How to Start an LLC in California
Here are the 7 steps to start a limited liability company (LLC) in California
For more information on how to form an LLC in any state, see the article How to Form an LLC.
Find out how start an LLC in CA yourself
Learn about California LLC formation, including information on Registered Agents, naming rules, business licenses, and more.
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Creating an LLC in California
A limited liability company (LLC) offers many benefits to small businesses, including liability protection and tax advantages.
An Limited Liability Company LLC must be formed in California by filing a Articles of Organization with the California Secretary of State and paying the $70 filing fee.
An LLC can be easily formed in California. Simply follow these seven steps, and you’re done. Find out more about LLCs and their benefits in our What is an LLC guide.
Step 1. Choose a Name for Your LLC California
A company name is the first and most important step in starting an LLC in CA. Choose a business name that complies with California’s naming requirements and is easily searchable by potential clients.
- California law requires an LLC name to contain the words “Limited Liability Company” or “Limited Company,” or the abbreviations “Ltd.,” “LLC,” or “LC.” “Limited” may be abbreviated as “Ltd.” or “LTD,” and “Company” as “Co.”
- It is not acceptable for your California LLC to have words associated with a government agency (FBI, Treasury, State Department, etc.).
- You should avoid using words or abbreviations that may make your LLC California appear to be a different type of entity, such as “LP” or “corporation”.
- There may be additional documentation and licensure paperwork required for certain restricted words (bank, lawyer, attorney, credit union, etc.).
- Do a name search on the State of California website to make sure the name you want is not already taken.
California’s Code of Regulations provides a complete list of naming rules.
Secure a domain name for your LLC: You are likely to need a web page even if you don’t think you do. Buying your domain name now will at least give you the option of having one in the future. It’s a good idea to check the URL availability before finalizing your California LLC name.
An LLC stands for a Limited Liability Company. A simple business structure that is more flexible and offers many of the same benefits as a traditional corporation. For more information, see "What is a Limited Liability Company?".
LLCs do not usually require a DBA. Your LLC name can serve as your company's brand name, and you can accept payments under that name too. However, you may need to file a DBA if you want to conduct business under another name. To learn more about DBAs, read our What is a DBA Guide.
Step 2: Hire a California Registered Agent
California requires that you appoint a registered agent for your LLC.
What is a Registered Agent? A registered agent is a person or entity authorized to accept service of process and other official documents on behalf of your LLC. This is the person or entity that will receive legal documents, government correspondence, tax forms, and notice of lawsuits on behalf of the LLC.
Please include your registered agent’s name and address on your Articles of Organization.
Registered Agent Requirements in California
In California, a registered agent must:
- Possess a physical street address
- Maintain regular office hours
- And be willing to accept (and forward!) legal mail on your behalf
You can be your own registered agent if you meet these requirements. One drawback is that your address will be available for everyone to see (including aggressive marketers).
When you use a registered agent service, you can focus on your business without having to be available during regular business hours. Additional benefits include:
- A private receipt of potentially embarrassing documents (such as legal action that’s taken against you)
- You do not have to change your registered agent address with the state when you move offices
For help with your California registered agent for service of process, please contact us. Our professional services can help you stay organized and compliant with the government.
Learn more about California Registered Agents by reading our full guide.
Are You looking for a Registered Agent?
Wise Business Plans offers a free year of registered agent service when creating an LLC in California.
Step 3.Prepare and File Articles of Organization
You must file Form LLC-1 – Articles of Organization with the California Secretary of State in order to register your California LLC. You may apply online, by mail, or in person
If you choose one of our business formation plans, we can handle this step for you.
California LLC Articles of Organization should include the following:
- Name and address of your business
- Contact information
- For service of process, your name and agent’s information
- Decide whether your California LLC will be member-managed or manager-managed. Indicate the names and addresses of each member and manager.
- The reason for creating an LLC in California.
- Name and address of the LLC’s organizer.
Foreign LLCs: You’ll need to form a Foreign LLC if you own a business in another state and are expanding into California – or vice versa. The cost to register is $70.
Two Ways to File the Articles of Organization
Filing online or by mail costs $70 (nonrefundable).
The 1st option is:
Online filing of Form LLC-1 with the State of California
The 2nd option is:
Filing the Articles of Organization by Mail or in Person
Address to Mail
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.
