STEP 1: Name your California LLC


This is the first and most important step in starting your LLC. Be sure to choose a name that complies with California's LLC 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, see 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

STEP 2: Choose an Agent of Service of Process


You are required to nominate a Agent of Service of Process for your California LLC. A Agent of 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 an 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 an agent of service of process and why you should consider hiring a professional service.

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Recommended: Incfile provides the first year of registered agent service free with LLC formation ($49 + State Fees)

STEP 3: File the 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.

File the Articles of Organization

OPTION 1: File Online with the State of California

File Online


OR


OPTION 2: File by Mail or In-Person

Download Form


Fee: $70 when filing online, $85 when filing by mail or in-person (Nonrefundable)

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

STEP 4: 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)

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? An operating agreement is an important document because it 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 article What is an LLC Operating Agreement?

Recommended: Use our free Operating Agreement Tool to draft a customized operating agreement for your LLC.

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.

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

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Six Key Steps After Forming a Business

1. Open a Business Bank Account and Get A Credit Card


Using dedicated business banking and credit accounts is essential for personal asset protection. When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. This is also known as piercing your corporate veil.

1. Opening a business bank account:

  • Separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Recommended: Get $200 when you open a business checking account with Chase. Learn more.

2. Getting a business credit card:

  • Helps you separate personal and business expenses.
  • Builds your company's credit history, which can be useful to raise capital later on.

Recommended: Compare business credit card offers at CreditCards.com. Learn more.

2. Set Up Accounting


Even if you haven’t officially opened for business – it’s critical to get your books in order. A well managed accounting system will help you:

  • Track your business finances, including bills, expenses and income.
  • Simplify your annual tax filings.

Quality accounting software makes the whole process fast and easy. Look for software that:

  • Syncs with your bank automatically
  • Matches transactions to invoices, bills, and purchase orders
  • Can be accessed from your phone
  • Makes it easy to work with your accountant

If you need help, a certified public accountant can work with you to set up an accounting system for your business. Thumbtack.com is a great resource for finding local professionals.

Recommended: QuickBooks has all the accounting features your small business will need.

Try QuickBooks for free.

3. Register Your LLC For California State Tax


You should also be aware of important California taxes that may apply to you business:

  • If you are selling a physical product, you’ll typically need to register for California sales tax.
  • If you hire employees, you will need to register for California Employeer Taxes, which includes Withholding Tax, Unemployment Insurance Tax, and Disability Insurance.

Register for California State Taxes

Sales Tax | Employer Tax

4. Obtain Business Licenses & 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.

Keep in mind that in order to get some licenses or permits, you may need to pay a fee, take classes, or pass an exam.

Research what types of federal, state, and local licenses and permits your LLC needs:

Recommended: If you are a first-time entrepreneur, consider having a professional service research your business’ licensing requirements. Our friends at Startup Savant have reviewed and ranked the top five license research services.

5. Get Insurance


Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance are:

  • General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
  • Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers against claims of malpractice and other business errors.
  • Workers Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths. In California, businesses with one or more employees, including officers and LLC members, are required by law to have workers compensation insurance. Get a free quote with ADP.

How much will the right insurance cost you? Click here to find out.

6. Follow Hiring Laws


If you plan to hire employees, stay compliant with the law by following these steps:

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Pay employees at least the minimum wage of $11.00 per hour

For more information, check out California's Tax Service Center.

Recommended: A payroll service saves you time and makes it easier to follow these requirements.

Get 20% off payroll with ADP

We understand that creating an LLC and getting your business up and running comes with many challenges. To help you succeed, we compiled the best local resources in every major metro area in California . You can get free assistance in the following areas:

  • Mentoring
  • Networking
  • Business Planning
  • Sales & Marketing
  • Research Assistance
  • Financial Planning
  • Fundraising
  • Legal Assistance
  • Coworking
  • Product Development

Maintain your LLC: Avoid fines and the risk of dissolution.

File Your LLC Biennial Report


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

If none of your business information has changed since the last time you filed a report, submit form LLC-12NC (no change):

Download Form LLC-12NC


OR


If some of your business information has changed since the last time you filed a report, submit form LLC-12:

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.

Franchise Tax


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

File Your Franchise Tax

File and Pay your Franchise Tax through the California Franchise Tax Board

File Online

Estimated Fee Form


Fee: Free

Tax Calculation:

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

Due Date: Due on the 15th day of the thrid month after the end of your LLC’s fiscal year. 

Report LLC Income


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

Read our LLC Tax Guide to learn more about federal income taxes for LLCs.

Avoid Dissolution


LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines, and even submitting reports on your behalf for an additional fee.

Recommended: Incfile offers a reliable registered agent service and excellent customer support.

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Become a knowledgeable LLC owner. Learn more about these important topics.

Obtain a 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.

Order a Certificate of Good Standing

Request a Certificate by Mail or In-Person

Download Form


Fee: $5 Payable to the California Secretary of State (Nonrefundable)

Dissolve Your California 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.

Register as a Foreign LLC in California


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)

Read More About LLCs and How To Run A Business