Start your business
A limited liability company (LLC) is a smart and easy way to give your business security. An LLC can protect your personal assets, give you a lot of flexibility in how you run your business, and identify your company with the state of California.
Better yet, your California Limited Liability Company is a way to add some weight behind your business idea. If you’ve dreamed of starting a business or have a new idea for the next big thing, an LLC is a quick way to add legitimacy to your entrepreneurial idea.
As a new or upcoming business owner, you should consider starting a California LLC. But don’t worry — it’s a simple process that comes with many perks.
1Name Your California LLC
Appoint a Registered Agent in California
In the state of California, you’ll need to file paperwork that helps put your business on the map.
However, you’ll first choose a name and check that it has not already been registered to another business owner. You will also ensure it follows all state guidelines; California LLC names cannot include words that might mislead the public or are considered to be vulgar.
Next, you’ll appoint a registered agent and fill out paperwork, such as the Certificate of Formation and Statement of Information. These files tell the state of California basic information about your company, such as who’s involved, where you’re located, and what type of business you’re in. Filing these forms will allow you to move forward with your new company. California also requires you to create an Operating Agreement, which details how your company will be run.
Finally, you’ll get set up with the IRS and apply for any licenses or insurance policies that are required by your industry.
This article outlines each step in an easy-to-follow guide so that you can find the best way to move forward with your LLC.
Naming your California LLC is the first step to starting your business. A name essentially signifies the birth of your brand; it’s important to make a great choice.
The words “Limited Liability Company” or the abbreviations “L.L.C.” or “LLC” must be included in your formal name. You may also abbreviate “Limited” to “Ltd.” and “Company” to “Co.”
Start by reading up on the state’s naming guidelines to ensure you’re following all the rules. Aside from avoiding profanities and not using an already registered moniker (check sections “deceptively similar and substantially the same as”), you’ll have to avoid names that could mislead the public. Most notably, this refers to names that could make your brand sound like a government-run entity. Words like “police,” “county,” and “state” will be off-limits.
If you’re still struggling with coming up with a unique and appropriate LLC name, see this ZenBusiness article for some guidance.
You will also want to check to ensure that your desired name hasn’t already been taken in the state of California. This is done on the Secretary of State’s website. If you find that your name is available but you’re not yet ready to file your Articles of Organization with the state of California, you can reserve it. Claim your LLC name for up to 60 days by filling out a Name Reservation Request form. This sense of security can be yours for $10. If you drop off the form in person, there’s an additional $10 filing fee.
When mailing in the name reservation form, you must also include a self-addressed and stamped envelope for your return paperwork.
Mail your paperwork to:
Secretary of State
Name Availability Unit
1500 11th Street, 3rd Floor
Sacramento, CA 95814
Only one name can be reserved per form; however, you can list three names in order of choice. This allows you to opt for a different name if your first choice has been taken already, with up to three names on a form. If all three are reserved, you will have to choose a different name. Or, you can wait 60 days to see if any of these names expire. If the previous reserver doesn’t file within 60 days, it’ll be open for grabs again.
California also has the option to check on business name availability by phone. This option is helpful for people who want to check frequently to see if their choice is up for grabs. If you check on California LLC names frequently, you may want to set up a prepaid phone account, which requires a minimum $100 deposit. If you determine how often you’ll use the Priority Telephone Service, you may require a larger deposit.
Once the account is up and running, you can call to check name availability. There is a $4 fee withdrawn from your account for each search by phone. Name reservations via phone are still $10 and will be withdrawn from your deposit.
To set up your prepaid phone account, you can call the California Secretary of State at (916) 653-1233 or email your request to the state’s Fiscal Office with this form.
Skip the paperwork and leave the headache to ZenBusiness instead. For $50 plus state fees, we’ll handle the name reservation paperwork for you. All you have to do is provide the information, and you can rest assured your name will be reserved with the right paperwork in place.
Next, consider a trademark or DBA name. Some businesses use a DBA — or “doing business as” — name when they are registered under a different moniker. There are many reasons a company will use a DBA name, such as introducing a new product line. They are not necessary but can be helpful if you want to avoid re-establishing your company with the state of California.
