Forming an LLC in California offers entrepreneurs several benefits including tax flexibility, asset protection, and operational freedom. Fortunately, registering an LLC in California can be done in seven straightforward steps.
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California LLC Quick Facts
- To form an LLC in California, you must file Articles of Organization with the California Secretary of State.
- The filing fee to start an LLC in California is $70 by mail or online and $85 in person.
- In California, all LLCs are required to submit an Initial Statement of Information within 90 days of formation.
- To maintain your California LLC, you must pay an annual LLC fee.
7 Steps to Starting an LLC in California
Forming an LLC in California is simple, just follow the seven steps outlined below to start your business today.
Ready to start a California LLC? Get started with these steps.
- Name Your California LLC
- Appoint a Registered Agent
- File Your Articles of Organization
- Draft Your Operating Agreement
- Obtain an EIN and Handle Taxes
- File a Statement of Information
- File a Beneficial Ownership Information Report
Step 1: Name Your California LLC
To start, you need to decide on a name for your LLC.
California business names must meet the following criteria:
- Include Limited Liability Company, LLC, or Limited Company
- Be unique and distinguishable from any other business entity in the state
- Cannot include terms that imply government affiliation or falsify your business’s purpose
For the full list of naming requirements for California LLCs, visit the state’s Code of Regulations.
To ensure your business name is unique, you will need to complete a business name search on the California Secretary of State website as well.
Securing a domain name that matches your business name is essential. Don’t let your perfect domain slip away, find your domain name today on GoDaddy.
Step 2: Appoint a Registered Agent
In California, you are required to appoint a registered agent to register an LLC.
A registered agent, or agent for service of process in California, can be an individual or business entity that is responsible for receiving important information and documents on behalf of your company such as tax forms or notice of lawsuits.
Registered agents in California must:
- Be a business or full-time resident of California with a physical address
- Not be the LLC itself but can be an LLC owner or employee
Who can be an agent for service of process?
A registered agent or agent for service of process can be the LLC owner or an employee of the company as well as a friend or family member. You can also opt to hire a registered agent service.
Step 3: File Your Articles of Organization
To register your LLC officially, you need to file California LLC Articles of Organization with the Secretary of State. You can complete this filing online or by submitting Form LLC-1: Articles of Organization by mail or in person.
The filing fee by mail or online is $70 and $85 if filed in person.
We recommend having the following details prepared:
- Name and phone number (optional) of the contact person for your LLC
- Your LLC name, entity number (if applicable), and mailing address
- Agent of service of process (registered agent) name and address
- Management structure (member-managed vs. manager-managed)
- Purpose statement approval with signature
Quick Note: If you’ve already formed your business in another state, you need to register as a California Foreign LLC or Out-of-State LLC. You can do so online or by submitting this form by mail or in person. The filing fee is $70 plus an additional $15 for in-person filings.
Step 4: Draft Your Operating Agreement
In California, creating and maintaining an operating agreement is required for LLCs.
An operating agreement is a document that outlines the internal procedures and ownership details of the company. This not only ensures that LLC members are in alignment but can help prevent future conflicts.
This is an internal document so you do not have to file it with the state but your LLC must keep an updated operating agreement on file.
Step 5: Obtain an EIN and Handle Taxes
An Employer Identification Number (EIN) that allows the IRS to track your business for tax reporting purposes.
You can receive your EIN for free on the IRS website.
This number is required for taxes, hiring, and opening a business bank account.
During this time, you should also identify any additional requirements for your business to pay taxes. You can do so by visiting the California Department of Tax and Fee Administration website.
Step 6: File the Initial Statement of Information
All LLCs in California must file an Initial Statement of Information within 90 days of formation.
This can be done online through the California Secretary of State website or by submitting Form LLC-12 by mail or in person.
The filing fee is $20 online or by mail and $35 in person.
Step 7: File a Beneficial Ownership Information Report
LLCs are required to file a Beneficial Ownership Information (BOI) Report with the US Financial Crimes Enforcement Network (FinCEN).
New LLCs must file this report within 90 days of formation. Existing LLCs must complete the filing between January 1st, 2024, and January 1st, 2025. Failing to do so will result in a $500 per day fine.
You can file online for free on the FinCEN website.
Information on exemptions can be found here.
Next Steps
After registering your California LLC, it’s important to:
- Open a business bank account to separate and protect your personal assets. You can sign up for Lili’s free checking account for quick and straightforward business banking.
Sign up for Lili Banking and Accounting Services
- Identify and obtain any licenses and permits that may be required federally or by the state.
- File a biennial statement of information with the Secretary of State every two years. You can do so online or by mail with a filing fee of $20 or in person for $35.
- Every business needs insurance. There are several types, however, most start with general liability, workers’ compensation, and personal liability insurance. You can easily get coverage that fits your needs with Next Insurance.
Request an online quote with NEXT Insurance
- Pay your annual LLC fee with the state. This fee will vary depending on your business’s income; you can find more information here.
Additional Tips for Success
- Build a strong network: Finding other entrepreneurs, mentors, advisors, and leaders in your industry can open new opportunities and provide support throughout your business’s lifecycle.
- Keep track of your compliance requirements: California has multiple reporting and fee requirements you need to follow to ensure your business stays compliant.
- Plan for the future: Map out the goals and ambitions of your company to ensure you’re hitting important milestones.
Conclusion
California is a popular destination for LLC formation. Make sure your formation goes smoothly by doing your research and following the steps diligently to ensure you’re setting your business up for success.