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Included In All LLC Packages
- Verify Company Name Availability
- Preparation & Filing of Articles
- Next Business Day Processing
- Registered Agent Service (1st Year FREE)
- Lifetime Company Alerts
- Online Order Status Tracking
- Free Business Tax Consultation
- Lifetime Customer Support
- Online Access to incorporation Documents
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Paperwork Completed By a Professional
Your documents will be prepared by an industry professional and filed directly with the Secretary of State. Follow the process with an Online Order Tracking System.
Launch Your Business
With next business day processing you will receive notification your LLC is active as soon as it is approved by the State.
How to Form An LLC: California and its Many Small Business Benefits
Starting a limited liability company is a smart business decision that offers many benefits. A limited liability company, also known as an LLC, is a hybrid business that provides personal liability protection to business owners should they be faced with a lawsuit or outstanding debts. By operating your company as an LLC, your personal bank accounts, real estate, and possessions are kept separately from the assets of your business because of the offered liability protection.
Forming an LLC is a big responsibility that requires many steps to be taken. If you’re looking to start an LLC in California, it’s wise to consult with a professional LLC formation company to help you get started. The professionals at LLC Formations can guide you through each step on how to form an LLC in California so you can focus on growing your business.
How Do You Start a California LLC?
Forming an LLC in California begins with choosing the type of business structure that best suits your business goals. The most common type of business structure is an LLC. The organizer of an LLC is a person who acts under the California code and opens up the business structure. The person of an LLC can be one of the following:
- Limited partnership
- Limited liability company
- Other entity
The person has rights to form the California LLC and conduct business on its behalf. The name of the limited liability company must contain one of the following designations:
- Limited Liability Company
Under the Secretary of State, and subject to the provisions of the California Code, a limited liability company may apply to transact business under a different name. However, the LLC’s name cannot possess any of the following:
- Insurance Company
The name of the California business cannot contain any reference that suggest the issuing of insurance policies or assuming insurance risks.
The Steps to Forming Your California LLC
1. Name Your California LLC
One of the most important parts of opening an LLC is choosing a business name. Your California LLC name will be the first introduction that customers have to your California business. You can choose almost anything as your LLC name, but it is recommended that you choose something clever and original so your company can be remembered by future customers or clients. You will apply for your LLC name through the California Secretary of State.
Many LLC filers often have trouble submitting applications because of repetitive name issues or filing errors with the California Secretary of State. To avoid these issues, you can conduct a California LLC name search to make sure that your ideal business name is unique. Think about the following as you are adopting a name for your California LLC:
- Names adopted cannot be misleading to the public.
- Names are not checked against trademark or service mark registrations.
- Names adopted can be reserved for 60 days.
- Reservations can be renewed to the same application but not for consecutive 60-day periods.
You may conduct a California LLC Name Search by completing a Name Availability Inquiry Letter form and sending it to the California Secretary of State. You may complete and submit the completed form by mail. Include a self-addressed stamp envelope to the following address:
California Secretary of State
Name Availability Unit
1500 11th Street, 3rd Floor
Sacramento, CA 95814
Submitting a Name Availability inquiry letter does not reserve a proposed LLC name, however, we can provide this service for you. Contact LLC Formations to connect with our team so we can help you get started.
If you wish to reserve an LLC name through the California Secretary of State, you may do so for a $10 fee. By reserving the name through the California Secretary of State, you are putting your chosen name on hold while you organize the rest of your business information. This keeps your business name safe while you handle other aspects, such as finding a registered agent, saving for a filing fee, figuring out how to move assets, or anything else related to forming an LLC.
2. Appoint a California Registered Agent
Like many other states, the California Secretary of State requires each LLC to appoint a registered agent in order to form an LLC. A registered agent is an individual person or company that receives important information sent to the listed LLC address on your behalf.
The registered agent receives important legal notices and business correspondences, so it’s important that your registered agent is available, reliable, and responsible when it comes to collecting your mail and informing you about important notices pertaining to your California LLC.
When you form an LLC, you can also choose to hire a registered agent service that will work to take care of your business in the state of California. This business service can be extremely helpful, and many business owners prefer to hire a registered agent service.