Step 4. File the Initial Statement of Information
LLCs in California are required to file an Initial Statement of Information (Form LLC-12) with the California Secretary of State within 90 days of formation. After that, a Statement of Information must be filed every two years (biennially).
You can do this online, by mail, or in person.
Statements of Information include the following:
- Name of LLC and California Secretary of State file number
- Agent’s name and address
- Address of the LLC’s principal office
- Mailing address of the LLC
- If there is no manager elected, the member’s name, business address, and residential address.
- An LLC’s email address (if it wishes to receive renewals via email rather than regular mail)
The LLC’s primary business activity
File California Statement of Information
Filing online or by mail costs $20 (nonrefundable).
The 1st option is:
Online filing through the California Secretary of State
The 2nd option is:
By Mail or in Person
Address to Mail
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
In a member-managed LLC, the members (owners) take on the business's daily responsibilities. Manager-managed LLCs are managed by managers who are elected by the members. Those who manage your LLC will have the authority to do a wide range of tasks-from hiring staff to opening bank accounts.
When an LLC conducts business in the state where it was formed, it is called a "domestic LLC". We normally refer to an LLC as a domestic LLC when we talk about it. When an existing LLC wishes to expand its business to another state, it must form a foreign LLC.
Step 5. Get a Certificate From the State
Upon filing your Certificate of Formation, the secretary of state will review it. As soon as the Certificate of Formation is approved, the LLC becomes a legal entity.
By obtaining this certificate, LLCs will be able to obtain an Employer Identification Number (EIN), licenses, and business accounts.
Step 6. Write an California LLC Operating Agreement
An operating agreement outlines the ownership and operating procedures of an LLC. In California, operating agreements aren’t required, but they are an integral part of your business.
Written operating agreements are helpful for different reasons, including resolving disputes over financial agreements and other potential litigation.
The LLC declaration can prove that your LLC is a separate entity, preserving your limited liability. An operating agreement ensures that all business owners are on the same page and reduces the possibility of future conflict.
How should an operating agreement be drafted?
The operating agreement should detail the LLC’s overall business purpose and other important matters, such as how the company will be taxed and how new members will be accepted. Legal agreements can clarify several important concerns, such as:
- Who makes decisions for the company, especially those who decide if partners disagree.
- Who is responsible for different aspects of the business as well as for strategic decisions.
- If a partner leaves the company, what will happen to their ownership interests in the corporation.
- The members and their contributions
- How profits and losses will be divided
- Procedures for admitting new members and removing outgoing members
In California, you can include just about anything in your operating agreement, as long as it doesn’t violate the state law or the Certificate of Formation.
A California SMLLC is not required to have an operating agreement. Although an SMLLC has just one member, an operating agreement is highly recommended. An SMLLC operating agreement does not need to be filed with the state.
Step 7. Get an EIN for Your California LLC
A company’s EIN stands for its Employer Identification Number. EINs are nine-digit numbers assigned by the Internal Revenue Service (IRS) to help identify businesses for tax purposes. It is essentially a Social Security number for a business..
You can apply for your EIN either by mail or online.
An EIN is used for the following purposes:
- Manage state and federal taxes
- Create a business bank account
- Hire employees
Get an EIN Number in California
Getting an EIN number is easy and free, There are two ways to get an EIN number in California.
The 1st option is:
Apply online for an EIN from the IRS
The 2nd option is:
Get an EIN by Mail or Fax
Address to Mail
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
A corporation or an LLC with two or more members must apply for an EIN. Likewise, if your business employs any number of employees, you will need an EIN.
When you receive your EIN, you will be informed of your tax classification options. Many LLCs choose the default tax status.
There are some LLCs that may be able to reduce their federal tax liability by electing the S corporation (S corp) status. Read about the difference between LLCs and S corporations here.
You don't need an SSN to get an EIN. Leave section 7b blank when completing IRS Form SS-4. Then you can complete your EIN application by calling 267-941-1099.
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What to do After Forming Your California LLC
Keep your personal and business assets separate
Your personal assets (such as your home, car, and other valuables) may be at risk when your California LLC is sued if they are mixed with your business accounts.
Here are some steps you can take to protect your LLC in California:
1. Create a Business Plan:
If you decide that a California LLC will be a good choice for your business in California, your next step is to create a business plan (although it is not required), so that you have a roadmap for what you will do and how you will accomplish it.
Free: Business Plans Examples
Do you need help creating a business plan? Check out these six free, proven business plan examples from different industries to help you write your own.
