How to Start an LLC in California: Complete Formation Guide
California is the largest state economy in the US and the fifth-largest economy in the world. Forming an LLC here gives you access to 39 million consumers, Silicon Valley, Hollywood, and the nation’s most diverse business ecosystem. This guide covers everything — filing steps, costs, the $800 franchise tax, and ongoing compliance.
California LLC at a Glance
$70
Filing fee for Articles of Organization with the California Secretary of State
$800/Year
Annual franchise tax — owed by every California LLC regardless of revenue (first-year exempt)
Biennial Filing
Statement of Information filed every 2 years ($20). Due within 90 days of formation, then biennially
5–7 Business Days
Standard processing time. Expedited available for additional fees ($350 for same-day, $750 for 4-hour)
How to Form a California LLC — Step by Step
Follow these six steps in order. Most founders complete the process in 1–2 hours plus processing time.
Choose Your LLC Name
Your California LLC name must include “Limited Liability Company,” “LLC,” or “L.L.C.” It must be distinguishable from existing entities registered with the California Secretary of State. Search the California Business Search to check availability. You can reserve a name for 60 days by filing a Name Reservation Request ($10).
Designate an Agent for Service of Process
California uses the term “Agent for Service of Process” instead of “registered agent.” Your agent must be a California resident with a physical street address in California, or a registered corporate agent. You can serve as your own agent (free but your address is public) or use a professional service ($100–$299/year). Registered agent guide →
File Articles of Organization (Form LLC-1)
File Form LLC-1 with the California Secretary of State. You can file online at bizfileOnline ($70) or by mail ($70). The form requires: LLC name, business address, agent for service of process name and address, management structure (member-managed or manager-managed), organizer’s name and signature. Online filing is faster — 5–7 business days vs 2–4 weeks by mail.
Create Your Operating Agreement
California is one of the few states that legally requires LLCs to adopt a written operating agreement (Cal. Corp. Code §17701.10). It doesn’t need to be filed with the state, but it must exist. Banks require it to open a business account. Courts reference it in disputes. It overrides California’s default LLC rules — which may not be what you want. Free operating agreement template →
Get Your EIN
Apply for a free Employer Identification Number from the IRS. Takes 5 minutes online, and your EIN is issued instantly. Required for opening a business bank account, hiring employees, and filing taxes. Get your free EIN →
File Statement of Information (Form LLC-12)
Due within 90 days of formation, then every 2 years. Filing fee is $20. Filed online at bizfileOnline or by mail. Reports your LLC’s current address, agent for service of process, managers/members, and business type. You can change your agent for service of process as part of this filing at no extra cost.
How Much Does a California LLC Cost?
The full cost picture — not just the filing fee.
One-Time Formation Costs
- Articles of Organization (Form LLC-1): $70
- Name reservation (optional): $10
- Certified copy (optional): $5
- Expedited processing (optional): $350 (same-day) or $750 (4-hour)
- Operating agreement: $0 (free template) to $1,000+ (attorney-drafted)
- EIN: $0 (free from IRS)
Recurring Annual Costs
- Annual franchise tax: $800 (every LLC, regardless of revenue)
- Statement of Information: $20 (every 2 years = $10/year)
- Registered agent service: $100–$299/year
- LLC fee (if revenue > $250K): $900–$11,790
- State income tax (personal): 1%–13.3%
The California $800 Franchise Tax — Explained
This is the most important cost to understand before forming a California LLC. The $800 annual franchise tax is owed by every LLC registered in California — whether it earns $10 million or $0. It’s a privilege tax for existing as an LLC in the state, not an income tax.
First-Year Exemption
LLCs formed in California are exempt from the $800 franchise tax in their first taxable year. This means you owe $0 in franchise tax for the tax year in which you form. Starting in your second tax year, the full $800 is due. If you form your LLC in December, your first taxable year is very short — the $800 kicks in January 1.
When Is It Due?
The $800 franchise tax is due by the 15th day of the 4th month after the beginning of your LLC’s taxable year. For calendar-year LLCs (most), that’s April 15. Pay using the California Franchise Tax Board’s (FTB) online payment system or by mailing Form 3522 (LLC Tax Voucher).
LLC Fee for High-Revenue LLCs
If your California LLC’s total revenue exceeds $250,000, you owe an additional LLC fee on top of the $800 franchise tax:
$250K – $499K
$900
additional fee
$500K – $999K
$2,500
additional fee
$1M – $4.99M
$6,000
additional fee
The fee is based on total revenue (gross income plus cost of goods sold), not profit. An LLC with $1M in revenue but $0 in profit still owes $6,000 + $800 = $6,800. The maximum fee tier is $11,790 for LLCs with $5M+ in revenue.
California-Specific LLC Requirements
Rules that apply only in California — know these before you form.
