How To Get An LLC In California In 7 Easy Steps

Overview

Getting an LLC in California involves a straightforward process. Below, we’ll guide you through the essential steps and provide factual answers to common questions.

How To Get An LLC In California: Step-By-Step

1. Choose a Name for Your LLC:
   • Choose a unique and available name for your LLC.
   • Perform a California LLC name search through the California Secretary of State website.
   • Reserve your chosen name if needed.
2. Registered Agent:
   • Appoint a registered agent with a physical address in California.
3. File Articles of Organization:
   • Complete the California LLC Articles of Organization form.
   • File online through the California Secretary of State website or submit a paper application.
4. Submit Initial LLC Statement of Information
   • If you’ve formed an LLC in California, you need to file an initial LLC Statement of Information within 90 days after the organization. 
5. Operating Agreement:
   • Draft an operating agreement outlining the structure and operation of your LLC. Although not required by the state, it is highly recommended.
6. Employer Identification Number (EIN):
   • Obtain an EIN from the IRS for tax purposes.
7. File the Beneficial Ownership Information Report:
   • Beginning in 2024, California LLCs must submit a Beneficial Ownership Information (BOI) Report.

1. Choose A Name For Your LLC

Check if the name you desire for your California LLC is available in the state. This is important because no two businesses in California can share the same name.

To do this, use the Secretary of State’s Business Entity Search tool to compare your business name with existing ones in California. 

Make sure your LLC name is unique by following California’s naming rules to increase the chances of your LLC name being approved.

If you need, you can reserve the name for your LLC for up to 60 days. The cost is $10.

2. Appoint Registered Agent 

In California, you need to choose a registered agent for your LLC (also referred to as an “agent for service of process”). This is the person or company allowed to get legal papers and important notices on behalf of your LLC.

Your registered agent can be a person, like yourself or one of your employees, or a company that offers this service.

The registered agent has to meet some requirements:

• If it is a company, it must offer registered agent services.
• The agent must have an address in California.
• The agent must be there in person and ready to get documents during regular business hours.

3. File California LLC Articles Of Organization

To officially establish your California LLC, you need to file the California LLC Articles of Organization. 

This document provides essential details about your LLC and serves as the official registration.

To prepare the certificate, gather the following information: your LLC name, the name and address of the registered agent, the purpose of your LLC business, and provide the effective date if different from the filing date. 

The form is a straightforward online submission or can be sent by mail.

The California LLC Articles of Organization filing fee is $70 if filed online. 

Once filed, the California Secretary of State will review the document, and upon approval, your LLC attains legal business entity status. 

You can undertake this process independently using our step-by-step guide or opt for the convenience of hiring a company for assistance.

4. File Initial LLC Statement Of Information

After your LLC filing is approved by the California Secretary of State, you must submit an initial Statement of Information within 90 days.

This same form is used for updating your registered agent or principal office, and it needs to be filed every two years thereafter. The filing fee for this statement is $20.

Additionally, in California, you are required to pay an annual LLC Franchise Tax for the privilege of conducting business in the state.

5. Create An Operating Agreement 

An operating agreement is a document that shows how your LLC will do business. 

While California doesn’t make it a must, having one is crucial. It helps in different ways, like resolving money disputes or potential legal issues. Without it, the courts decide based on state laws, not necessarily what’s best for the LLC.

The agreement can include things like the LLC’s name, address, how long it will last, the registered agent’s details, info from the articles of organization, the business’s purpose, member contributions, how profits and losses are shared, rules for new and leaving members, how the LLC is managed, and clauses about protection and responsibility.

6. Obtain Employer Identification Number (EIN)

The Internal Revenue Service (IRS) gives your LLC a nine-digit number called an Employer Identification Number (EIN) to identify it for taxes. You can get your EIN by mail or online through the IRS.

This number helps you:

• File and handle taxes at both the state and federal levels.
• Open a bank account for your business.
• Apply for permits and licenses.
• Hire employees.

Obtaining an EIN is FREE.

7. File The Beneficial Ownership Information Report

Starting in 2024, many California LLCs must submit a Beneficial Ownership Information (BOI) Report to the Financial Crimes Enforcement Network (FinCEN). 

This is a new rule, and the deadlines can be a bit confusing. For LLCs created in 2024, the report is due within 90 days of registering with the California Corporations Section. 

If your LLC was registered before 2024, you have until January 1, 2025. LLCs established in 2025 or later must file within 30 days of formation. 

The BOI Report requires details about the person who filed your Articles of Organization (your LLC organizer) and all individuals with at least 25% ownership or substantial control over your LLC’s operations and finances.

Read BOI FAQs here.

Review: What Is Needed To Form An LLC In California?

To form an LLC in California, you need:

• A unique LLC name.
• Articles of Organization
• Registered Agent information.
• Statement of Information.
• Operating Agreement (recommended).
• Employer Identification Number (EIN).

What Forms Do You Need To Get An LLC In California?

• Application to Reserve LLC Name
• Articles of Organization (online)
• Articles of Organization (PDF)
• Initial Statement of Information Form
• EIN Application Form
• BOI Form

How Much Does It Cost To Start An LLC In California?

The cost to start an LLC in California involves several steps, each with its own associated fees:

• Certificate Of Formation Filing Fee: $70
• Name Reservation Fee (if needed): $10
• The Statement of Information: $20 every 2 years

What Is The California Franchise Tax?

In California, LLCs need to pay a Franchise Tax annually. 

The California LLC Franchise Tax, required for doing business in the state, is an annual fee of at least $800.

Default tax status LLCs pay this flat fee, while LLCs taxed as corporations also have a minimum of $800. S-Corp status LLCs add 1.5% tax on net income, and C-Corp status LLCs add 8.84%. Due on the 15th day of the fourth month after filing, subsequent annual payments are typically on April 15th. An exception applies if the LLC’s tax year was 15 days or fewer without business activity.

What Is The California LLC Estimated Fee?

Additionally, there is the California Annual LLC fee, which applies if your LLC earns more than $250,000 annually.

The fee is a flat amount of $900, $2,500, $6,000, or $11,790, depending on your LLC’s income. This fee is due by the 15th day of the sixth month of the tax year, typically on June 15th.

How Long Does It Take For An LLC To Get Approved In California?

If you send your LLC application by mail, it will be approved in 7-10 business days, plus the time it takes for the mail (2-3 weeks in total).

However, if you file online, your LLC can be approved in 7-10 days.

What Are The Benefits Of Getting An LLC In California?

• Limited liability protection for members
• Pass-through taxation
• Flexible management structure
• Credibility for business transactions

Is California A Good State To Get An LLC?

Whether California is the right state for your LLC depends on where you live and do business. If you live or operate in California, it makes sense to start your LLC there. 

The state does impose an annual Franchise Tax of at least $800 on LLCs (plus LLC Fee), which can have a negative effect on small businesses. 

Getting An LLC In California: Next Steps

Once your LLC is registered, you can:

• Get the permits and licenses you need for your business, like health or zoning permits.
• Register your business with the state’s tax agency.
• Open a business bank account.
• Apply for a business credit card.
• Buy insurance for your business.
• Safeguard your name and logo with a trademark.

To maintain your LLC in California, you must:

• File biennial reports by the due date to keep the LLC in good standing.
• Update any changes to the registered agent or business address promptly.
• Pay annual Franchise Tax and LLC Fee.
• Pay Taxes (owners file their individual tax returns)

Conclusion

Forming an LLC in California involves a few key steps, from name reservation to obtaining an EIN. 

Carefully following the process ensures a smooth establishment of your LLC. 

For more detailed information and to access the necessary forms, visit the California Secretary of State website.