In California, DBA names are referred to as fictitious names and must be filed in the county where your business is located. You’ll need to get the necessary forms from your county clerk.
Registering a trademark in California can protect your business or DBA from being used by others in the state. A brand logo or company name trademark can be beneficial to your business, even as a new LLC. Placing a trademark on your name or brand’s design helps keep it from being copied or stolen by existing or upcoming businesses. It protects your intellectual property and provides you with standing ground in the event of copyright infringement.
When starting your California LLC, intellectual property includes things like:
Holding a trademark means that you “own” the right to use certain words or designs, and others are infringing on that ownership if they copy or repeat your work. Likewise, it means that another business cannot have the same name as your own.
You can learn more about California’s guidelines on the state website. Regardless of whether you want to apply for your own trademark, it’s wise to search the California trademark database to make sure your desired business name hasn’t already been trademarked in the state.
By the same token, you’ll want to check the U.S. Patent and Trademark Office (USPTO) database to make sure your name hasn’t been federally trademarked. If it is available, you can apply to register it on the USPTO website; however, please keep in mind that this process is not immediate but can provide broader protection if you plan on doing business outside of California.
In the state of California, you can file to register a trademark with a fee of $70. You can fill out the request for a trademark online, by mail, or in person. Online and in-person drop-offs are marked with the time and date that they were received, while mailed submissions are marked at 5 p.m. of the day they were delivered.
Mail your trademark registration to:
Secretary of State
P.O. Box 942870
Sacramento, CA 94277
Once approved, you will receive a free copy. Certified copies can be requested for $5 each. Trademarks can be modified or forfeited with the same form for a fee of $30 and $5 for a certified copy.
With your trademark application, you will need to communicate if you applied for a federal trademark and why it was refused at the federal level, if applicable. It is recommended to include a Declaration of Accuracy (example) that all information has been checked to be true. This inclusion is voluntary but could speed up the approval process for your form. In addition, an inaccurate statement is subject to a civil penalty of up to $10,000 that will be enforced by a California public prosecutor.
Learn more about trademarks on ZenBusiness’s trademark vs. copyright page. Another helpful step in naming your brand is securing a website domain that will help potential customers find you online. You can conduct a quick online domain search and then have ZenBusiness register that domain for you.
For help naming your business and other filing services, look to ZenBusiness’s online services. With a range of affordable options, we can help you with the paperwork to set up your business, which gives you time to focus on actually growing your company. Consider these comprehensive options to get your brand up and running.
Now, it’s time to get down to the nitty-gritty. You’ll need a key piece to file with the state of California to show them that you mean business: the Articles of Organization. This form explains things such as who’s involved in your LLC and their contact information. It is a legal requirement for operating an upstanding business in the state of California.
California separates the above information into two forms, which is different from how many states request LLC filings. If you already own an LLC in another state or have previously opened an LLC outside of California, note this change. The second form, your Statement of Information, will be covered in the next step.
Secretary of State
Business Entities Filings
P.O. Box 944260
Sacramento, CA 94244-2600
The Articles of Organization should include:
Your business name and address
Your registered agent’s name and information
Whether your LLC will be manager-managed or member-managed
Signature of the organizer
Most LLCs elect to be member-managed, meaning the members (owners) all share in the running and managing of the business. In a manager-managed LLC, the members appoint one or more managers to manage the company. These appointees can be certain members of the LLC or someone hired from outside the ownership.
The filing fee is $70, with an added $15 fee when submitting paperwork in person. All in-person filings are considered to be expedited and will be processed faster than online or mail submissions. There are additional fees associated with in-person filings, as outlined below.
Choose to have your paperwork precleared and/or expedited to hit a specific timeline. Next-day approval services are available. This paperwork needs to be mailed or dropped off in person to the Sacramento office public counter. These services are not available at the Los Angeles Secretary of State location.
Prepare your upcoming California LLC with applicable forms for preclearance and expedited services, respectively.