The benefits of hiring a service include working with an experienced professional, and additionally, your private information will be protected since it won’t have to be listed on any official documents. Instead, the registered agent service will have their phone number and California address listed on important documents since they will be handling the communication for your California business.
3. File for Your California LLC
After naming your business and appointing a registered agent, the next thing that you need to do is officially set up your LLC in California so you can start receiving the LLC benefits for business and tax purposes. To do this, you need to submit three important documents so you can fully open your California LLC.
I) Your California Articles of Organization
II) Your California business license
III) Your initial list of managing members or managers
You can choose between two convenient filing methods when forming an LLC in California. You have the option to set up your LLC by mail or you can file online. It is almost the same process when you file by mail, but filing online will finalize everything much more quickly. When you file online, the approval time and the overall process are both easier so you can start doing business more quickly.
Each method will require you to pay a filing fee when you form a California LLC. If you file by mail, your filing fee can be sent by check or money order. If you file online, your filing fee can be paid by credit card. There may be an additional filing fee added for convenience if you choose to file online.
Contact LLC Formations if you have any questions about how to file for your LLC in California.
Statement of Information: $20
California limited liability company authorized representatives must file a Statement of Information with the California Secretary of State. The fee required for filing a domestic limited liability company is $20. For foreign limited liability companies, the fee of $5 is in addition to the standard fee of $20 for a total of $25. To file for your LLC online, organizers may pay the fee using a Visa or Mastercard. The authorized representatives will receive a PDF copy of the filed Statement of Information from the Secretary of State.
$800 Annual Tax
Organized and/or registered limited liability companies and foreign limited liability companies are subject to an annual tax even if they do no business in the state of California. There is a 15-day exception for organized limited liability companies and foreign limited liability companies if they do not conduct any business in California during the taxable year, or if their tax year is 15 days or less.
The due date for the $800 Annual Tax for domestic limited liability companies is the 15th day of the 4th month after filing the Articles of Organization with the California Secretary of State. This pays the first-year annual tax for your tax year.
For foreign limited liability companies that register or commence business in California after the 15th day of the 4th month of their tax year must pay when they commence business or when they register with the Secretary of State, whichever occurs first.
4. Set up the Operating Agreement for Your California LLC
The LLC Operating Agreement is an important and necessary component of forming a business in California, or in any state for that matter. The LLC Operating Agreement defines the manner with which to organize and manage the limited liability company or foreign limited liability company. This is a necessary part of your LLC formation.
The Operating Agreement may be oral or in written form, and it must be included even if you operate as a single-member LLC or sole proprietorship. The California LLC Operating Agreement is maintained by the limited liability company or foreign limited liability company.
The Operating Agreement governs the following when you form an LLC:
- Relations among the members of the LLC
- Rights and duties of the LLC and its members
- Activities and conduct of the LLC
- How to handle profits and losses or company assets
- Conditions for amending the Operating Agreement
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5. File the Articles of Organization
Once you have everything else taken care of, it is time to fill out and file your California LLC Articles of Organization. The Articles of Organization is used to structure the rights, duties, liabilities, and other obligations between each member of your LLC in California.
You will need to have the following information on hand when you complete your California LLC Articles of Organization:
- The limited liability company name
- The street address of your LLC’s principal office
- The LLC’s mailing address (if different from the principal office address)
- The name and street address of your registered agent
- The names and street addresses of all authorized representatives and at least one signature
- The effective date for the entity (up to five days before or 90 days after the receipt of application)
- A valid email address
You may choose to file either by mail or online. If you need help, contact the professionals at LLC Formations so we can help you get started.
The Sacramento Office accepts the following requests by mail or drop-in:
a) Check for name availability (by mail).
b) Reserve a name.
c) File a document.
d) Request information (certificates of filed documents and status reports).
The costs for each form filing vary by type of limited liability company.
