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California LLC Formation Costs
California LLC Filing Fees - $70-$85
- $20 Statement of Information Fee
- $800 Franchise Tax
Filing Time - It normally takes 3-4 weeks for the LLC paperwork to be approved in California. Expedited processing is also available for an additional fee.
Don’t want to form an LLC by yourself? - Let IncFile guide you through the LLC formation process so you know everything was done right. Only pay state fees!
The Limited Liability Company (LLC) is a popular business entity choice structure for many businesses starting in California. The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in California without an attorney.
Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting for the business owner’s personal assets.
Related: How Does an LLC Protect You?
Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration and management flexibility.
Forming an LLC in California is something most people can do on their own, but it’s nice to have some support in case you have questions or get stuck. IncFile and Inc Authority provide LLC formation guidance for only the cost of the state fees!
To form a Limited Liability Company in California, file the Articles of Organization with the California Secretary of State. The LLC filing fee is $70.
Approval for the LLC typically takes 3-4 weeks, however by filing in-person at Sacramento office (1500 11th Street) and paying an additional $15, processing time is typically reduced to only 1-2 days.
HOW TO FILE THE ARTICLES OF ORGANIZATION AND FORM A CALIFORNIA LLC
The steps for filing online or by mail are largely the same. The screenshots show filing online.
Step 1: Limited Liability Company Purpose Statement and Name
Purpose Statement – No action necessary. Keep the statement “The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the California Revised Uniform Limited Liability Company Act.”
Limited Liability Company Name – Enter the name of the LLC. Be sure to not include any identifiers (LLC, L.C., etc) in this box.
The name of the LLC also has to not likely to mislead the public and be unique to other registered entities in the state of California. Check on available LLC names.
Before selecting a business name, you may also want to see if a domain name is also available.
LLC Identifier – The legal name of the LLC must include one of the following at the end of the business name:
- Limited Liability Company
- Limited Liability Co.
- Ltd. Liability Company
- Ltd. Liability Co.
Name Reservation – If you have already reserved a name, check the box and enter the Name Reservation Number so it can be applied to this LLC filing.
Before finalizing on a name, read about the LLC Name Requirements in California.
Step 2: Business Address
In this section, enter the street address, city and zip cost of the initial designated office. This address can be the physical address of the LLC or it can be the address where the business records are kept. You may not use a PO Box for the designated office.
Step 3: Service of Process
To have an LLC in California, a Registered Agent must be identified. The Registered Agent is either a California resident (Individual) or a registered agent company (California Registered Corporate Agent). The agent must have a physical address in the state to act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc on behalf of the LLC. To see a list of approved Registered Agents, visit https://businessfilings.sos.ca.gov/frmlist1505s.asp
Even though any individual can be the Registered Agent (business owner, member, friend, etc), their name and address become public record and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when they are doing business from home. Hiring a company to be the Registered Agent will reduce the number of unwanted phone calls and mailings.
Step 4: Management
This section asks if the LLC is managed by one manager, more than one manager or all limited liability company member(s). Every LLC will have at least one member.
There are three choices:
- One Manager – This is when the members of the LLC hire somebody to run the company, similar to the position of CEO for a corporation. This is commonly referred to as a Manager-Managed LLC.
- More than One Manager – Also a Manager-Managed LLC, but with multiple managers.
- All LLC Members – The members themselves are the “managers” and have an active involvement in the day-to-day operations of the business. This is commonly referred to as a Member-Managed LLC.
Most LLCs are member-managed and if so would select all liability company member(s).
Step 5: Organizer
Enter the name of the person who is filing the LLC paperwork and the central point of contact. The LLC organizer could be a member or someone helping with the entity formation.
Step 6: File Date
If you want the LLC to start on today’s date choose “No, I do NOT want a Future File Date” otherwise select “Yes, I would like a Future File Date” and enter a date less than 90 days in the future to start.
Some will delay the LLC start date if they aren’t ready to go but want the filing out of the way or if they are close to the end of a calendar year and want to save on some fees. At the end of each year, a California LLC will pay at a minimum the $800 franchise tax and file annual tax returns.
Step 7: Review
Review the Articles of Organization to ensure all of the information is correct.
Step 8: Pay and File
Pay and file the Articles of Organization.
If filing online, enter your credit card information.
If mailing, send the form and a check for $70 to:
Secretary of State, Business Entity Filings
P.O. Box 944228
Sacramento, CA 94244-2280
If delivering in person, the cost is $85 and can be paid with a check, money order or credit card. The office is located:
Secretary of State
1500 11th Street
Sacramento, CA 95814
If you have questions, contact the California Secretary of State.
Companies like IncFile and IncAuthority help guide you to make sure it’s done right and you only pay the normal state fees.
Check out our reviews of popular LLC formation services to learn more.
Tasks After Forming Your LLC
Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.
Prepare an Operating Agreement
The operating agreement is a document that governs the framework of an LLC. This document covers items like ownership rights, member responsibilities, how profits and losses are distributed and more.
Most states do not require an LLC to have an operating agreement, however it is required in California. In addition to it being required, the operating agreement is useful as it helps to improve member’s liability protection and reduce misunderstandings of the member’s roles and responsibilities.
Obtain an EIN
The EIN or Employer Identification Number is a unique 9-digit number for a business. Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.
The EIN will be needed in order to open a bank account, register for business licenses and permits, file tax returns, pay payroll taxes and more.
Related: How to Apply for an EIN
Open an LLC Bank Account
Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.
Several documents will be needed to open a business bank account such as:
- A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
- Copies of the original formation paperwork from the state showing the creation of the LLC.
- Driver’s licenses of the members.
- Depending on the age of the LLC, an California Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, there will likely be a variety of business licenses and permits to register for before starting. Some common registrations include:
- Business License – Some cities require businesses to obtain licensing before they can start. In some cases, even home-based businesses must have licensing in order to legally operate.
- Professional License – Certain services such as barbershops, accountants, salons and others must be licensed.
- Seller’s Permit – In order to sell products and provide services, registration with the California Department of Tax & Fee Administration will be necessary.
Pay the Annual Franchise Tax
Something to keep in mind when filing a California LLC is that each year the LLC has to pay an $800 franchise tax to the California Franchise Tax Board. If you are filing towards the end of a calendar year and can wait, you might consider delaying the filing until January.
File the Annual Statement of Information
LLCs are required to file a statement of information annually with the California Secretary of State. The statement of information updates ownership information and other details.