Preclearance services: “Provide a customer with the option to submit a business entity document in person to the Secretary of State’s Sacramento office prior to filing to determine if the document conforms to law and to receive a preclearance response within a guaranteed time frame.”
Expedited filing services: “Provide a customer with the opportunity to submit for filing a business entity document in person to the Secretary of State’s Sacramento office and to receive a filing confirmation or filing response within a guaranteed time frame.”
These timelines are guaranteed and begin at the time that the paperwork is received; for example, if you file the 24-hour preclearance form Tuesday at noon, your preclearance will begin Wednesday at noon.
24-hour preclearance, Class I: $500
72-hour preclearance, Class II: $400
5-day preclearance, Class III: $300
10-day preclearance, Class IV: $250
4-hour expedited filing, Class A: $500 (document has to be precleared and approved to be eligible)
Same-day expedited filing, Class B: $750 (document must be received by 9:30 a.m. for guaranteed filing by 4 p.m. for that same business day)
24-hour expedited filing: Class C: $350
All expedited paperwork must include:
The file you’re submitting. The file needs to be signed by all involved parties. This will be personally delivered to the Secretary of State’s office in Sacramento. Digital signatures are not viable or accepted by the state on paper copies.
A copy of your preclearance response
Your complete filing fee
The complete expedited fee (this will need to be a separate check and will be deposited even if your request is rejected)
A note and/or instructions on your requested class, as well as specific filing date, if applicable
Notification on filing response (how do you want to be notified?)
The name and phone number for a point of contact
Filing your Articles of Organization can be done on a quick schedule, as long as the proper protocol is followed. Consider this option if you are in need of a quick turnaround turn or have hard dates for opening your LLC.
The Articles of Organization are usually approved within seven business days without expedited or preclearance services.
Next, you’ll submit the initial Statement of Information. This is the second part of the initial paperwork in starting your LLC in the Golden State. Remember, this step is in addition to what is required in most states to form your LLC.
Your Statement of Information has to be filed within 90 days of filing the Articles of Organization to retain your LLC name and status with the state.
You can also mail the form to:
Secretary of State
Statement of Information Unit
P.O. Box 944230
Sacramento, CA 94244-2300
Because each entity can be updated on the California Secretary of State website, it’s important that you are dealing with your own LLC. Accidentally modifying the wrong business can lead to prosecution by the state.
Finally, when filing your Statement of Information, remember that this information will be open for public record. Determine if you want your personal information to be viewed by others or if you prefer to maintain your privacy. Using an outside service as your registered agent like ZenBusiness can help prevent your personal information from going public.
When filing outside of the required filing period, there is no fee associated with the paperwork, for instance, if you update your Statement of Information or resubmit it with the Secretary of State’s office. Your Statement of Information will need to be renewed every two years, as long as you continue to operate and remain in business. When refiling within your intended time slot, the fee is $20 for renewal on all California LLCs.
If you have more than one member within your LLC, you’ll need to add an attachment to the Statement of Information. This is added to the original paperwork with no additional charge.
According to the state of California’s business website, there is a large portion of applications that cannot be processed due to typographical errors, issues with their business name, or omitted items in the applicant’s Articles of Organization. To avoid these errors, which could potentially slow down or halt your LLC completion process, check out these tips provided by the state.
Name reservations. As mentioned earlier, check to ensure that your business name has not already been registered. A name that has already been used will cause your application to be denied and force you to start the process over, only with a new name. Check your preferred business name before filing so that this simple mistake won’t slow you down.
Electronic signatures. The state of California has very clear guidelines as to what constitutes a legal digital signature. While typing in your name physically into a computer or other electronic device is accepted, there also needs to be paperwork advising that this type of signature can be used and that all parties are signing digitally. In addition, the state website advises: “Electronic signatures on filings submitted through the Secretary of State’s online process are the only electronic signatures that are acceptable for filings with the Secretary of State. Computer-generated signatures or fonts made to look like a signature printed on paper filings are not acceptable.”
This also means you cannot digitally sign paperwork and print it for expedited filing. When using paper copies of LLC forms, all paperwork should be signed in person. Keep this in mind when multiple signatures are needed, especially when dealing with members who live far apart. Paper copies are only accepted at the state’s Sacramento office. These can be mailed if you are not local or within driving distance from the Secretary of State location.
