How to start an LLC in California: Your 2025 step-by-step guide

Starting a business is exciting, but you need to consider how to structure it for long-term success. In California, you can choose from a sole proprietorship, partnership, corporation, or LLC, each with its own legal, tax, and operational implications. The right structure can protect your assets, optimize taxes, and set your business up for growth, so it’s important to choose the one that best fits your goals.

LLCs are among California’s most commonly registered business structures, especially for small businesses. It is a structure that offers some important advantages. 

Jump to:

• Why choose an LLC in California?
• New business data in California in 2025
• 5 steps for creating an LLC in California
• Step 1: Choose a name for your California LLC
• Step 2: Choose a registered agent in California
• Step 3: Complete the Articles of Organization form and file your California LLC
• Step 4: Get an Employer Identification Number (EIN)
• Step 5: Ongoing compliance and required filings
• Types of LLCs to consider in California
• Costs of setting up an LLC in California
• LLC Taxes in California 
• Frequently asked questions

Why choose an LLC in California?

For California entrepreneurs, forming an LLC can be a smart choice. It’s a business structure that offers the liability protection of a corporation with the flexibility and tax advantages of a partnership. LLC members can shield personal assets while benefiting from pass-through taxation, meaning profits are taxed on their individual returns rather than at the corporate level. LLCs also generally have less paperwork and fewer compliance requirements compared to corporations. 

Whether you're launching a tech startup in San Francisco, a retail store in Los Angeles, or a boutique winery in Napa, an LLC provides a versatile and scalable business structure. This guide walks you through how to start an LLC in California, including costs, paperwork, tax considerations, and how tools like accounting software can support your operations. For an overview of starting any type of business, check out our guide on how to start a business in California.

New business data in California in 2025

California continues to be a powerhouse for business growth, ranking as the fifth-largest economy in the world. The state's rising population and record-high tourism spending contribute to its dominance in new business starts, venture capital funding, and key industries like manufacturing, high-tech, and agriculture. With a strong foundation for innovation and economic expansion, California remains the top destination for entrepreneurs and established companies alike.

A major driver of California’s economy is its tech industry, which boasts a workforce of over 1.5 million people—more than the next two highest-ranking states combined. The state leads in custom software services, tech manufacturing, and digital innovation, accounting for more than a quarter of the total U.S. tech industry’s economic impact. 

Small businesses also play a crucial role, making up 99% of all businesses in the state. With over 4.1 million small businesses, California surpasses every other state in sheer volume. Significant small business sectors include accommodation and food services, healthcare and social assistance, professional and technical services, construction, retail, and manufacturing, making the state a diverse and dynamic environment for entrepreneurs.

5 steps for creating an LLC in California

Once you’ve decided to start an LLC in California, it’s time to nail down the details. You’ll need to choose a unique business name, find a registered agent, file necessary documents, and secure an EIN. The next sections explain each step to make establishing your new venture simple and straightforward.

Step 1: Choose a name for your California LLC

Your LLC's name serves as its official legal identity. Choosing your business name requires more than just creative genius. The California Secretary of State (SOS) provides specific naming guidelines and requirements to follow.

California LLC naming rules 

Here are some of the guidelines you must follow when naming your California business:

Name distinguishability

• The chosen name must be distinguishable from existing business entities of the same type registered with the California Secretary of State.
• Names that are too similar to existing ones may be rejected to prevent public confusion.

Character requirements

• Use only the English alphabet and standard Arabic numerals (0-9).
• Roman numerals are not permitted to differentiate your LLC from existing entities. For instance, if "Seven Sisters LLC" is registered, "VII Sisters LLC" would not be acceptable.

Prohibited terms

• Avoid words suggesting a governmental affiliation, such as:
• Federal
• Municipal
• Agency
• Commission
• Bureau
• Board
• Refrain from using terms that could mislead the public or imply an association with insurance or banking institutions, like "Corp," "Bank," "Trust," "Assurance," or "Surety."

Required designators

• Your business name must include an appropriate designator indicating its limited liability status. Acceptable variations include:
• Limited Liability Company
• LLC
• L.L.C.
• Ltd. Liability Co.

For a comprehensive understanding of naming regulations, refer to the California Code of Regulations.

Check for name availability

Once you’ve chosen a name for your new business, you must ensure that no other company is already using it. Use the California Secretary of State's Business Search tool to verify if your desired business name is already in use. 

Be aware that subtle variations in business names may not be sufficient to make them legally distinct. The state applies strict criteria when determining name uniqueness. The following differences do not make names distinguishable:

• Suffixes (e.g., Inc., LLC, Co.). For example, ABC, Co. and ABC, LLC are not considered different.
• Articles (e.g., the, a, an)
• Interchanging "and" with "&"
• Substituting numbers for words (five vs. 5) 
• Modifying punctuation, spacing, letter case, and typeface 

When searching for name availability, focus on your preferred core name without these variations.