Operating Agreement Required
California legally mandates a written operating agreement (Cal. Corp. Code §17701.10). It’s not filed with the state, but it must exist. Most states only recommend one — California requires it. Without one, California’s default rules apply — and they may not match your intentions.
Statement of Information (Biennial)
File Form LLC-12 within 90 days of formation, then every 2 years by the end of the calendar month of your formation anniversary. $20 filing fee. A $250 penalty applies if filed late. This is separate from and in addition to the franchise tax.
Two State Agencies
California has two filing authorities. The Secretary of State handles formation (Articles of Organization, Statement of Information). The Franchise Tax Board (FTB) handles taxes ($800 franchise tax, LLC fee, income tax). You file with both — different agencies, different deadlines, different websites.
No Series LLCs
California does not recognize Series LLCs. If you need to separate liability between multiple business lines or properties, you’ll need separate LLCs — each with its own $800 annual franchise tax. States like Delaware, Wyoming, and Texas allow Series LLCs.
Professional LLCs Restricted
California does not allow most licensed professionals (lawyers, doctors, CPAs, architects) to form a standard LLC. Instead, they must form a registered limited liability partnership (LLP) or a professional corporation (PC). Check with your professional licensing board before choosing an entity type.
Foreign LLCs Pay $800 Too
If you form in Wyoming or Delaware but do business in California, you must foreign-qualify — and you’ll owe the $800 California franchise tax in addition to your home state’s fees. Forming out-of-state doesn’t avoid California’s taxes if you operate here.
California LLC Taxes
California LLCs face multiple tax obligations. Here’s the full picture.
$800 Annual Franchise Tax
Every LLC, every year, regardless of income. Due April 15 for calendar-year filers. Pay via FTB Form 3522 or online at the FTB website. First tax year is exempt.
LLC Fee (Revenue-Based)
Additional fee for LLCs with total revenue exceeding $250,000. Ranges from $900 to $11,790. Paid with Form 3536 (Estimated Fee for LLCs). Due by the 15th day of the 6th month of the current taxable year.
Personal Income Tax
California has the highest state income tax rate in the US: 1% to 13.3% (the 13.3% rate applies to income over $1 million). Since LLCs are pass-through entities, LLC profits flow to your personal California return. If you live in California, you owe California income tax on all LLC income — regardless of where it’s earned.
Self-Employment Tax
LLC members who actively participate in the business owe federal self-employment tax (15.3% on the first $168,600 of net earnings, 2.9% above that). This is a federal tax — not California-specific — but it’s a major cost for California LLC owners. Electing S-Corp taxation can reduce this for members earning $60K+ in net profit. LLC vs S-Corp guide →
Sales Tax
California’s base state sales tax rate is 7.25% — the highest in the nation. Combined with local taxes, the total rate ranges from 7.25% to 10.75% depending on the city/county. If you sell taxable goods, you must register for a seller’s permit with the California Department of Tax and Fee Administration (CDTFA). Business licenses guide →
Should You Form Your LLC in California?
California’s costs are high. Here’s when it makes sense — and when to consider alternatives.
✓ Form in California If…
- You live and operate in California. Forming elsewhere means you’ll foreign-qualify in CA anyway — paying double fees plus the $800 franchise tax
- Your revenue will exceed $100K quickly. At higher revenue levels, the $800 franchise tax becomes a small percentage of total costs
- You have a physical location in CA. Retail, restaurant, office, or warehouse — physical presence triggers CA tax obligations regardless of where you form
- Your clients are in California. California-based clients and courts prefer dealing with CA-registered entities
- You need CA business licenses. Many CA professional and local licenses require a CA-registered entity
✗ Consider Alternatives If…
- You’re pre-revenue and testing an idea. The $800/year franchise tax hits whether you earn $0 or $10M — painful for a business that hasn’t launched yet
- You’re 100% online with no CA presence. A Wyoming or New Mexico LLC avoids the $800 tax if you truly have no CA nexus
- You’re a licensed professional. CA restricts most professionals from forming standard LLCs — you may need a PC or LLP instead
- You need a Series LLC. California doesn’t recognize Series LLCs — you’d need multiple separate LLCs ($800 each)
- You plan to stay very small. A sole proprietorship avoids the $800 franchise tax entirely (though it offers no liability protection)
The $800 math: If your LLC nets $50K/year, the $800 franchise tax is 1.6% of profit — manageable. If your LLC nets $5K/year, it’s 16% — brutal. California’s minimum cost structure favors businesses that will generate meaningful revenue. For testing a business idea, consider forming in a cheaper state first and foreign-qualifying in California only when revenue justifies it.
California LLC Post-Formation Checklist
Complete these steps after receiving your formation confirmation from the Secretary of State.