Much like the bylaws required by corporations, operating agreements outline the rules and operating procedures for the management of the LLC. Information like whether members have the right to admit additional members, an explanation of the terms and conditions, and the circumstances, if any, under which the cessation of membership of one or more members will result in the LLC’s dissolution should be included.
Aside from just being a legal requirement in California, the Operating Agreement is a great resource to look back on in a time of need. Keep it on file and update it as your business changes.
LLC Operating Agreements are not required by most states. However, as California requires this document, you can’t be in good standing without it for your LLC.
Your company can benefit from an Operating Agreement for many reasons:
It helps uphold the limited liability aspect of your limited liability company in the eyes of the court if it’s ever questioned.
It can settle disagreements between LLC members.
It helps structure business ownership.
It proves legitimacy with financial institutions, the state, and the federal government.
Even single-member LLC businesses need this document.
However, even though an Operating Agreement is required by the state of California, you are not required to file it. It should be kept on hand with your company’s files so it can be referred to in times of need. For instance, if there’s a dispute between LLC members or a change in industry standards, the Operating Agreement will be looked upon for guidance.
Do you need help drafting an Operating Agreement? Don’t fret about what should or what shouldn’t be in your business’s Operating Agreement. ZenBusiness can help by providing a customizable Operating Agreement.
An Employer Identification Number (EIN) is considered your tax ID number for your LLC. Receiving an EIN is an easy but necessary process. Your EIN will identify your company to the IRS much like your social security number identifies you with the federal government. It will allow you to open a business bank account, and it’s required when hiring employees.
Get your California LLC’s EIN online through the IRS. With the online application, you’ll fill out your business information and any contact information for you, other LLC members, or your registered agent. This officially states your business intent with the state of California. You can also request paperwork and mail or fax in your information. Receiving an EIN is free, other than postage when mailing your papers.
Applying for your EIN takes only a few minutes. Once the paperwork has been completed, you’ll be assigned a unique number that’s specific to your business. You can begin using it immediately. When filing by mail, fax, or phone, users can wait an average of four weeks before they receive their EIN.
Alternatively, ZenBusiness can handle this process for you. To move forward and get your EIN today, let ZenBusiness help you through this painless process.
In the state of California, starting an LLC can have varying costs. Filing fees cost between $90 and $115, depending on if you file online or in person.
Operating Agreement for many reasons:
Filing your California LLC online or by mail: $90 (includes the Articles of Organization for $70, plus $20 for the Statement of Information)
Filing your California LLC in person: $105 (includes the Articles of Organization for $85 — $70, plus a $15 in-person drop-off fee — and $20 for the Statement of Information)
California LLCs that are filed in person are considered to be expedited over digital filings. If you need to file your business quickly, a hard paper file can speed up the process.
If you need to open your LLC in a pinch, this can be done at an added cost. Filing for expedited paperwork can cost up to $1,000 per form for same-day approval and filing. Same-day paperwork needs to be received by 9:30 a.m. to meet this requirement.
Let us take care of the unpleasant paperwork, allowing you to stay focused on your business’s future. With our business formation services, you won’t have to worry about mailing in documents: We’ll handle each step with the state and let you know when your LLC becomes official. Our work is quick and affordable, saving you a lot of headaches at an extremely low price.
In the state of California, businesses must pay an annual franchise tax of $800. Under form 3522, business owners must file with the state and pay their annual fee, which is due four and a half months after your LLC has been approved. Even though it can take a month for filing to process, this counts as the first month.
These funds are due for all California LLCs, regardless of income or revenue that’s been collected throughout the year. The funds are due as long as the business is operational.
Businesses will owe the full amount per calendar year, no matter how many months they remained in business. For example, if you opened your California LLC in November, the franchise fee will be due Feb. 15 of the following year. (Because November counts as the first month, those fees will actually fall three and a half months after filing.)
Fees are due to all businesses still in operation with the state, even if they do not have an income for the calendar year. Dissolving the business is the only way to free your business of the California franchise fee.
