800 annual franchise tax on all LLCs . This makes California one of the most expensive states for ongoing LLC maintenance.

Table of Contents

1. Overview — Why Form an LLC in California
2. Choose a Name
3. Designate an Agent for Service of Process
4. File Your Articles of Organization
5. File Statement of Information
6. Create an Operating Agreement
7. Get Your EIN
8. Costs
9. After You File
10. FAQ

Overview — Why Form an LLC in California

California LLCs are governed by the California Revised Uniform Limited Liability Company Act . Despite the high ongoing costs, forming an LLC in California is necessary if you operate in the state:

• Required if you do business in CA — California aggressively enforces registration requirements. If you have customers, employees, or property in CA, you need a CA LLC or foreign registration.
• World's 5th largest economy — access to the largest US state market (40 million people)
• Strong liability protection — California's LLC statute provides robust member protection
• Pass-through taxation — avoids corporate double taxation
• Massive tech/startup ecosystem — particularly in the Bay Area and LA

California's major drawback: The $800 minimum annual franchise tax — owed regardless of revenue, profit, or activity. Even if your LLC earns $0, you owe $800/year to the Franchise Tax Board (FTB). The first-year exemption (AB 85) expired after 2023 — LLCs formed in 2024+ owe the $800 starting in their first year.

Choose a Name

Your LLC name must comply with the California Revised Uniform LLC Act and include "Limited Liability Company," "LLC," or "L.L.C." The name must not be the same as or misleadingly similar to existing entities on the Secretary of State's records.

California name restrictions:

• Cannot include "bank," "trust," "trustee," "incorporated," "inc.," "corporation," "corp." unless authorized
• Cannot use "insurer" or "insurance company" without DOI approval
• Must be distinguishable from existing entities

Before committing to a name, search the bizfile database at https://bizfileonline.sos.ca.gov/ to verify availability. You can reserve your name for 60 days by filing a Name Reservation Request ($10 fee).

Designate an Agent for Service of Process

California uses the term "agent for service of process" rather than "registered agent" . Every California LLC must designate an agent who can accept legal documents on the LLC's behalf.

California-specific requirements:

• Must be a California resident individual OR a registered California corporation
• LLCs cannot serve as agents for service of process — this is unique to California
• The agent must have a California street address (no PO boxes)
• The LLC cannot serve as its own agent

See our agent for service of process guide.

File Your Articles of Organization

File Articles of Organization (Form LLC-1) with the California Secretary of State. The filing fee is $70.

Required information on Form LLC-1:

• LLC name
• Agent for service of process name and California address
• Management structure (1 manager, more than 1 manager, 1 member, more than 1 member)
• Purpose (typically "any lawful act or activity")

File online at https://bizfileonline.sos.ca.gov/ or by mail. Processing: online filings typically 3-5 business days; mail filings 5-10 business days.

File Statement of Information (Required)

Within 90 days of filing your Articles of Organization, you must file a Statement of Information (Form LLC-12) with the Secretary of State. Fee: $20.

This is mandatory and separate from the Articles of Organization. It provides:

• Names and addresses of managers or members
• Agent for service of process information
• Principal business address
• Type of business

After initial filing, the Statement of Information is due every 2 years (in the filing anniversary month). See our annual filing guide.

Create an Operating Agreement

California does not legally require a written operating agreement, but the California Revised Uniform LLC Act states that the operating agreement governs the LLC's internal affairs. Without one, the default rules of the California Revised Uniform LLC Act apply.

Your operating agreement should define: ownership, profit sharing, management authority, voting rights, and exit procedures.

Get Your EIN

An Employer Identification Number (EIN) is your LLC's federal tax ID. Apply free at irs.gov. Required for banking, employees, and tax filing.

Costs

Complete cost breakdown for a California LLC:

Total first-year cost: $969+ ($70 Articles + $20 SOI + $800 franchise tax + $99 agent) Total second year onward: $919+ ($800 franchise tax + $99 agent + $20 SOI biennial)

After You File

Once your Articles of Organization are approved:

1. File Statement of Information (Form LLC-12) within 90 days — $20 fee
2. Create your operating agreement
3. Get your EIN
4. Open a business bank account
5. Pay your first franchise tax by the 15th day of the 4th month after formation
6. Understand your California tax obligations
7. Obtain necessary business licenses

FAQ

How much does it really cost to have a California LLC?

Formation is cheap ($70 Articles + $20 SOI = $90). But ongoing: $800/year franchise tax (mandatory, even with $0 revenue) + agent fee. If your CA income exceeds $250K, add the LLC fee ($900-$11,790). California is one of the most expensive states for LLC maintenance.

Is the $800 franchise tax avoidable?

No. The first-year franchise tax exemption (AB 85) applied only to LLCs formed in 2021-2023. LLCs formed in 2024 or later owe the $800 starting in their first taxable year. The only way to stop owing it: formally dissolve your LLC with the SOS AND the FTB.

What is the difference between the franchise tax and the LLC fee?

The franchise tax ($800) is a flat minimum paid by ALL LLCs regardless of income. The LLC fee ($900-$11,790) is an additional fee based on California-source gross income exceeding $250K. They are separate obligations owed to the Franchise Tax Board.

Can I form a California LLC if I do not live in California?

Yes. California does not require members to be residents. You do need an agent for service of process with a California address. Non-residents with CA-source income still owe CA income tax and the $800 franchise tax.

Does California allow Series LLCs?

No. California has not enacted Series LLC legislation. You must form separate LLCs for liability isolation between different properties or businesses.

Why does California call it "agent for service of process" instead of "registered agent"?

California's Corporations Code uses "agent for service of process" as the legal term. The role is identical to what other states call a "registered agent" — accepting legal documents on the LLC's behalf. The terminology difference is statutory.

What about the first-year franchise tax exemption?

The first-year franchise tax exemption (AB 85) expired after 2023. LLCs formed in 2024 or later owe the full $800 in their first taxable year. The payment is due by the 15th day of the 4th month after formation.