FORM AN LLC IN CALIFORNIA

STEP 1. NAME YOUR CALIFORNIA LLC

 

Choosing a company name is the first and most important step in starting your LLC. Be sure to choose a name that complies with California naming requirements and is easily searchable by potential clients.

 

1. Follow the naming guidelines:

  • Your name must include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).

  • Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).

  • Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.

  • For a complete list of naming rules in California, you can read California's Code of Regulations.

 

2. Is the name available in California? Make sure the name you want isn't already taken by doing a name search on the State of California website.

 

3. Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don't plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.

After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

You are required to nominate an Agent for Service of Process for your California LLC. An Agent for Service of Process is more commonly known as a Registered Agent in other states.

What is an Agent Of Service Of Process? An Agent Of Service Of Process is a person or business that agrees to send and receive legal papers on behalf of your LLC. Such papers include service of process of legal action (if you are sued) and state filings.

Who can be a Agent Of Service Of Process? An Agent Of Service Of Process must be a resident of California or a corporation authorized to transact business in California. You may elect an individual within the company including yourself.

Learn more about the role of a registered agent and why you should consider hiring a professional service.

FAQ: Nominating a Registered Agent

Can I be my own Registered Agent?

Yes. You or anyone else in your company can serve as the registered agent for your LLC.

STEP 2. CHOOSE A REGISTERED AGENT IN CALIFORNIA

 

STEP 3. FILE THE CALIFORNIA ARTICLES OF ORGANIZATION

 

To register your LLC, you will need to file the Articles of Organization with the State of California. This can be done by mail or in-person.

When filing, you will need to state whether your LLC will be member-managed or manager-managed. We recommend learning more about these two options before you file.

OPTION 1: File Online with the State of California

 

File Online

 

OR

OPTION 2: File by Mail or In-Person

Download Form

 

State Filing Cost: $70 when filing online or by mail (Nonrefundable)

 

Mail to:
Secretary of State
Business Entities Filings
P.O. Box 944228
Sacramento, CA 94244

 

Submit in-person:
1500 11th St.
Sacramento, CA 95814
Mon-Fri. 8 a.m. to 5 p.m.

 

Note (if filing in-person): Articles filed in person at the Secretary of State Office in Sacramento are subject to an additional $15 counter drop-off fee. This provides priority processing over applications submitted by mail. The filing counter is on the 3rd floor.

FILE THE ARTICLES OF ORGANIZATION

If you’re expanding your existing LLC to the State of California, you need to form a Foreign LLC.

 

FAQ: Filing LLC Documents

 

What is the processing time to form my California LLC?

  • 5 business days online or by mail, but may be expedited for an additional fee.

  • 4–Hour - $500.00

  • Same Day - $750.00

  • 24–Hour - $350.00

 

What is the difference between a domestic California LLC and foreign LLC?

An LLC is referred to as a "domestic LLC" when it conducts business in the state where it was formed. Normally when we refer to an LLC we are actually referring to a domestic LLC. A foreign LLC must be formed when an existing LLC wishes to expand its business to another state. If you are filing as a Foreign California LLC learn more here.

STEP 4. FILE THE INITIAL STATEMENT OF INFORMATION

 

California requires all LLCs to file an Initial Statement of Information (Form LLC-12) with the California Secretary of State within 90 days of forming your LLC. This can be done online, in-person, or by mail.

FILE THE INITIAL STATEMENT OF INFORMATION

OPTION 1: File the Statement Online through the California Secretary of State

File Online

OR

OPTION 2: File the Statement by mail or in-person

Download Form

Fee: $20 (Nonrefundable)

Mail to:
Secretary of State, Statement of Information Unit
P.O. Box 944230
Sacramento, CA 94244

Submit In-Person:
California Secretary of State Sacramento Office
1500 11th Street
Sacramento, CA 95814

STEP 5. CREATE AN OPERATING AGREEMENT

 

An operating agreement is required when forming an LLC in California.

What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.

Why are operating agreements important? A comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.

For more information on operating agreements, read our California LLC operating agreement guide.

STEP 6. OBTAIN AN EIN

 

What is an EIN? The Employer Identification Number (EIN), or Federal Tax Identification Number, is used to identify a business entity. It is essentially a social security number for the company.

Why do I need an EIN? An EIN is required for the following:

  • To open a business bank account for the company

  • For Federal and State tax purposes

  • To hire employees for the company

 

Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.

 

NOTE

FOR INTERNATIONAL APPLICANTS: You do not need an SSN to obtain an EIN. Learn more here.

GET AN EIN

Option 1: Request an EIN from the IRS

Apply Online

OR

Option 2: Apply for an EIN by Mail or Fax

Download Form

 

Mail to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999

 

Fax:

(855) 641-6935

Fee: Free

FAQ: Getting an EIN

How do I get an EIN if I don’t have a social security number?

An SSN is not required to get an EIN. You can simply fill out IRS Form SS-4 and leave section 7b blank. Then call the IRS at 267-941-1099 to complete your application.