Reserve your LLC name

If your search determines that your business name of choice is available, you may want to reserve it as you prepare for your LLC filing. You can submit your reservation request online or print the form and send it by mail. There is a $10 fee. 

If you’re a Sacramento or Los Angeles resident, you can deliver it in person to the Secretary of State offices, but you must pay an additional $10. 

Keep in mind that a name reservation does not establish your LLC; it simply reserves your desired name for 60 days. 

Step 2: Choose an agent for service of process in California

California law mandates that you designate an agent for service of process. This agent is the official recipient of legal documents on behalf of your LLC.

Who needs an agent for service of process?

• All California LLCs are required to appoint an agent for service of process.
• Foreign LLCs registering in California must also designate an agent for service of process, even if they have an agent in their home state.

Who can be an agent for service of process?

• Individual: A person residing in California with a physical street address (P.O. boxes are not acceptable) who is available during standard business hours to receive legal documents.
• Registered corporate agent: A registered 1505 corporate agent, designated to accept court papers.

Note that a business entity cannot act as its own agent for service of process.

Choosing a professional corporate agent

If you opt to hire a professional corporate agent, here are some tips for finding the right one.

Research and compare

Be sure to research different providers and compare factors such as:

• Cost: Fees typically start around $50 per year.
• Reputation: Choose a reputable company with a proven track record.
• Customer support: Ensure they provide excellent customer service and support.
• Knowledge: Select a provider with a strong understanding of California-specific compliance requirements to ensure your business stays in good standing.
• Coverage: For businesses operating in multiple states, choose a provider that offers services across all the states where you plan to operate.

Consider bundled services

If you're using a company formation service or an attorney to set up your LLC, they may offer corporate agent services as part of a package.

Step 3: Complete the Articles of Organization form and file your California LLC

Once you’ve decided on your name and your registered agent, the next step is to fill out the Articles of Organization form.

What is an Articles of Organization?

The Articles of Organization is a legal document submitted to California to officially form a limited liability company. It includes essential details such as your business name, address, members, purpose, and management structure. This document serves as the foundation for your LLC's legal operation within the state. 

In California, the Articles of Organization form is filed with the California Secretary of State. The fee to file a new California Articles of Organization is $70. 

You have three options for obtaining and submitting the form:

Option 1: Online

The fastest and most convenient way to submit the Articles of Organization form is through the California Secretary of State’s online portal, bizfile Online. 

Option 2: Mail-in filing

You can also file an LLC in California by mail. Download and complete the Articles of Organization (Form LLC-1) from the Secretary of State's website and mail it with the $70 filing fee to: 

Secretary of State Business Programs Division 

Business Entities 

P.O. Box 944260

Sacramento, CA 94244-2600

Option 3: In-person filing 

If you prefer, you may hand-deliver Form LLC-1 to Secretary of State Business Programs Division Business Entities, 1500 11th Street, Sacramento, CA 95814. There is an additional $15 special handling fee for in-person filings.

How long does it take for an LLC to get approved in California?

LLC form submissions are reviewed in the date order of receipt, with online submissions given priority.

Visit the California Secretary of State website for updated processing time information.

If you are not a California resident

To conduct business in California as a non-resident and establish a foreign (out-of-state) LLC, follow these steps:

1. Designate an agent for service of process: Appoint a qualified agent for service of process to receive legal documents on behalf of your LLC.
2. Ensure compliance with naming rules: Your LLC's name must be distinguishable from existing entities registered in California. Before registering, conduct a name availability search through the California Secretary of State's online portal to confirm your desired name is unique.
3. Obtain a Certificate of Good Standing: Provide a Certificate of Status (equivalent to a Certificate of Good Standing) from your LLC's home state, issued within the last 60 days. This will need to accompany your California LLC registration.
4. Complete the application for registration: Fill out the "Registration – Out-of-State LLC" form, available online through the California Secretary of State's bizfile portal. 
5. File the application with the applicable filing fee: Submit your completed application and accompanying documents to the California Secretary of State. Online filing is recommended for faster processing, but mail-in options are also available. The current filing fee for registering a foreign LLC in California is $70.

For more detailed information on registering a foreign LLC in California, visit the California Secretary of State's website.

What to include in your LLC's Articles of Organization form

Completing the Articles of Organization form is a fairly simple process since not much information is required. You will be asked to provide:

• The name of your LLC
• The purpose of your LLC, a brief description of your business
• The address of the LLC in California (must be a street address, not a P.O. box)
• The name and address of your agent for service of process
• Management structure
• Your signature

Step 4: Get an Employer Identification Number (EIN)

You’ll likely need an Employer Identification Number (EIN) from the Internal Revenue Service to form an LLC in California. An EIN is a nine-digit number that identifies a business for tax purposes, similar to a Social Security Number for your company.