2. Open a Bank Account
As soon as your LLC is officially formed, you should open a business bank account. Why? Keeping separate bank accounts will help you maintain the legal distinction between the LLC and you (the owner).
Because LLCs are limited liability companies, creditors and litigants can’t take your assets.
It is essential for small business owners to partner with the right bank. Find out which banks offer the best business checking accounts, have low or no fees, ATM accessibility, and interest-earning accounts as well as online or mobile banking tools.
Recommended: Check out our business bank account page to learn which banks offer the best business check accounts, ATM access, interest-bearing accounts, and online and mobile banking options for businesses.
3. Obtaining a business credit card:
- Allows you to separate personal and business expenses.
- Develops your company’s credit history, which can be helpful to raise capital (e.g., small business loans) later.
4. Hiring a business accountant:
- It prevents your business from overpaying taxes while preventing penalties, fines, and other costly tax mistakes.
- Gives you more time to focus on your growing business by simplifying bookkeeping and payroll.
- Manage your business’s funding more effectively. Find out where extra profit or loss can be made
Getting Business Insurance for Your LLC
You can manage risks and grow your LLC with business insurance. Here are the most common types:
- General liability insurance protects your business from lawsuits. Most small businesses purchase general liability coverage.
- Professional liability insurance protects professionals and businesses from claims of negligence from their clients or customers. Liability insurance typically covers negligence, copyright infringement, personal injury, and more.
- Workers’ compensation insurance: Covers illnesses, injuries, and deaths resulting from a worker’s work.
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Let us help you with your business insurance needs.
- General business liability insurance
- Medical insurance
- Term life insurance
- Workers’ Comp
- Surety bonds
- Commercial auto
Create Your Business Website
A website is an important step in legitimizing your business. It is essential for all businesses. You are missing out on a large percentage of potential customers and revenue if you don’t have a website, even if your business is too small or in an offline industry.
More than 90% of consumers begin their search for products and services online. If you don’t have a website that is ready to welcome your customers, then they will simply find your competitors.
Here are the main reasons why you shouldn’t delay building your website:
- Every respectable firm has a website. When it comes to getting your firm online, size or sector isn’t a concern.
- Creating a basic website has never been easier, thanks to website builder tools like the GoDaddy Website Builder. To design a website, you don’t need to hire a web designer or developer.
Recommended: If you want to enhance your conversion rates and maximize revenue in order to help expand your business and meet objectives, you should always hire a professional business website design company to build your business website.
Wise Business Plans is a leading web design company, We have created over 2000 + websites across 20 countries for our clients but we are physically based in 7 major cities in the United States including Alabama web design, Pennsylvania, Las Vegas, Colorado Springs, Iowa, Michigan and San Diego.
California LLC FAQs
- To file a name reservation application by mail or in person, it will cost $10. You will be charged an additional $10 handling fee if you submit the reservation form in person.
- Each registered LLC must also file a biennial report with the California SOS. An LLC's statement of information (biennial report) must be filed 90 days after formation and every two years thereafter. There is a $20 filing fee.
Even though filing on your own is often the cheapest option, it can be very time-consuming to complete all of the forms. Another option is to hire a lawyer, but this can cost hundreds, if not thousands, of dollars.
With LLC formation service at Wise Business Plans can handle all of the filings and paperwork for you at an affordable price
There are many benefits to forming your LLC in California. The Golden State can be a thriving market in addition to being your home state (if you live there). Benefits of forming a California LLC include:
Legal security and good standing with the government.
Personal liability is limited
Tax options are better
More freedom than a corporation has,
In order to dissolve an LLC in California, you will have to file paperwork with the Secretary of State. These forms include a Certificate of Cancellation and a Certificate of Dissolution.
It usually takes three to five business days for your California LLC to be processed. This can take up to six to seven business days during the peak season, which lasts from December to January. There is an additional fee for filing in person, but it can expedite the process by eliminating postal transit time. California also offers 24-hour expedited filing for a nonrefundable fee.
California law prohibits LLCs from providing professional services. This includes any service that requires a state license. If you're not sure whether your service requires a state license, visit the California Department of Consumer Affairs website. A California professional can form a limited liability partnership (LLP) instead of an LLC.
Your state taxes can be deducted from filing fees, which are considered normal business expenses. However, the $800 annual franchise tax isn't tax-deductible.
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