However, businesses that are in their first year as an LLC and were open for fewer than 15 days do not need to pay the franchise tax fee. New LLCs who did not conduct business in the state are also exempt from this fee until the following calendar year.
From then on, your LLC will pay for the calendar year by April 15, or tax day, for that year. This payment will cover January to December of that year. Keep in mind that can mean two payments in short succession, depending on when the business LLC paperwork is filed.
Due to the nature of these payments, California is often busier filing LLC paperwork toward the beginning of the year. Keep in mind that it could take longer during this time to be approved and receive your paperwork.
Filing forms can also be post-dated, but not by more than 90 days. Therefore, if you open your California LLC toward the end of a calendar year, you could potentially save funds by waiting to file all necessary paperwork until after New Year.
Going forward, the annual franchise fee will always be due on April 15, eliminating the piggyback payments that can occur in your first year of filing.
This franchising fee is an additional fee that most states do not charge. It’s unclear why California charges this additional money to its LLC members.
Your Statement of Information will also need to be renewed every other year. This costs $20 per submission when filing within your intended due date.
Having your LLC in the state of California comes with many benefits. Aside from being your place of residence (for those who reside in the Golden State), it can be a thriving market. The benefits of forming a California LLC include:
Legal security and proper standing with the government
Limited personal liability
Better tax options
More business freedom, without more structure requirements
California is also an established state in the business community. There are many online resources available to LLC owners. In most cases, only legitimate businesses can access these programs.
If you are considering opening a business in any form, it’s a good idea to register your business so that you’re in good standing with the state. Opting to do this sooner, rather than later, could free you of any potential penalties. Officially forming your California LLC can also show you’re a serious business owner ready to take the necessary steps to create brand success.
Learn more about the benefits of the LLC business structure.
There is a wide variety of business taxes that your California LLC will need to pay. These include tax that’s payable to the California government, like California sales tax and California state tax. You will also need to pay federal, self-employment, and possibly payroll tax to the IRS, based on how much your LLC pulls in annually.
California LLC holders pay their own income taxes, while the business itself is exempt from federal taxes. Many business owners pay their taxes annually, while others opt to pay in quarterly estimates. In many states, there is a penalty if you do not pay in quarterly installments when making over a certain dollar amount. California’s taxes are among the highest in the country, up to 13.3%.
This number is based on your company’s income from the previous tax year. As the owner of an LLC, your business will not owe taxes other than the annual $800 fee. However, you will owe a corresponding amount on your income tax.
California income tax rates are as follows:
$0 — 1%
$8,809 — 2%
$20,883 — 4%
$32,960 — 6%
$45,753 — 8%
$57,834 — 9.3%
$295,373.00 — 10.3%
$354,445.00 — 11.3%
$590,742.00 — 12.3%
$1,000,000.00 — 13.3%
Due dates fall on the 15th of corresponding months, including January, April, June, and September. This means no taxes will be due from Sept. 15 until Jan. 15. But it can also mean that two payments will be due in April — the first for the current calendar year, and the fourth and final payment from the previous year. This is for all LLC members who pay quarterly federal and/or state taxes.
Take note that these dates are subject to change and could be pushed to later due dates. In extreme circumstances, the state has altered tax deadlines, such as the onset of the COVID-19 pandemic, when the first/fourth quarter tax due dates were pushed to July 15.
If your business makes or plans to make more than $250,000 per year, you will owe an additional franchise fee.
Businesses making $250,000-$499,999 owe $900 annually.
Businesses making $500,000-$999,999 owe $2,500 annually.
Businesses making $1,000,000-$4,999,999 owe $6,000 annually.
Businesses that make more than $5,000,000 owe $11,790 annually.
Franchise fees and subsequent tax estimates should be paid on time. Late or partial payments can be charged with late fees, penalties, and interest.
It’s a good idea to talk with an accountant or tax professional when looking at these options, so you can be sure you are filing under the right fit for your brand.