According to the IRS, you need an EIN if any of the following apply:

1. You have employees.
2. Your business operates as a corporation or partnership.
3. You file employment, excise, or alcohol, tobacco, and firearms tax returns.
4. You withhold taxes on income, other than wages, paid to a non-resident alien.
5. You have a Keogh plan (a tax-deferred pension plan).
6. You are involved with certain types of organizations, including trusts, estates, real estate mortgage investment conduits, non-profit organizations, farmers' cooperatives, or plan administrators.

Single-member LLC considerations

If you’re a single-member LLC, you may not be required to obtain an EIN. However, getting one is still a smart idea, as your business needs might change over time, and obtaining an EIN is free.

An EIN becomes mandatory if your LLC elects to be taxed as a corporation, hires employees, or files excise or employment tax returns.

Having an EIN also simplifies opening a business bank account and protects your personal Social Security Number, reducing the risk of identity theft.

Requesting an EIN

You can request an EIN by mail or phone, but the fastest method is completing the process online on the IRS website. After obtaining an EIN, use accounting software to track business expenses and ensure your company’s finances remain separate from your personal finances. 

Step 5: Ongoing compliance and required filings 

Getting your LLC certificate is the first step of the business compliance journey. To continue doing business, you must adhere to the state and federal laws and regulations to keep your LLC compliant, which include:

• Statement of Information
• Requirement: All California and foreign LLCs must file an initial Statement of Information (Form LLC-12) within 90 days of filing the Articles of Organization. After that, an updated Statement of Information is required every two years.
• Purpose: This filing keeps the state updated on your LLC’s business address, management, and agent for service of process, ensuring compliance with California regulations.
• What to include in your Statement of Information:
• Your chosen LLC name, which is subject to approval by the state
• The physical address of your main office and your mailing address, if different
• The name and address of your California agent for service of process
• Whether your LLC will be managed by a single owner, multiple managers, or all limited liability company members
• Business purpose, which is already filled in
• Signature of the person submitting the form
• How to file: Submit Form LLC-12 online through the California Secretary of State’s bizfile portal.
• Fee: The initial and biennial filing fee is $20.
• Operating agreement
• Requirement: While not filed with the state, California requires LLCs to maintain an operating agreement to document ownership and management structure.
• Purpose: Establishes clear rules, roles, and responsibilities for LLC members, helping to prevent disputes and ensure smooth operations.
• Why you need it: An operating agreement can provide legal protection, clarify decision-making processes, and may be required by banks or lenders when opening a business account.
• How to create it: LLC members draft and agree upon the document. It should be kept with business records for internal reference.
• Beneficial Ownership Information Report
• Filing Requirement: As of January 1, 2025, all California LLCs must file an annual Beneficial Ownership Information Report to the U.S. Department of the Treasury within 30 days of forming an LLC.
• Purpose: This report helps prevent money laundering and other financial crimes by identifying the true owners of the LLC.
• Who needs to file: All LLCs formed in 2024 or later are required to file.
• How to file: File the report online through the U.S. Treasury Financial Crimes Enforcement Network website.
• Fees: There is no filing fee.
• Business licenses and permits
• Requirement: Depending on your industry and location, specific licenses or permits may be necessary to operate legally in California.
• Examples:
• Professional services
• Food and beverage establishments
• Construction firms
• Plumbing and gas fitting services
• Verification: Utilize the CalGold database to identify the necessary permits and licenses for your business type and location. 
• State tax registration
• Requirement: If your LLC will collect state taxes, such as sales tax, you must register with the California Department of Tax and Fee Administration (CDTFA).
• Tax determination: The CDTFA offers resources to help you identify applicable taxes for your business.
• Registration methods: Register online through the CDTFA's Online Services portal or contact their customer service at 800-400-7115 for assistance.

California LLC Return of Income (Form 568)

• Requirement: All California LLCs must file Form 568, Limited Liability Company Return of Income, annually with the Franchise Tax Board (FTB).
• Purpose. To report income, deductions, and other financial details.
• Who must file:
• Single-member LLCs (if taxed as a disregarded entity)
• Multi-member LLCs (if taxed as a partnership)
• LLCs electing to be taxed as a corporation must file Form 100 or Form 100S instead.
• How to file: Submit Form 568 electronically via the FTB's website, or print and send a completed Form 568 to the Franchise Tax Board.
• Annual LLC fee
• Requirement: LLCs with a total income of $250,000 or more from California sources must pay an additional annual fee.
• Due date: The fee is due by the 15th day of the sixth month of the current tax year.
• Current fee structure:
• $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 
• Payment method: Use Form 3536, Estimated Fee for LLCs, to remit your payment.
• Purchase insurance
• Requirement: Depending on your business operations, specific insurance coverage may be necessary, such as:
• Workers’ compensation insurance
• Commercial auto insurance
• Liability insurance
• Information: Consult an insurance specialist or attorney for guidance on required insurance types and coverage options.
• Certificate of Status (Optional)
• Requirement: While not always legally required, obtaining a Certificate of Status can be beneficial.
• Purpose: It verifies that your LLC is in good standing with the state of California.
• Why you may need it: To open a business bank account, obtain certain licenses, or apply for credit card processing.
• How to obtain it: Request it through bizfile Online.
• Fee: Currently, it is $5 per copy.