6. Obtain the Proper Permits for Your California LLC
The California Secretary of State does not issue licenses or permits for business entities to do business in California. However, based on the type of business you operate, you may be required to apply for municipal licenses or permits on the city or county level before forming an LLC. If you are required to have specific licenses, you must file for them and be approved before you start doing business in California or your LLC may be dissolved.
There are two factors that determine whether you need a business license and a permit for your California LLC:
I) The nature of your business
II) The location of your business
If you want more information about determining whether or not your LLC requires additional licenses and permits, or if you have questions about LLC tax information, contact the professionals at LLC Formations to ensure that everything is being handled correctly.
7. Obtain an EIN for Your California LLC
The IRS issues a federal identification number called an employer identification number, or EIN. This number is crucial when you form an LLC as it allows you to administer payroll and handle income taxes and the federal tax for your California LLC. All of your LLC tax information will use an EIN. You must file every major business transaction through the EIN, so it’s important to keep this number handy.
You may apply for an EIN online on the IRS website. Applying for an EIN is a free service for every type of business entity in the state of California. Whether you operate as a sole proprietorship or a multi member LLC, you will need an EIN so you can process your federal tax and income tax return through this number. Your EIN essentially acts like a social security number for your California LLC.
Filing for your EIN
When you file your EIN online for your LLC, the application must disclose the name of the principal officer. The IRS calls the principal officer the “responsible party,” and it must be an individual.
The online application is available here. The hours of operation for applying online are Monday to Friday, 7 a.m. to 10 p.m. eastern standard time.
If you choose to file by mail, be aware that it may take up to four weeks to process. You will need to file form SS-4. If you need help to file form SS-4, LLC Formations can help you make sure that everything is correct before mailing it in so you don’t have to wait any extra time to start your LLC in California.
7. Set up a California Business Bank Account
When considering a business bank account for your LLC, it is very important to have a business account that is separate from your personal account. This is important so you can keep your personal assets separate from your LLC funds, which means that they remain protected. If your LLC is involved in a court case, you will avoid exposing your personal funds and investments.
After an EIN number has been issued to you by the IRS, you can open up a business checking account for your LLC. Another advantage of having a separate business checking account for your LLC in California is that it simplifies the overall record-keeping process for both accounting and tax purposes.
The banks in California have different rules and regulations to keep in mind when choosing which bank will be the best for your LLC. Before opening up a new account for your LLC, it is recommended that you first find out the following information before committing to an account for your LLC:
- What’s the minimum initial deposit that is required to open the account?
- Is there a minimum balance requirement? If so what is the minimum amount?
- Are there any monthly maintenance fees? If so, what are they?
- What is their policy concerning online banking?
Required Paperwork Needed to Open a Bank Account
In addition to having an EIN number to open your business bank account, you will also be required to provide the following documents:
- Your stamped and approved LLC Articles of Organization
- The initial list of LLC managers or managing members
- Your LLC State Business License if applicable
- Photo ID
- A copy of your LLC Operating Agreement
If you are a multi member LLC, all LLC members and owners will need to be available to open up the bank account for the LLC. If you operate your LLC as a sole proprietorship or single member LLC, then only you will need to be available. If you need help choosing the best bank for your LLC, contact LLC Formations so we can help you determine which bank can meet your business’ needs.
8. Understand State Taxes Regarding Your California LLC
A limited liability company or foreign limited liability company in California must pay the $800 Annual Tax assessed by the California Franchise Tax Board to retain the Certificate of Good Standing. For a domestic LLC or foreign LLC, the $800 Annual Tax is due to the Franchise Tax Board by the 15th day of the 4th month.
In addition, a limited liability company or foreign limited liability company in California must submit the state LLC annual tax payment based upon earnings pertaining to California. The business entity must estimate total income from California sources and pay the annual fee by the 15th day of the 6th month of the current tax year.
What If I Cannot Pay the $800 Annual Tax or the LLC Tax Fee?
The Franchise Tax Board bills all California limited liability companies and foreign limited liability companies for unpaid taxes. There are three different types of billings and notices.
Return Information Notice: The FTB will mail a Return Information Notice if the LLC fails to pay the correct annual tax, the annual fee, or the NCNR member’s tax.
