Start an LLC in California
Starting your California LLC in January might save you close to $1000 in startup fees. CA charges an $800 minimum initial fee, plus another $800 minimum at the start of your fiscal year. Waiting until the start of the year skips a duplicate report and pushes your annual fee to next year.
Get your ducks in a row by using our free business tool to fill out your Certificate of Formation. Better yet, skip the hassle and hire us to start your LLC for you.
How to Start an LLC in California
Starting an LLC in California is a smart move if you want liability protection, a flexible management structure, and different tax options. California charges $90 to start an LLC, but within about four months, you’ll also have to pay the $800 franchise tax.
To start an LLC, you fill out paperwork—called California Articles of Organization—and submit it to the California Secretary of State. You can do it yourself or hire someone (like us) to do it for you. There are also several other steps you’ll need to take to fulfill requirements with the federal government, strengthen your liability protection, and protect your privacy. Here’s how to do it.
1. Name Your LLC
The very first thing you need? A name. Sounds easy enough, but your name has to meet some requirements. And most importantly, it needs to be available.
You can find the exact rules in CA Corp Code § 17701.08, but here are the basics.
- Include “LLC,” “Limited Liability Company,” “Ltd. Co.,” or some combination of identifiers.
- Don’t use words that might trick people into thinking your company is something that it isn’t, like “corporation” or “bank.”
- Be unique! If your name is too close to the name of another business operating in California, your paperwork will be rejected. You can check by doing a Business Name Search in California.
Tip: If your business name is available in California, it may still be federally trademarked. If it is, that won’t stop you from using it—but it could put you at risk of facing legal trouble down the road. Find out with a Trademark Clearance Search.
2. Register Your Domain Name
Once you’ve determined that your desired business name is available in California, you’ll want to check that it’s available as a domain name. Your domain name is the address of your website (for example, ours is northwestregisteredagent.com.)
If you’re not ready to build a business website yet, that’s okay. Registering your domain name at this point is still a smart move, for two reasons.
- It’s not easy to change your LLC’s name. Before you officially form an LLC, you want to make sure the name (or something that complements it) is available as a domain name.
- Once you have your domain name, you can get a business email address.
As soon as you start your business, you’ll start giving out your contact information. Using a business email address (like [email protected]) presents a professional image, organizes your communications, and saves you from giving your personal email address out to strangers.
Tip: When you hire us to start your LLC, you get a domain name free for a year.
3. File California LLC Articles of Organization
Articles of Organization is the name of the form you’ll submit to the California Secretary of State. Once they approve your paperwork, your LLC is official. But you want to make sure you get it right. Otherwise, they’ll reject your paperwork and you’ll be back at square one. Here’s the information you’ll need for California Articles of Organization.
Remember, it needs to include some version of “LLC” or “Limited Liability Company.” Most importantly, it needs to be unique in the state of California.
Next, you need to list your business address. The address you list here doesn’t actually have to be your LLC’s office, but it does have to be a street address in California. No PO boxes.
The address you list here will go on the public record, which means anyone will be able to find it online. Because of that, we recommend using your registered agent’s address here. Not sure what a registered agent is? Head to the next step.
A registered agent (called an agent for service of process in California) is a person or company that you designate to receive official mail on behalf of your LLC. If your LLC is ever served with a lawsuit, the process server will deliver the paperwork directly to your registered agent. Once your registered agent accepts the paperwork, your business is legally considered “served.” The registered agent should then forward you your mail—quickly and securely. Appointing a registered agent is a legal requirement in California.
Legally, your California registered agent must:
- Have physical street address (not a PO box or virtual office) in your state.
- Be available during regular business hours at this address.
- List their street address on the public record.
Tip: If you meet these requirements, you can be your own registered agent. If you’re always on the go, or if you’re hoping to live more privately with your LLC, you can hire us to act as your California registered agent.
This is where you indicate who will manage your LLC—members or managers.
- In a member-managed LLC, the owners run the business.
- In a manager-managed LLC, a hired manager or managers run the business.
Tip: You can appoint an owner (member) to be a manager; in this case, you’d name them a “managing-member” of the LLC, and your LLC is manager-managed. This only works in a multi-member LLC where not all members are managers.
Nothing for you to do here—California has written your business purpose statement for you, and you can’t change it.
The organizer is just whoever is singing and submitting this paperwork. This doesn’t even have to be someone within your LLC. However, your organizer’s information will become public record. If you hire Northwest, we’ll be your organizer and list our information here.
How do you “file” California Articles of Organization?
“Filing” just means getting your paperwork to the California Secretary of State with the correct filing fee ($70.) You can do that a few ways.
You can drop it off in person here:
Secretary of State
Business Programs Division – Business Entities
1500 11th Street
Sacramento, CA 95814
Or mail it in here:
Secretary of State
Business Entities Filings
P.O. Box 944260
Sacramento, CA 94244-2600
Or do it online here:
California Secretary of State
4. Adopt an Operating Agreement
An operating agreement is just what it sounds like—an agreement on how your LLC should operate. A solid operating agreement will cover how your LLC will undertake important procedures, like voting, allocating profits, and resolving disputes. Operating agreements are internal documents, kept on record with your LLC. They’re not required by law in California, but they’re essential for any LLC.
Tip: Writing an operating agreement is hard. We had our attorneys draft an operating agreement specifically for use in California—you can use it for free.
5. Get an EIN
Your LLC probably needs to get an EIN (sometimes called a FEIN.) Kind of like a social security number for your business, your EIN is a nine-digit number that the IRS will assign to your business for tax identification purposes. You’ll use your LLC’s EIN to open a business bank account, apply for loans and licenses, pay taxes, and protect your personal identity. You can apply for one online with the IRS or hire us to take care of it for you.
6. Get a Business Bank Account
If you let your personal finances mix with your business finances, you’re at risk of “piercing the corporate veil” (a dramatic-sounding metaphor that just means a court has found your LLC isn’t a separate entity from you, the owner.) So you’ll need a business bank account. The bank will likely ask to see your operating agreement, EIN, and an LLC Resolution to Start a Bank Account.
7. File Statement of Information & Pay The Franchise Tax
Most states have some sort of annual or biennial reporting requirement—in California, you have to file a Statement of Information within 90 days of forming your LLC. It costs $20 to file and requires basic information about your LLC. We recommend that you just file it at the same time you form your LLC. Then you can forget about it for two years, until it comes due again. And if you want to forget about it forever, you can hire us to file the California Statement of Information for you.
Then there’s the $800 California Franchise Tax. This is the annual tax you’ll pay for the “privilege” of doing business in California, and all businesses are required to pay it. Oof, what a bummer. As soon as you form an LLC, the clock starts ticking. You have four months and 15 days to pay it.
8. File Your BOI Report
The Beneficial Ownership Information Report is a report businesses file with FinCEN that discloses information about your beneficial owners and company applicant. You can file yours online or hire us to do it for you. Businesses are asked to file within 90 days of forming your LLC.
You can file your LLC’s BOI Report for free through the FinCEN.gov website. Or, we can file your BOI Report for you.
*This is informational commentary, not advice. This information is intended strictly for informational purposes and does not constitute legal advice or a substitute for legal counsel. This information is not intended to create, nor does your receipt, viewing, or use of it constitute, an attorney-client relationship. More information is available in our Terms of Service.
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