In general, it takes three to five business days to process your LLC in California. During the peak season, which lasts from December to January, this can take up to six to seven business days. Filing in person costs an additional $15 and can expedite the process by cutting out transit time in the mail. California also offers 24-hour expedited filing for a non-refundable $350 fee.
No. While the state of California requires the existence of an Operating Agreement before an LLC can exist or remain in good standing with the state, it’s not necessary to file it. You can write the paperwork manually or use a service like ZenBusiness, who will provide an Operating Agreement template.
Choose the best tax structure for your California LLC by looking at all of your options and talking to a tax professional. Corporations pay a flat tax on income, while LLCs do not pay their own tax but defer to the income of their members.
Deciding the right fit will take some math and evaluation, especially as profits grow for your business. This will be dependent on your income level, too. Businesses that pull in more than $250,000 are subject to additional fees that increase with higher profit margins.
For help determining the best tax structure for your California LLC, look to the help of ZenBusiness’s tax center.
California does not allow Series LLCs. A Series LLC is essentially a string of businesses that fall under a single structure. If you’re unsure about the status or type of LLC that your business will fall within, or if you’re moving your business from another country or state, it’s a good idea to talk with a skilled professional.
However, Series LLCs that were filed in another state can be transferred to California and are grandfathered into their system. This could be a viable option if moving states or considering doing more business in the state of California.
To open your LLC in California, you’ll need various licenses and permits. Each license will vary based on your particular industry, city, or county.
Some permits or licenses can include:
Occupational permits or licenses to practice or perform your business
Alcohol and/or tobacco permits
For example, construction companies must have a minimum of a $100,000 worker bond and $1 million in liability insurance.
You can find out more about what types of licenses your LLC might need in the state of California on their website. Nearly all California businesses will require a business license. These are issued at the local level rather than state, so you’ll need to check with your county or city government.
It’s your responsibility to research what federal, state, local, and/or industry-specific licensing your company requires, or hire someone to research these for you. Two valuable resources for searching for licenses and permits at the state and local level are CalGOLD (The Gold Standard For Permit Assistance) and the California Department of Consumer Affairs.
California law states that an LLC cannot be formed to provide any service that requires a professional state license. Most other states give these types of professionals the option to form a professional LLC (PLLC), but California does not. Check with the California Department of Consumer Affairs to confirm that any services your LLC would be providing do not fall into this category. If it does, you have the option to form a Limited Liability Partnership (LLP). Details can be found at the California Franchise Tax Board website.
The categorization for which professions can and cannot form an LLC can get complicated, so you may need to consult an attorney to find out what applies to your business.
To dissolve your LLC in California, you will need to file paperwork with the Secretary of State. Forms included are Certificate of Cancellation and Certificate of Dissolution
You will also need to send a notice to any creditors. Any business completed should still be filed with the IRS.
To remove a member from your LLC, you should first review the business’s Operating Agreement. The Operating Agreement should outline any steps that need to be taken to remove a member, such as notice, voting, or reallocating responsibilities.
Next, you will fill out an updated Statement of Information form that should be submitted to the Secretary of State. This form’s filing fee is $20 and will replace your previous Statement of Information.
Be sure to update all accounts or documents for the business with the new owner’s information so that there is a proper record for the California LLC.
Yes, California LLCs are allowed to file DBAs. A DBA name is a filing option that allows people or businesses to use a varied form of their name while conducting business.
To learn more about DBAs and why they can be beneficial for your California LLC, check out our blog.
Filing fees are considered normal business expenses and can be deducted from your state taxes. However, the annual franchise fee of $800 is not tax-deductible.
As you file each document that has a filing fee of at least $25, one uncertified copy will be returned without an additional charge. The copy can be certified upon request with a $5 fee due with your request. If you prefer more copies, you will need to fill out a separate request form, along with any and all funds that are due.
Copies cost $1 for the first page and $0.50 for each page thereafter. Certified copies cost $5 per form.
Forms that cost less than $25 to file will not come with a complimentary copy. Copies cost $1 for the first page and $0.50 for each page thereafter. Certified copies cost $5 per form.
If your forms have already been filed, you can request copies on the Business Entities Records Request page.
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