How to start an LLC in California in 2024

Eric Rosenberg

BLUEPRINT

Updated 6:36 a.m. UTC June 19, 2024

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When starting or growing a business in California, you may want to consider the added benefits of registering as a Limited Liability Company, commonly called an LLC. In this guide, we offer a closer look at how to start an LLC in California, the costs associated with it and any free resources that can help you confidently move forward with the next phase of your business.

Tip: For an LLC to work properly, you may encounter significant costs, as well as tax and legal implications. Consult with a trusted tax expert or attorney if you’re unsure which business structure makes the most sense for your business needs.

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Steps to start an LLC in California

If you’re ready to form an LLC, you can hire a company to take care of the paperwork or you can file the forms yourself. The steps to form an LLC in California include the following:

Choosing a business name.
Creating an operating agreement (if you have partners).
Appointing a registered agent.
Accessing BizFile online to begin filing to complete your Articles of Organization.
Preparing for bi-annual filing and tax requirements.

Here is a closer look at the main steps to follow if you’re independently registering an LLC in California.

1. Choose your LLC business name

Whether you’ve started operating your business as a sole proprietorship or are just starting out with a new LLC, you need a business name. You can choose any name you want. However, it must be a name that is not already in use in your state. It is a good idea to pick a name that makes it easy for your customers to understand what your business offers. In California, the business name must end with Limited Liability Company, LLC or L.L.C.

When you pick a name you like, check to ensure the name is available. The first place to check is the California Secretary of State’s business search tool. It’s also a good idea to ensure the name isn’t already trademarked with a search at the United States Patent and Trademark Office database. Last but not least, type the name into Google and other major search engines to ensure the website domain name is available.

Many LLC formation service providers offer a free name check tool to make these steps easier. They also ensure you follow guidelines for naming your business, such as the addition of “LLC” to any LLC business name (i.e., “XYZ Services, LLC”). You can use some of these tools without signing up for a plan, while others may only offer the tool to existing customers.

Inc Authority, for example, in addition to offering free LLC formation services, offers a name check tool on the front page of its website. Simply visit the Inc Authority website, then use the search bar to search your business name. The search bar will automatically search the state from which you access the site. Once you begin your search, it will also walk you through developing a name that meets state naming requirements.

2. Create an operating agreement if you have partners

If you’re working with a partner or multiple partners, you’ll need an operating agreement for your business. You don’t have to submit an operating agreement to the state. However, you are required to make one in many states and keep it on file at your place of business or the address you use to register your LLC with the state. A template can make this step easy.

Even when not required, an operating agreement offers the following benefits:

Protection: It protects you and any partners against personal liabilities for financial or other risks the company undertakes.
Control: It allows your company’s members to decide how it will be run. If you do not create an operating agreement, these decisions are decided by the state in its default operating agreement. The rules within this agreement may go against your operating wishes.
Dispute resolution: By delineating how your company will be run and maintained, an operating agreement provides guidelines to all members regarding the resolution of (or, even better, the prevention of) disputes and misunderstandings.

At minimum, your operating agreement should include the following:

Your LLC’s identifying information: This includes its name, headquarters address and registered agent address (if different from the headquarters address).
Statement of intent: This should state the nature of the business. For example, you may state that you will buy and sell goods pertaining to a certain industry and that you will conduct business permitted by and in accordance with state LLC laws.
Operating time period: For most businesses, this statement simply declares that this operating agreement is in accordance with state laws, the company will form once the operating agreement is complete and LLC paperwork is filed with the state, and will dissolve according to state laws. It can also put restrictions in place, such as an end to the sale of goods in response to a specific period of need around those goods.
Tax treatment: Choose what tax structure you will use, including a sole proprietorship, a partnership or a corporation. Multi-member LLCs have different tax filing requirements than single-member LLCs. Put simply, an LLC with only one member is generally treated as a disregarded entity, meaning taxes are simply filed with the owners’ personal tax forms each year.
LLC member admission guidelines: This statement delineates the process for incorporating a new member (or partner) into the business.

The easiest way to write your operating agreement is by accessing a template. Templates are available for free through many LLC formation services. RocketLawyer, for example, offers a free operating agreement template based on your state.

3. Choose a registered agent

A registered agent is a designated person who receives legal notices for your business, such as service of process paperwork. You can act as your own registered agent. However, you must be present in your business office during all regular business hours. This prohibits you from stepping out for travel, a meal with a client or other business matters. It also means embarrassing legal or tax notices may be delivered to you in front of customers.

To remain compliant despite these requirements and restrictions, you can also designate someone else, such as an internal manager, or hire an outside firm to be your registered agent. The benefit of choosing an outside registered agent is that you can protect your personal contact information from being added to a public record, step out when needed during business hours and protect your company’s reputation.

To hire a registered agent, you would need to go through a provider such as Bizee or Inc Authority. Good registered agent service providers staff their offices during all regular local business hours. They also have offices in all 50 states so you can appoint one within California and any other states you operate (a legal requirement).

Read our guide on Best Registered Agent Services of 2023 to choose the right registered agent for your LLC.

4. Form your business using BizFile Online

Your next step requires careful attention to detail. Head to the Bizfile Online system for the state of California. Follow the link for “Register a Business (Corporation, Limited Liability Company, Limited Partnership).” Under the header “Limited Liability Companies Initial Filings,” click the link for Articles of Organization – CA LLC. Follow the instructions to fill out the form.

Articles of Organization are the primary document showing your business exists, so you’ll want to double check everything before clicking the submit button. Also, be aware that the Articles of Organization will be publically available online, including personal information.

New LLC reporting requirement alert

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has implemented a new reporting requirement for all non-exempt LLCs starting on January 1, 2024.

