California LLC Formation

Each state has different requirements for forming a limited liability company (LLC). Whether you are starting a business or incorporating a business already in existence, you'll want to understand the California LLC formation requirements.

How to start an LLC in California

Starting a new business comes with a variety of challenges. The following highlights some of the critical steps needed to keep your business compliant when getting a limited liability company (LLC) stated in California. For more information on stating a business, view our webinar “What You Need to Know When Deciding Whether to Register Your Small Business”.

Decide on a name for your LLC

Naming your business is an important step that needs to be considered carefully. There are many business and compliance requirements to weigh when making the final decision on your LLC’s name.

Generally, your name will need to be unique, not the same or too similar to an existing Californian business, and it can’t be misleading. California has very specific regulations regarding that you can refer to here when deciding the name of your LLC.

BizFilings offer a free state name check to help you check the availability of your desired business name and we can help you reserve your name when you’ve made your decision.

Determine management structure (member vs. manager)

One of the reasons you may have selected an LLC as your business type is the management structure. LLCs can have one of two management structures: member-managed, or manager-managed. The difference between the two comes down the relationship between management and ownership:

• If an LLC is member-managed, then all members are active in the decision-making processes. 
• If an LLC is manager-managed, then a manager is designated to make the decisions on its behalf.

When starting your LLC, it is critical to understand how you plan to manage your business. Read our article LLC members vs. LLC managers for more information on LLC management structure.

If the registered agent is an individual, then they must reside in California and have a physical address (i.e., not a PO box). If you decide to use a professional business as your registered agent, then that agent must be qualified with the California Secretary of State. BizFilings includes this service in all incorporation packages.

Select your registered agent

A registered agent (also often referred to as agent for service of process) is a person or business you appoint to receive and forward to you important legal and tax information. California requires a registered agent to incorporate and the business must maintain a registered agent throughout its existence.

Prepare and file with California

Creating your LLC in California requires two separate filings: Articles of Incorporation, and a Statement of Information. Your Articles of Incorporation form your business in California and the Statement of Information is a periodic filing first required within 90 days of formation. BizFilings handles this step for you, allowing you to concentrate on running your business.

In California you are to maintain your own Operating Agreements and are not to file them with the Secretary of State. Read our article on LLC operating agreements for more information.

Obtain a federal employer identification number

A Federal Employer Identification Number (EIN or Tax ID) is an IRS identification number used for businesses. The most common comparison is to an individual’s Social Security Number. The EIN must be obtained by LLCs to be used when filing taxes. However, it is also often used for other important business activities, such as opening a business bank account, obtaining a loan, or paying invoices. Check out our article on Federal EIN for more information.

Meet your license and permit requirements

You LLC may be required to obtain licenses and permits before it can legally operate in California. There are many factors that go into determining which licenses and permits at the federal, state, and local levels are required for your business. For example, if you plan to hire employees, you may need a payroll tax registration and depending on where they are based that could have implications as well. Read out article “Understanding business licenses” for more information.

What is the cost to form an California LLC?

At BizFilings, we clearly outline our fees and the California state fee. When you view our pricing to form an LLC you plainly see:

• BizFilings’ package prices. BizFilings offers three incorporation service packages from which you can choose.
• State fee for standard turn-around. Our pricing clearly shows the state fee to form an LLC in California with standard turn-around.
• Expedited turn-around. You will see the BizFilings and state fee, if any, for expedited turn-around.
• 48-hour turn-around. California has a 48-hour filing option, which is outlined in our pricing.
• Certified copy. Our pricing also clearly displays the BizFilings and state fee, if any, for issuing a Certified Copy of the Articles of Organization.

California LLC name requirement

The LLC name must end with "Limited Liability Company," "LLC" or "L.L.C." The word “Bank” or variations cannot be used in LLC names.

Member/Manager information

The following are California’s requirements for the members/managers of LLCs:

• Minimum number. LLCs must have one or more members/managers.
• Residence requirements. California does not have a provision specifying where members/managers must reside.
• Age requirements. California does not have age requirements.
• Inclusion in the Articles of Organization. Member/Manager names and addresses are not required to be listed in the Articles of Organization.

Requirements for California Articles of Organization

The document required to form an LLC in California is called the Articles of Organization. The information required in the formation document varies by state. California's requirements include:

• Registered agent. LLCs must list the name and address of a registered agent with a physical address (no post office boxes) in California. The registered agent must be available during normal business hours to accept important legal and tax documents for the business.

Other filings required at the time of incorporation

Some states require additional filings or steps at the time of incorporation, such as a county level filing, publishing notice of the LLC formation in a local newspaper or an initial report filing. California requires the following:

• Initial report. California requires LLCs to file an initial report with the state within six months of incorporating.

Professional services businesses

California does not allow professionals, such as accountants, attorneys form professional limited liability companies (PLLCs).

After forming a limited liability company (LLC) , you must undertake certain steps on an ongoing basis to keep your business in compliance. These steps are also important in preserving the limited liability an LLC provides its owner(s). This guide outlines the ongoing requirements for California LLCs.

California LLC taxes and fees

The following are taxation requirements and ongoing fees in California:

• Annual report and franchise tax. California requires LLCs to file a Statement of Information biennially during a time period that runs from the first day of the fifth month preceding the LLC's formation anniversary date but no later than the last day of the anniversary month. The fee for the Statement of Information is $20. California also has a minimum franchise tax of $800, which is due within three months of incorporation and annually thereafter.
• Taxes. For complete details on state taxes for California LLCs, visit Business Owner's Toolkit or the State of California .
• Federal tax identification number (EIN). An EIN is required for LLCs that will have employees. Additionally, most banks require an EIN in order to open a business bank account.
• State tax identification number. California does not require a state tax identification number.

Business Licenses in California

Business licenses and/or permits are required for most businesses. The BizFilings Business License Application Package can help you stay on top of these requirements.

Additional California information

View the following additional resources BizFilings has for forming and maintaining companies in California:

• California Corporation Formation