How to Start an LLC in California

California has the largest economy in the United States and is home to millions of small businesses. Forming a California LLC costs just $70 in state filing fees, making it one of the more affordable states for initial formation. However, California imposes an $800 annual franchise tax that all LLCs must pay starting in 2026, so it’s important to understand the full cost picture before you get started. California also requires an operating agreement by law — one of only a handful of states with this requirement.

Follow these steps to start your California LLC in 2026.

How to Start an LLC in California (7 Steps)

Step 1: Name Your California LLC

Your California LLC name must not be the same as or too similar to any existing business entity registered with the California Secretary of State. The name must end with “Limited Liability Company,” “LLC,” or “L.L.C.” — California is strict about this requirement. You can search for available names using the California Business Search tool on the Secretary of State’s website.

If you want to reserve a name before filing, you can submit a Name Reservation Request (Form LLC-1R) for $10, which holds the name for 60 days. This is the shortest reservation period among all U.S. states, so be prepared to file your Articles of Organization quickly after reserving. You should also check whether your desired domain name and social media handles are available, and search the USPTO trademark database to avoid potential trademark conflicts.

California naming rules:

• Must end with “Limited Liability Company,” “LLC,” or “L.L.C.”
• Cannot include words like “bank,” “trust,” “insurer,” or “corporation” without special approval
• Must not be the same as or misleadingly similar to an existing entity on file with the Secretary of State
• Cannot use certain professional designations unless the LLC is a registered professional LLC

Step 2: Choose an Agent for Service of Process

California requires every LLC to have a registered agent — called an “agent for service of process” in California — with a physical street address in California. The agent for service of process receives legal documents, including lawsuits, subpoenas, and official state correspondence, on behalf of your LLC. This person or entity must be available at the designated address during normal business hours.

You can serve as your own agent for service of process (if you have a California address), or use a professional service. Serving as your own agent means your personal address becomes public record and you must be physically available during all business hours.

Our top recommendation is Northwest Registered Agent ($39/year), which also handles LLC formation for $39 + the $70 state fee. This gives you both formation service and a full year of registered agent coverage at a competitive price.

Step 3: File Your Articles of Organization

To form your California LLC, file Articles of Organization (Form LLC-1) with the California Secretary of State. The fastest way to file is online through bizfileOnline, California’s electronic filing system. You can also file by mail, but online filing is recommended for faster processing and immediate confirmation.

California’s Articles of Organization form is relatively simple compared to other states. You’ll provide basic information about your LLC, including the name, address, agent for service of process, and management structure. You do not need to list the names of your LLC members in the Articles of Organization — that information is reported separately in the Statement of Information.

Filing details:

• Filing fee: $70
• Online filing: bizfileOnline.sos.ca.gov (recommended — faster processing)
• Processing time: 5-7 business days (standard), 1-2 business days (expedited for additional fee)

Information required:

• LLC name
• Agent for service of process name and address
• LLC street address
• Mailing address (if different)
• Management structure (one or more managers, or all members)
• Organizer’s name and signature

Step 4: Create an Operating Agreement

California requires LLCs to have an operating agreement by law (Cal. Corp. Code Section 17701.10). While the state does not require you to file the operating agreement with any government agency, you must create and maintain one. California is one of only a few states that legally mandate this document.

Your operating agreement should cover ownership percentages, how profits and losses are distributed, voting rights, management structure, procedures for adding or removing members, and dissolution terms. For single-member LLCs, the operating agreement establishes that the LLC is a separate legal entity from the owner. For multi-member LLCs, it serves as the foundational governance document. Banks will require a copy to open a business bank account.

Step 5: Get an EIN

Apply for an Employer Identification Number (EIN) through the IRS website. It’s free and takes about 15 minutes online. An EIN serves as your LLC’s federal tax identification number — like a Social Security Number for your business. You need an EIN to open a business bank account, hire employees, file federal taxes, and apply for business credit. All California LLCs should get an EIN, even single-member LLCs with no employees.

Step 6: File Your Statement of Information

Within 90 days of forming your California LLC, you must file an initial Statement of Information (Form LLC-12) with the Secretary of State. The filing fee is $20. After the initial filing, the Statement of Information must be filed every two years during the applicable filing period. You can file online through bizfileOnline.

The Statement of Information reports your LLC’s current address, agent for service of process, manager or member names, and the type of business your LLC conducts. This is how the state keeps track of who is behind each LLC. If any information changes between filing periods, you can file an amended statement at any time for $20.

Step 7: Pay the California Franchise Tax

All California LLCs must pay an annual franchise tax of $800 to the California Franchise Tax Board (FTB). This is a flat tax that applies regardless of your LLC’s income — even if your LLC earns $0, you still owe $800. The tax is due by the 15th day of the 4th month after your LLC is formed (for new LLCs), and then annually on April 15 each year.

Note: California waived the $800 first-year franchise tax for LLCs formed between 2021 and 2025 under Assembly Bill 85, but this waiver has expired for LLCs formed in 2026. Your LLC will owe the $800 franchise tax starting from its first year of operation. Pay through the Franchise Tax Board website using their online payment system.