What tax structure should I choose for my LLC?

When you get an EIN, you will be informed of the different tax classification options that are available. Most LLCs elect the default tax status.

However, some LLCs can reduce their federal tax obligation by choosing S corporation status. We recommend consulting with a local accountant to find out which option is best for you.

KEEP YOUR COMPANY COMPLIANT

CALIFORNIA BUSINESS PERMITS & LICENSES

 

Do I need business licenses and permits?

To operate your LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.

The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.

Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.

Find out how to obtain necessary licenses and permits for your business or have a professional service do it for you:

  • Federal: Use the U.S. Small Business Administration (SBA) guide to federal business licenses and permits.

  • State: Apply for or learn more about licenses, permits and registration with the State of California's CalGold website.

  • Local: Contact your local county clerk and ask about local licenses and permits.

CALIFORNIA LLC TAX REQUIREMENTS

 

Depending on the nature of your business, you may be required to register for one or more forms of state tax:

Sales Tax

If you are selling a physical product, you’ll typically need to register for a seller's permit through the state of California’s website. This certificate allows a business to collect sales tax on taxable sales.

Sales tax, also called "Sales and Use Tax," is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.

Read our sales tax guide to find out more.

Employer Taxes

If you hire employees, you will need to register for California Employer Taxes, which includes Employee Withholding Tax, Unemployment Insurance Tax, and Disability Insurance through the California Payroll website.

Register for California State Taxes

Sales Tax | Employer Tax

 

FAQ: Additional Taxes

What is the California Franchise Tax?

There is a Franchise Tax for each LLC formed in California which varies depending upon your LLC’s income, learn more here.

FEDERAL LLC TAX REQUIREMENTS

 

Most LLCs will need to report their income to the IRS each year using:

CALIFORNIA BIENNIAL REPORT & FRANCHISE TAX

 

California requires LLCs to file a biennial report, also known as the Statement of Information, with the Secretary of State. This must be submitted on paper, by mail or in person (drop off).

FILE YOUR BIENNIAL REPORT

OPTION 1: File Online with the Secretary of State

File Online

OR

OPTION 2A: File form LLC-12NC by mail or in-person if none of your business information has changed

Download Form LLC-12NC

OR

OPTION 2B: File form LLC-12 by mail or in-person if some of your business information has changed

Download Form LLC-12

Fee: $20 for each biennial statement (Nonrefundable)

Due Date: Every second year by the end of the month in which your LLC was formed.

Late Filings: California charges a $250 penalty for failure to file on time.

California LLCs are required to pay an annual Franchise Tax. You can do this online or by mail.

File and Pay Your Franchise Tax Online through the California Franchise Tax Board

File Online

OR

File and Pay Your Franchise Tax by Mail through the California Franchise Tax Board

Estimated Fee Form

You can pay by mail by making a check or money order payable to the "Franchise Tax Board," along with the Estimated Fee Form.

Fee: Free

Mail to:
Franchise Tax Board
P.O Box 942857
Sacramento, CA 94257

Tax Calculation:

  • $800 for LLCs with annual revenue < $250,000.

  • $800 + Estimated Fee for LLCs with annual revenue > $250,000

FILE YOUR FRANCHISE TAX

 

FOREIGN LLCS

Forming a foreign LLC allows your company to operate as one entity in multiple states. If you have an existing LLC and want to do business in California, you will need to register as a foreign LLC. This can be done by mail.

REGISTER AS A FOREIGN LLC IN CALIFORNIA

File by Mail with the California Secretary of State

Download Form

Fee: $70 (Nonrefundable)

Mail to:
Secretary of State,

Business Entities Filings Unit
P.O. Box 944228
Sacramento, CA 94244

CERTIFICATE OF GOOD STANDING

A Certificate of Good Standing, known in California as a Certificate of Status, verifies that your LLC was legally formed and has been properly maintained. Several instances where you might need to get one include:

  • Seeking funding from banks or other lenders

  • Forming your business as a foreign LLC in another state

  • Obtaining or renewing specific business licenses or permits

 

To order a Certificate of Status in California, you must complete the Business Entities Records Request Form. You can submit this form either in person at the Secretary of State, or by mail.

Request a Certificate by Mail or In-Person

Download Form

Fee: $5, payable to the California Secretary of State

(Nonrefundable)

Mail to:
Secretary of State
BE Certification and Records
P.O. Box 944260
Sacramento, CA 94244

 

Submit in-person:
1500 11th St.
3rd Floor, Room 380
Sacramento, CA 95814
Mon-Fri. 8 a.m. to 5 p.m.

ORDER A CERTIFICATE OF GOOD STANDING

DISSOLVE YOUR LLC

 

If at any point in the future you no longer wish to conduct business with your LLC, it is important to officially dissolve it. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. To dissolve your LLC, there are two broad steps:

  • Close your business tax accounts

  • File the Articles of Dissolution

 

When you are ready to dissolve your LLC, follow the steps in our California LLC Dissolution Guide.