How to Form an LLC in California

The filing fee to form an LLC in California is $70, paid to the California Secretary of State when you file your Articles of Organization. However, California also imposes an $800 annual franchise tax on all LLCs, which is due within the first few months of formation and annually thereafter. This makes California one of the more expensive states to maintain an LLC.

Online filings with the California Secretary of State are typically processed within 5 to 7 business days. Paper filings take significantly longer. California offers expedited processing options, including same-day or 24-hour processing for an additional fee, which can be useful if you need to start operations quickly.

California LLCs must file a Statement of Information biennially (every two years) with the Secretary of State, which costs $20. In addition, all California LLCs must pay an $800 minimum annual franchise tax to the Franchise Tax Board. LLCs with gross income over $250,000 also owe an additional annual fee ranging from $900 to $11,790.

California requires every LLC to designate an agent for service of process. The agent can be an individual residing in California with a physical street address or a registered corporate agent. California is unique in that the agent's address is listed on public filings, so many business owners use a professional service for privacy. The designated agent must be available during business hours to accept legal documents.

California law requires LLCs to adopt a written or oral operating agreement, making it one of the few states with this legal mandate. Under California Revised Uniform Limited Liability Company Act (RULLCA), the operating agreement governs member relations, management, and financial arrangements. Even though oral agreements are technically permitted, a written operating agreement is strongly recommended to avoid disputes and ensure enforceability.

Your California LLC needs an EIN if it has more than one member, has employees, or elects to be taxed as a corporation. Even single-member LLCs should obtain an EIN because California banks typically require one to open a business account. You can apply for an EIN for free online through the IRS, and it is issued immediately upon completing the application.

California has some of the highest tax rates in the nation, with individual income tax rates ranging from 1% to 13.3% and a corporate tax rate of 8.84%. All LLCs also owe the $800 minimum franchise tax. A sole proprietorship avoids the franchise tax but offers no liability protection. An LLC provides asset protection and flexibility. If your California LLC generates substantial income, electing S-Corp status can reduce self-employment taxes, but S-Corps in California must pay a 1.5% franchise tax on net income (minimum $800). Careful tax planning is essential in California.

California imposes an $800 minimum annual franchise tax on all LLCs regardless of income or activity. Previously, first-year LLCs were exempt from this tax, but that exemption applied only for tax years starting in 2021 through 2023. Currently, the $800 franchise tax is due by the 15th day of the 4th month after your LLC is formed, and then annually on April 15. This is one of the most significant ongoing costs of operating a California LLC.

California does not require LLCs to publish a notice of formation in a newspaper. This sets it apart from states like Arizona and New York, which do have publication requirements. However, you must still file your Articles of Organization with the Secretary of State and submit the biennial Statement of Information to keep your LLC in good standing.