The requirement is called the Beneficial Ownership Information (BOI) report and it is estimated to only take about 20 minutes to complete.

Here’s what you need to know:

LLCs formed before January 1, 2024 have until January 1, 2025 to file.

LLCs formed between January 1, 2024 and January 1, 2025 have 90 days to file from the confirmed date of the businesses’ registration.

New LLCs formed after January 1, 2025 will have 30 days to file from the confirmed date of formation.

For all details, FAQs and to file, visit FinCEN’s BOI website.

5. Prepare for required business filings and taxes

Every two years, California requires businesses to file an updated Statement of Information. It is a short form that updates the state on basic information about your business, including who the members are, your current business address and more. This information is used to send you legal notifications from the state.

The date you must file your first annual report depends on your date of incorporation. You must file within 90 days of registering your LLC. For a quick filing process, you’ll use the same Secretary of State website to file a Statement of Information. You can also use it to look up your statement of information due date.

When submitting the form, businesses must also pay a minimum tax to the California Franchise Tax Board. The minimum tax is $800 annually and goes up if your business earns more than a specific minimum threshold.

Cost to start an LLC in California

As of this writing, businesses don’t have to pay any filing fees when forming a new LLC. Optionally, you can pay $350 for next-day service or $750 for same-day service. If you use an outside lawyer or filing service, you’ll also have to pay their fees.

The biggest expense is an annual LLC fee paid to the Franchise Tax Board. You may qualify for a lower payment the first year, but you should plan on paying at least $800 per year, even if your business doesn’t earn that much.

Larger businesses must pay fees according to this schedule:

ANNUAL BUSINESS INCOME	ANNUAL LLC FEE
$250,000-$499,999	$900
$500,000-$999,999	$2,500
$1,000,000-$4,999,999	$6,000
$5,000,000 or more	$11,790

Find the best LLC services for California: Best LLC services of 2024

California requirements for LLCs

When your LLC is established, you’ll have to continue meeting minimum requirements to remain in good standing. Missed or late forms can lead to added fees or the dissolution of your business. Here’s what you must do to maintain your LLC:

File annual Statement of Information: Your business must file a Statement of Information form annually. You can check the Secretary of State’s website to find your filing deadlines based on your date of incorporation and enter your form online.
Pay annual Franchise Tax: Late or missed franchise tax payments can incur additional fees. You can pay the estimated amount early to avoid costly missteps.
Maintain registered agent service if applicable: If you hire an outside registered agent, pay any required renewal fees so your service doesn’t lapse.
Keep updated business records: In addition to an updated operating agreement and copies of your business filings, you’ll need accurate financial records for tax purposes.
File taxes with the state and IRS: Businesses must file taxes in California and with the IRS. You may be able to file yourself using business tax software. If you’re unsure how to proceed, consulting with a trusted tax professional may be wise.
Apply for any required business licenses and permits: Depending on the nature of your business, you may need additional business licenses or permits. Some cities or counties may also require your business to register and pay additional fees.

Resources for California LLCs

California LLC laws may be tough for some business owners to track. These government and business organizations offer helpful resources and information:

Featured LLC service offers

ZenBusiness

Learn More

Via ZenBusiness’ website

Free version available

Yes

Lowest published package price

$199

Live chat

Yes: Human

LegalZoom

Learn More

Via LegalZoom’s website

Free version available

Yes

Lowest published package price

$249

Live chat

Yes

Northwest Registered Agent

Learn More

Via Northwest’s website

Free version available

Lowest published package price

$39

Live chat

Yes

Frequently asked questions (FAQs)

An LLC is a limited liability company. Limited liability companies are business entities used for tax and legal purposes.

You can establish an LLC in California without filing fees during a temporary period ending June 30, 2023. Typical fees are $70 to create an LLC. You must also pay a $20 annual fee with your Statement of Information. Annual taxes start at $800 for California LLCs.

California LLCs pay taxes to the Franchise Tax Board. Taxes start at a minimum of $800 per year for LLCs in the state.

Hiring a registered agent service is not required in California, but you must designate a person or company as your registered agent. You can act as your own registered agent or choose another trusted individual, such as a lawyer or accountant.

The downside of acting as your own registered agent is that your personal information, including your address and phone number, is publicly available to anyone searching for your business. If you use a professional registered agent service, you’ll have to pay a monthly or yearly fee to that company to act as a registered agent on your company’s behalf.

California LLCs file a report called a Statement of Information every two years in addition to an annual tax return. If you are incorporated during an even year, you will file every even year. If you are incorporated in an odd year, you must file every odd year.

To close an LLC in California, you must file a Statement of Dissolution with the Secretary of State. To do so, your entity must be in good business standing with all taxes and fees paid and up to date.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Eric Rosenberg

BLUEPRINT

Eric Rosenberg is a financial writer, speaker, and consultant based in Ventura, California. He is an expert in topics including banking, credit cards, investing, cryptocurrency, insurance, real estate, and business finance. He has professional experience as a bank manager and nearly a decade in corporate finance and accounting. His work has appeared in many online publications, including Business Insider, Nerdwallet, Investopedia, and U.S. News & World Report.

Alana Rudder

BLUEPRINT

Alana is the deputy editor for USA Today Blueprint's small business team. She has served as a technology and marketing SME for countless businesses, from startups to leading tech firms — including Adobe and Workfusion. She has zealously shared her expertise with small businesses — including via Forbes Advisor and Fit Small Business — to help them compete for market share. She covers technologies pertaining to payroll and payment processing, online security, customer relationship management, accounting, human resources, marketing, project management, resource planning, customer data management and how small businesses can use process automation, AI and ML to more easily meet their goals. Alana has an MBA from Excelsior University.