Notice of Balance Due: The FTB will mail a Notice of Balance Due if the LLC fails to pay the annual tax, fee, or NCNR member’s tax.
Past Due Notice: The FTB will mail a Notice of Balance Due to all LLCs for tax liabilities, penalties and interest unpaid for 45 days from the first notice’s mail date.
Limited liability companies or foreign limited liability companies are subject to the following penalties and interest:
- Pay Tax or fee late, including NCNR
- Underpayment of tax or fee, including NCNR
- Filing of tax return beyond the extended due date
- Estimated LLC late fee
- Underpayment of estimated late fee
Penalties are also imposed. They include underpayment, delinquency and late filing. If an LLC or foreign LLC pays the balance due within 15 days of the notice date, no additional penalties will accrue.
If an LLC or foreign LLC does not submit Form 568, does not pay all tax, penalty, or interest due, its powers, rights, and LLC privileges may be suspended. Once you form an LLC, be sure that you pay all state filing fees and file everything that you need to file or you may risk your LLC being dissolved. If your LLC is dissolved, your assets will no longer be protected.
California LLC Fees
- If the total income rounded to the nearest whole dollar is $250,000 – $499, 999, the fee is $900.
- If the total income rounded to the nearest whole dollar is $500,000 – $999,999, the fee is $2,500.
- If the total income rounded to the nearest whole dollar is $1,000,000 – $,999,999, the fee is $6,000.
- If the total income rounded to the nearest whole dollar is $5,000,000 or more, the fee is $11,790.
How Can LLC Formations Help You?
You should now have everything you need to successfully start doing business as an LLC in California state. You’ll just need to follow the above steps and file the proper paper work with the Secretary of State so you can form an LLC and keep your assets protected while growing your business.
If this process seems confusing, our company is associated with multiple entities that can expedite the set up of your LLC. You can visit us online at LLC Formations for more information. Check out our guide to setting up a New Hampshire LLC.
Processing times vary for type of requests. For more information, visit here. https://www.sos.ca.gov/business-programs/business-entities/processing-times/
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A California LLC or foreign LLC that receives a solicitation letter can mail a written complaint along with the entire solicitation and related documents, including the outer and return envelopes, to the California Attorney General’s office to the following address:
California Attorney General’s Office
Public Inquiry Unit
P.O. Box 944255
Sacramento, California 94244–2550
Complaint forms can be submitted online and printed. Submit the printed copy to the address. The CA Attorney General’s office website address is here.
Q: How do I change my LLC’s address of record, name and/or address of the agent for service of process, and names of managers of a manager-managed limited liability company or foreign limited liability company and names of members of a member-managed limited liability company or foreign limited liability company?
A domestic limited liability company or foreign limited liability company can change recorded information by filing the applicable form. For California limited liability companies and foreign limited liability companies, file a Statement of Information – Domestic or Foreign Limited Liability Company on Form LLC-12. The form must be completed in its entirety and you will need to file it with all of the proper information, such as your name, email address, and anything else that is relevant to your LLC formation.
A Statement of Information must be filed every year for limited liability companies and foreign limited liability companies. A Statement of information must be filed for changes to name and address of an agent for service of process, if an agent for service of process resigns, and if the LLC’s or foreign LLC’s address information changes. Information about Statement of Information, as well as forms, is available here (https://www.sos.ca.gov/business-programs/business-entities/statements/).
A limited liability company or foreign limited liability company can change its name using the applicable document or form. For a domestic limited liability company, file a Certificate of Amendment on Form LLC-2. For a foreign limited liability company, file an Application for Registration Certificate of Amendment on Form LLC-6. If your business entity decides to change its name, it must file all of the relevant information and the new name must be approved before you can do business in California under that name.
Q: How do I request a copy of a filed business entity document or a Certificate of Status or Certificate of Filing?
Copies of filed documents and certificates can be obtained by submitting a request to the California Secretary of State Sacramento office in person (drop off) or by mail. The information requests page is available here .
A Certificate of Status may be obtained by phone. A Certificate of Status request is not available online. Please visit the Information Requests webpage here so you can get this document for your LLC.