Operating Agreement
Legally required in California. Draft and adopt before opening a bank account. Template →
Get Your EIN
Free, instant, at IRS.gov. Required for banking, hiring, and tax filing. Apply free →
File Statement of Info
Form LLC-12 due within 90 days of formation. $20. File at bizfileOnline. Guide →
BOI Report
File beneficial ownership info with FinCEN within 30 days. Free. $500/day penalty for non-compliance. Guide →
Business Bank Account
Bring EIN, Articles of Organization, operating agreement, and photo ID. Separate business and personal finances from day one.
Business Licenses
Check city, county, and state requirements. Most CA cities require a business license. Seller’s permit if selling goods. Guide →
Franchise Tax Setup
Register with the Franchise Tax Board. First-year exempt. $800 due April 15 of your second tax year. Calendar it now.
Bookkeeping
Set up accounting software or a spreadsheet. Track every business transaction. California’s high tax rates make deduction tracking critical.
Ready to Form Your California LLC?
File yourself at bizfileOnline ($70) or use a formation service that handles everything.
Compare Formation Services
ZenBusiness, Northwest, Incfile, LegalZoom — compare top services. Many include registered agent and EIN. Plans from $0 + state fee.
Compare Services →File at bizfileOnline
California Secretary of State’s official filing portal. File Form LLC-1 yourself for $70. No third-party fees. Standard processing: 5–7 business days.
Go to bizfileOnline →Free Operating Agreement
Legally required in California. Single-member and multi-member versions. Download, customize, and adopt before opening your bank account.
Download Template →Related California & LLC Guides
LLC vs. S-Corp
California LLC owners earning $60K+ in profit should evaluate S-Corp election. The self-employment tax savings can be significant.
Read the comparison →Filing Fees by State
How California’s costs compare to all 50 states — formation fees, annual reports, franchise taxes, and total annual cost.
Compare all states →California Registered Agent
Agent for Service of Process requirements, how to change agents for free with the Statement of Information, and provider options.
Read the guide →EIN / Tax ID Guide
Get your free EIN after formation. Required for California business bank accounts, hiring, and FTB registration.
Read the guide →BOI Filing Guide
California LLCs must report beneficial owners to FinCEN. Separate from state filings. $500/day penalties for non-compliance.
Read the guide →General LLC Formation Guide
Not sure about California-specific rules? Start with the general LLC guide for universal benefits, structure, and tax overview.
Read the guide →California LLC FAQ
Quick answers to the most common California LLC questions.
How much does a California LLC cost per year?
At minimum: $820/year ($800 franchise tax + $20 biennial Statement of Information = $10/year average). Add a registered agent ($100–$299/year) and the real annual cost is $900–$1,100. LLCs with revenue over $250K pay an additional fee ($900–$11,790). California is the most expensive state for small LLCs.
Is the $800 franchise tax waived for the first year?
Yes. LLCs formed in California are exempt from the $800 franchise tax in their first taxable year. The $800 is due starting in the second taxable year. If you form in December 2026, your first taxable year is short (Dec 2026) and the $800 kicks in January 2027 — timing matters.
Can I avoid the $800 by forming in another state?
Only if you have zero California presence. If you live in California, have employees in California, store inventory in California, or have significant California sales, you must register in California — and you owe the $800. Forming in Wyoming but operating in California means you pay both states’ fees.
Do I need an operating agreement in California?
Yes — California legally requires LLCs to adopt a written operating agreement (Cal. Corp. Code §17701.10). It’s not filed with the state, but it must exist. Without one, California’s default rules apply, which may not suit your business. Banks also require it to open business accounts.
What’s the difference between the Secretary of State and the FTB?
The Secretary of State handles entity formation (Articles of Organization, Statement of Information). The Franchise Tax Board (FTB) handles taxes ($800 franchise tax, LLC fee, income tax). You file with both — different agencies, different deadlines, different websites. Don’t confuse them.
How long does it take to form a California LLC?
Standard online processing: 5–7 business days. Mail filing: 2–4 weeks. Expedited options: same-day ($350 additional), 4-hour ($750 additional). Most formation services use standard online filing. If you need it faster, pay for expedited processing through bizfileOnline.
Can professionals form an LLC in California?
Most licensed professionals (lawyers, doctors, CPAs, architects, engineers) cannot form a standard LLC in California. They must use a Professional Corporation (PC), Registered Limited Liability Partnership (LLP), or other approved structure. Check with your professional licensing board for the specific requirements of your profession.
Does California allow Series LLCs?
No. California does not recognize Series LLCs. If you need to isolate liability between multiple business lines or properties, you must form separate LLCs — each with its own $800 annual franchise tax. For real estate investors with multiple properties, this makes California significantly more expensive than states that allow Series LLCs (Delaware, Wyoming, Texas).
Start Your California LLC Today
$70 filing fee. Operating agreement required. $800 franchise tax starts year two. Get it done right the first time.
$70 state fee • 5–7 day processing • Operating agreement template included
