Introduction: How to Set Up an LLC in California
Looking to protect your personal assets and legitimize your business? Forming an LLC is one of the best ways to do that—and California offers a clear process to get started. In this guide, you’ll learn how to set up an LLC in California, from choosing a name to filing paperwork and staying compliant.
Step 1: Choose a Name for Your California LLC
Your LLC name must:
- Be unique and not already in use.
- Include “Limited Liability Company,” “LLC,” or “L.L.C.”
- Avoid restricted or misleading words (e.g., bank, trust).
Check name availability using the California Business Search tool.
Step 2: Appoint a Registered Agent
A Registered Agent is someone who receives legal documents on behalf of your LLC.
- Must be a California resident or a registered agent service.
- Must have a physical address in California (P.O. boxes not allowed).
Step 3: File Articles of Organization (Form LLC-1)
To legally form your LLC in California, file Form LLC-1 with the California Secretary of State.
- Filing fee: $70
- Filing methods: Online, by mail, or in person
- Processing time: 5–10 business days (faster for online filings)
File online through bizfile Online.
Step 4: File Statement of Information (Form LLC-12)
Within 90 days of filing Form LLC-1, you must file a Statement of Information (Form LLC-12).
- Filing fee: $20
- Due every 2 years thereafter
- Includes business address, members, and agent information
Step 5: Create an Operating Agreement
An Operating Agreement outlines ownership and management structure.
Though not filed with the state, California requires LLCs to have an Operating Agreement on file—even if it’s a single-member LLC.
It should include:
- Member roles and responsibilities
- Profit-sharing rules
- Voting and decision-making procedures
Step 6: Apply for an EIN (Employer Identification Number)
An EIN is a tax ID issued by the IRS, necessary for:
- Hiring employees
- Opening a business bank account
- Filing taxes
Get your EIN for free at the IRS website.
Step 7: Register for California State Taxes
Depending on your business type, you may need to:
- Register for a Sales Tax Permit via the California Department of Tax and Fee Administration (CDTFA)
- Pay the $800 Annual Franchise Tax to the California Franchise Tax Board (FTB)
Even if your LLC doesn’t make income, this annual tax is due every year.
Step 8: Stay Compliant Annually
To keep your LLC active in California, be sure to:
- File LLC-12 every 2 years
- Pay the $800 annual franchise tax
- Maintain an updated Operating Agreement
- Renew any local permits or business licenses
Why Set Up an LLC in California?
- Personal asset protection
- Legal credibility and trust
- Flexible management and tax structure
- Access to California’s massive market
Conclusion: Ready to Form Your California LLC?
Now you know exactly how to set up an LLC in California, including state requirements, forms, and tax rules. While California does have higher fees compared to other states, the legal protection and operational flexibility of an LLC can make it worth the investment.