California LLC Costs

Total first-year cost: $890-$1,189. The $800 franchise tax makes California one of the more expensive states for LLC formation on an ongoing basis. If you serve as your own agent for service of process, your mandatory first-year costs are $890 ($70 filing + $800 franchise tax + $20 SOI). See our complete guide to LLC costs by state.

California LLC Taxes

California has one of the highest tax burdens for LLCs in the country. Every California LLC must pay an $800 annual franchise tax to the Franchise Tax Board, regardless of income. This is a flat fee that applies even if your LLC earns no revenue during the year. There is no exemption or reduced rate for small businesses.

In addition to the franchise tax, California LLCs with gross receipts above $250,000 pay an additional LLC fee based on their income level: $900 for gross receipts of $250,000-$499,999; $2,500 for $500,000-$999,999; $6,000 for $1,000,000-$4,999,999; and $11,790 for $5,000,000 or more. This fee is calculated on gross receipts (total revenue), not net income, and is due on the 15th day of the 6th month of the current tax year. It is paid in addition to the $800 franchise tax.

California’s personal income tax rates range from 1% to 13.3%, which applies to LLC profits passed through to members. The 13.3% top rate is the highest state income tax rate in the country. Combined with the $800 franchise tax and the potential LLC fee, California LLCs can face a substantial state tax burden.

California’s state sales tax rate is 7.25%, with local additions bringing the total to between 7.25% and 10.25% depending on your location. If your LLC sells taxable goods or services, register for a seller’s permit through the California Department of Tax and Fee Administration (CDTFA).

California LLC Annual Requirements

California LLCs must file a Statement of Information (Form LLC-12) every two years for a $20 fee. This form updates the state on your LLC’s current address, managers or members, and agent for service of process. The initial statement is due within 90 days of formation, and subsequent filings are due every two years during the applicable filing period assigned by the Secretary of State.

You must also pay the $800 annual franchise tax to the Franchise Tax Board each year by April 15. Additionally, you need to file California Form 568 (Limited Liability Company Return of Income) each year with the FTB, which reports your LLC’s income, deductions, and credits. This is an informational return — the LLC itself doesn’t pay income tax (unless it elected C corp taxation), but the return is required.

Keep your agent for service of process current, and file an amended Statement of Information with the Secretary of State if your LLC’s information changes. Failure to pay the franchise tax or file required returns can result in penalties, interest, and eventually suspension or cancellation of your LLC by the Franchise Tax Board.

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Frequently Asked Questions

How much does it cost to start an LLC in California?

The state filing fee is $70 for Articles of Organization. However, you must also pay the $800 annual franchise tax (no first-year waiver for LLCs formed in 2026), $20 for the Statement of Information, and optionally $39-$299 for a registered agent service. Most people spend between $890 and $1,189 in their first year.

How long does it take to form an LLC in California?

Online filings through bizfileOnline are typically processed in 5-7 business days. Expedited processing is available for an additional fee and can reduce the turnaround to 1-2 business days. Mail filings take significantly longer.

Do I need an agent for service of process in California?

Yes, every California LLC must designate an agent for service of process (California’s term for a registered agent) with a physical street address in California. This person or company accepts legal documents on behalf of your LLC and must be available during normal business hours.

Does California require an operating agreement?

Yes, California law (Cal. Corp. Code Section 17701.10) requires all LLCs to have a written operating agreement. While you don’t need to file it with the state, you must create and maintain one. It should define how your LLC is managed, how profits are distributed, and what happens if a member leaves or the LLC is dissolved.

How are LLCs taxed in California?

All California LLCs pay an $800 annual franchise tax regardless of income. LLCs with gross receipts over $250,000 pay an additional fee ranging from $900 to $11,790. LLC profits passed through to members are subject to California’s personal income tax rates of 1% to 13.3%. California has one of the highest combined state tax burdens for LLCs in the country.

Can I be my own agent for service of process in California?

Yes, any California resident with a physical street address in the state can serve as their own agent for service of process. Your address will become part of the public record, and you must be available during business hours to accept legal documents. Many business owners use a professional service for privacy and reliability.

Is the California franchise tax waiver still available in 2026?

No. The first-year franchise tax waiver applied to LLCs formed between 2021 and 2025 under Assembly Bill 85. This waiver has expired and is not available for LLCs formed in 2026 or later. All new California LLCs must pay the full $800 annual franchise tax starting from their first year of operation.

What is the California Statement of Information?

The Statement of Information (Form LLC-12) is a biennial filing that updates the state on your LLC’s current information, including address, agent for service of process, and manager/member details. The initial filing is due within 90 days of formation and costs $20. It must be refiled every two years during your assigned filing period.

Does my California LLC need a business license?

California does not have a general state business license, but most cities and counties require a local business license, business tax certificate, or home occupation permit. Los Angeles, San Francisco, San Diego, and other major cities each have their own licensing requirements. Check with your city’s finance or business licensing department for specific requirements.

Can a non-resident form an LLC in California?

Yes, you do not need to be a California resident to form an LLC in the state. However, you will need an agent for service of process with a California address. Be aware that if your LLC conducts business in California, it will be subject to the $800 annual franchise tax and California income taxes regardless of where you personally live.