How to Form an LLC in California (2026)

1. 1Choose a name for your LLC and verify availability by searching the California Secretary of State's business search tool at businesssearch.sos.ca.gov. Your name must include "Limited Liability Company," "LLC," or "L.L.C." and cannot include words like "Corporation," "Corp," or "Inc."
2. 2Appoint a registered agent (called an "agent for service of process" in California) with a physical street address in California. You can serve as your own agent.
3. 3File Articles of Organization (Form LLC-1) with the California Secretary of State. The filing fee is $70. File online through BizFile Online for faster processing (3-5 business days vs. 5-7 weeks by mail).
4. 4Obtain an EIN (Employer Identification Number) from the IRS at no cost. You need this to open a bank account, hire employees, and file taxes.
5. 5Create an operating agreement. California is one of five states that legally requires an operating agreement (Cal. Corp. Code Section 17701.10). This document governs ownership, management, and profit distribution.
6. 6Open a business bank account using your Articles of Organization, EIN, and operating agreement. California courts take "commingling" of personal and business funds seriously.
7. 7Obtain any required business licenses and permits. California has no general statewide business license, but most cities and counties require a local business license or tax certificate.
8. 8File your initial Statement of Information (Form LLC-12) within 90 days of formation. The filing fee is $20. This is separate from the biennial Statement of Information due every 2 years.

• ✓Obtain an EIN from the IRS (free, apply online at irs.gov)
• ✓File your initial Statement of Information (Form LLC-12) within 90 days — $20 fee
• ✓Open a dedicated business bank account
• ✓Register with the California Franchise Tax Board and prepare for the $800 annual franchise tax
• ✓Get a local business license or tax certificate from your city or county
• ✓Get business insurance (general liability at minimum)
• ✓Set up an accounting system to track income and expenses
• ✓Register for a California seller's permit if selling taxable goods (free, through CDTFA)

Your California LLC name must contain "Limited Liability Company," "LLC," or "L.L.C." It cannot include words like "Corporation," "Corp," "Incorporated," or "Inc." Restricted words such as "Bank," "Trust," "Insurance," or "University" require prior approval from the relevant state agency. The name must not be the same as or too similar to an existing business entity registered with the California Secretary of State. You can check availability at businesssearch.sos.ca.gov.

California LLCs pay an $800 annual franchise tax to the Franchise Tax Board regardless of income — this applies even if your LLC earns $0. New LLCs are exempt from the $800 tax in their first tax year. If your LLC's gross receipts exceed $250,000, an additional annual fee applies: $900 for $250K-$499K, $2,500 for $500K-$999K, $6,000 for $1M-$4.99M, and $11,790 for $5M+. LLC members also pay California personal income tax (top rate 13.3%) on their share of profits. California does not require newspaper publication after formation, unlike Arizona, Nebraska, and New York.

LLC vs. other structures in California

In California, the $800/year franchise tax applies to LLCs regardless of income, making it one of the most expensive states for low-revenue businesses. If your LLC consistently earns over $80,000/year in profit, consider electing S-Corp tax status to reduce self-employment taxes. If your LLC earns very little, the $800 annual tax may make California a poor choice — but you will still owe this tax if you do business in California regardless of where your LLC is formed.

• •Pay the $800 annual franchise tax to the Franchise Tax Board by the 15th day of the 4th month after your tax year begins
• •File a biennial Statement of Information (Form LLC-12) every 2 years — $20 fee, due in your filing month
• •Maintain an agent for service of process with a physical address in California at all times
• •Keep your operating agreement current — this is a legal requirement in California
• •File California Form 568 (LLC Return of Income) and pay any additional LLC fee if gross receipts exceed $250,000
• •File personal California income tax returns for all members receiving pass-through income

California imposes additional taxes beyond the filing fee that you should factor into your decision. Make sure the total annual cost — including the franchise tax — fits your business budget before committing.

In general, you should form your LLC in the state where you physically live and conduct business. Forming in a "tax-friendly" state like Wyoming, Delaware, or Nevada sounds appealing, but if you operate in California, you will still need to register as a foreign LLC there — paying fees in both states.

An LLC is almost always a better choice than operating as a sole proprietorship because of the personal liability protection it provides. However, if your LLC is highly profitable, you should talk to a CPA about electing S-Corp tax treatment to potentially reduce your self-employment tax burden.

What California LLC Owners Need to Know

• •California charges an $800 annual franchise tax for all LLCs regardless of income — this is the biggest ongoing cost
• •An additional LLC fee applies if gross receipts exceed $250,000 (ranges from $900 to $11,790)
• •California is one of five states that legally requires an operating agreement
• •The $70 filing fee is relatively low, but the $800 franchise tax makes California one of the most expensive states overall
• •New LLCs are exempt from the $800 franchise tax in their first year

Frequently Asked Questions

Official California Resources

• California Secretary of State — Business Entities
• BizFile Online (file Articles of Organization)
• FTB — LLC Tax Info (Pub 3556)
• Statement of Information Filing