Form a LLC in California
Everything you need to know about forming a LLC in California. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Business Name
Select a unique name that includes 'Limited Liability Company,' 'LLC,' or 'L.L.C.' and does not conflict with existing registered entities. Use the California Secretary of State's free business name search tool to confirm availability.
30 minutes
Designate a Registered Agent
Appoint a registered agent (also called an agent for service of process) who has a physical street address in California and is available during normal business hours. This can be an individual resident or a registered commercial agent service.
15 minutes
File Articles of Organization
Complete and file Form LLC-1 (Articles of Organization) with the California Secretary of State online, by mail, or in person. The filing fee is $70 and you must provide the LLC name, business address, registered agent information, and management structure.
30 minutes
Draft an Operating Agreement
California law (Corporations Code Section 17701.10) requires LLCs to have an operating agreement, though it does not need to be filed with the state. This document outlines ownership percentages, member roles, profit distribution, and operational procedures.
2-4 hours
What's Next After Filing
Once your LLC is officially formed, you'll want to complete these important steps:
- •File Initial Statement of Information — Within 90 days of formation, file Form LLC-12 (Statement of Information) with the California Secretary of State. The filing fee is $20 and requires current addresses, registered agent details, and manager or member information.
- •Obtain an EIN and Open a Bank Account — Apply for a free Employer Identification Number (EIN) from the IRS online, which is required for tax filing, hiring employees, and opening a business bank account. Keeping business finances separate from personal finances is essential for maintaining liability protection.
- •Register with California Franchise Tax Board and Obtain Licenses — Register your LLC with the California Franchise Tax Board (FTB) and pay the annual $800 minimum franchise tax, which is due by the 15th day of the 4th month after formation. Additionally, obtain any required local business licenses or industry-specific permits.
Advantages
- ✓Personal liability protection shields members' personal assets from business debts and lawsuits
- ✓Flexible management structure allowing member-managed or manager-managed operation without the formality of a corporation
- ✓Pass-through taxation by default avoids double taxation, with profits and losses reported on members' personal tax returns
- ✓No residency requirements for members, allowing foreign nationals to own a California LLC
- ✓Flexible profit distribution not required to be proportional to ownership percentage if specified in the operating agreement
Considerations
- •California's mandatory $800 annual minimum franchise tax applies regardless of revenue or profitability, making it costly for startups and inactive LLCs
- •Additional LLC gross receipts fee applies when annual income exceeds $250,000, significantly increasing tax burden for higher-revenue businesses
- •Self-employment taxes apply to active members on their share of profits, which can be higher than the payroll tax structure available to S-Corp shareholders
Annual Obligations
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