Form an LLC in California — Everything You Need to Know
A practical, no-nonsense guide to forming a limited liability company in California. We cover the actual requirements, real costs, and what nobody else tells you.
California LLC at a Glance
State Filing Fee
$70
Processing Time
15 business days
Annual Report Fee
$20 (biennial)
Franchise/Annual Tax
$800
State Income Tax
Yes (13.3%)
Member Disclosure
Public
California is Best For
California-Specific Requirements
- !$800 minimum annual franchise tax regardless of income
- !Statement of Information (Form LLC-12) due within 90 days of filing, then biennially
- !Additional LLC fee based on gross receipts ($900-$11,790)
- !Operating agreement legally required
Requirements to Form an LLC in California
Forming an LLC in California requires a few key things. Here is what you actually need — no unnecessary legal jargon:
- 1A unique business name. Your LLC name must be distinguishable from other entities registered in California. It must include "LLC," "L.L.C.," or "Limited Liability Company."
- 2A registered agent. Someone with a physical address in California who can receive legal documents on behalf of your LLC. You can be your own agent if you have an address in the state, or you can use a service like Sedes.
- 3Articles of Organization. This is the formation document you file with the Secretary of State along with the $70 filing fee. It includes your LLC name, registered agent, management type, and purpose.
- 4An operating agreement. California legally requires an operating agreement. It defines how your LLC is managed, how profits are split, and what happens if things go sideways.
- 5An EIN (Employer Identification Number). Your LLC's tax ID from the IRS. Free to obtain. Required for opening a business bank account, hiring employees, and filing taxes.
How Much Does It Cost?
| Item | Cost | Frequency |
|---|---|---|
| State Filing Fee | $70 | One-time |
| Annual Report | $20 (every 2 years) | Biennial |
| Franchise Tax (minimum) | $800/year | Annual |
| Expedited Processing (optional) | $350 | One-time (5 days) |
| Registered Agent Service | $49/year | Annual (with Sedes) |
| EIN | $0 | One-time (free from IRS) |
| First Year Total | $939 | with Sedes RA |
| Annual Ongoing Cost | $859/year | with Sedes RA |
Note: Minimum $800/year franchise tax regardless of income. Additional LLC fee for gross receipts over $250K: $900 at $250K-$499K, $2,500 at $500K-$999K, $6,000 at $1M-$4.99M, $11,790 at $5M+
State fees are paid directly to California. Sedes's formation service starts at $0 + state fees.
How Long Does It Take?
Standard Processing
15 business days
State filing fee only ($70)
Expedited Processing
5 business days
Additional $350 fee
Pros & Cons of a California LLC
Advantages
- +Low filing fee ($70)
- +Largest economy in the US with massive consumer base
- +Strong consumer protection laws
- +Well-established LLC statute
Disadvantages
- -$800 annual minimum franchise tax even with zero income
- -Additional LLC fee for gross receipts over $250K
- -Highest state income tax in the nation (up to 13.3%)
- -Statement of Information required within 90 days of filing
- -Members and managers are publicly listed
What You Should Know About California LLCs
California imposes an $800 minimum franchise tax on all LLCs, even those with no revenue. This makes it one of the most expensive states for LLC maintenance. New LLCs were exempt from the $800 franchise tax in their first year through 2023, but this exemption has expired.
Step-by-Step: How to Form an LLC in California
Choose your LLC name
Search the California Secretary of State business name database to make sure your desired name is available. Your name must include "LLC" or "Limited Liability Company" and must be distinguishable from existing entities.
Appoint a registered agent
Your registered agent must have a physical street address in California (no P.O. boxes). They receive legal documents and state correspondence on your behalf. Sedes includes registered agent service with all plans.
File your Articles of Organization
Submit your formation documents to the California Secretary of State along with the $70 filing fee. You can file online or by mail. With Sedes, we handle the filing for you.
Create an operating agreement
California legally requires an operating agreement. It defines how your LLC is managed, how profits are split, and what happens if a member leaves. Sedes generates a customized operating agreement as part of the formation process.
Get your EIN from the IRS
Apply for an Employer Identification Number (EIN) on the IRS website. It is free and takes about 5 minutes online. You need this to open a business bank account and file taxes.
Open a business bank account
This is critical. Keeping your personal and business finances separate is what makes your liability protection real. Without it, a court could 'pierce the corporate veil' and hold you personally liable.
Stay compliant
File your biennial report ($20), pay any required taxes, and keep your registered agent current. Sedes's compliance calendar tracks all of this automatically.
California Secretary of State — Online Filing
File directly with the state or let Sedes handle it for you.
Frequently Asked Questions
How much does it cost to form an LLC in California?
The state filing fee is $70. You will also pay $20 every 2 years for the annual report. There is a minimum franchise tax of $800/year. Your estimated first-year total is $890 (state fees only). With Sedes, the formation service itself starts at $0 — you only pay the state fees.
How long does it take to get an LLC in California?
Standard processing takes approximately 15 business days after filing. Expedited processing is available for $350 (5 business days). With Sedes, we prepare and submit your filing within hours, but the state processing time still applies.
Do I need a lawyer to form an LLC in California?
No. Millions of LLCs are formed every year without a lawyer. For straightforward single-member or partnership LLCs, a formation service like Sedes can handle everything. If you have complex ownership structures, significant assets to protect, or need specific tax planning, consulting a business attorney is a good idea.
Can I form a California LLC if I live in another state?
Yes. Anyone can form an LLC in California regardless of where they live. However, if you plan to do business in your home state, you will need to register your California LLC as a foreign LLC there, which means paying fees in both states. For most people, forming in their home state is simpler and cheaper.
What is the difference between member-managed and manager-managed?
In a member-managed LLC, all owners (members) participate in running the business and making decisions. In a manager-managed LLC, one or more designated managers handle operations while other members are passive investors. Most small LLCs choose member-managed.
Do I need an operating agreement?
Yes, California legally requires an operating agreement. An operating agreement defines how your LLC works, protects your personal liability, and prevents disputes. Banks often require it to open a business account.
Not sure if California is the right state for your LLC?
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