Types of LLCs to consider in California 

When establishing an LLC in California, it's important to understand the different types available to determine which best suits your business needs.

Single-member LLC

A single-member LLC is owned by one individual or entity, offering liability protection similar to that of a corporation while providing simplified management and taxation. In California, single-member LLCs are typically treated as disregarded entities for tax purposes, meaning the business's income and expenses are reported on the owner's personal tax return. However, a single-member LLC must still file the Limited Liability Company Return of Income (Form 568) and pay applicable LLC taxes and fees.

Multi-member LLC

A multi-member LLC is comprised of two or more members. This LLC structure provides flexibility in management and profit distribution. In California, unless the LLC elects to be taxed as a corporation, it is treated as a partnership for tax purposes, with income and losses passing through to the members' personal tax returns.

Manager-managed LLC

In a manager-managed LLC, members designate one or more managers to oversee daily operations, allowing non-managing members to assume passive roles. This structure is beneficial when certain members prefer to invest without participating in day-to-day management.

Member-managed LLC

A member-managed LLC involves all members actively participating in the company's management and decision-making processes. This is the default management structure in California unless otherwise specified in the Articles of Organization or operating agreement.

Costs of setting up an LLC in California

Setting up a limited liability company in California involves several fees: 

• A $70 one-time fee to file your Articles of Organization
• Statement of Information fee of $20
• Agent for service of process fees, if applicable, which typically start at $50 a year
• Every LLC operating in California is required to pay an annual franchise tax of $800
• If your LLC's total income exceeds $250,000, a fee ranging from $900 to $11,790 is assessed, depending on your total income

Other costs you may have to cover include late fees if you file any required paperwork after its due date and license or permit fees if your business operates in a regulated industry.

Open a California LLC business bank account

Establishing a separate business bank account is important for maintaining the liability protection afforded by your California LLC. Combining personal and business finances can jeopardize this protection. A dedicated business account not only preserves this separation but also offers additional benefits:

• Simplified tax preparation: Having distinct accounts streamlines the process of tracking business expenses and income, making tax filing more straightforward.
• Professionalism: Clients and vendors can make payments to a business account, enhancing your company's credibility.

What you'll need 

When opening a business bank account, you’ll typically need:

• Your EIN 
• A copy of your Articles of Organization
• (Possibly) an operating agreement and Certificate of Status
• Personal identification

Out-of-state residents should consider choosing a bank with a presence in the state.

After opening your bank account, use QuickBooks accounting software to track and manage your finances. 

LLC Taxes in California

LLCs in California are subject to specific tax classifications and obligations at both the federal and state levels.

Federal tax classification

In alignment with federal guidelines, California LLCs can choose their tax classification:

• Single-member LLCs: Automatically treated as disregarded entities, with income and expenses reported on the owner's personal tax return.
• Multi-member LLCs: Default to partnership taxation, requiring the filing of Form 1065 with the IRS.
• Election as a corporation: LLCs can opt to be taxed as a C corporation or S corporation by filing the appropriate forms with the IRS.

State taxes

California imposes several state-specific taxes on LLCs:

Annual franchise tax

All LLCs must pay an annual franchise tax of $800. The tax is due by the 15th day of the fourth month after the beginning of the tax year. Use Form 3522, Limited Liability Company Tax Voucher, to submit your payment.

Gross receipts fee

LLCs with a total income over $250,000 are subject to an additional fee, calculated based on the total income derived from or attributable to California. The fee structure is as follows:

• $250,000 to $499,999: $900
• $500,000 to $999,999: $2,500
• $1,000,000 to $4,999,999: $6,000
• $5,000,000 and above: $11,790

This fee is due by the 15th day of the 6th month of the current tax year.

State income tax

California imposes a state income tax on personal income, which affects LLC members differently based on the entity's tax classification:

Pass-through entities

For LLCs classified as pass-through entities, such as sole proprietorships, partnerships, or S corporations, profits are reported on the individual tax returns of the members. This means they are then subject to California's personal income tax rates, which, as of 2025, range from 1% to 13.3%, depending on taxable income levels. For taxable incomes exceeding $1,000,000, there is an additional 1% Behavioral Health Services Tax.

Corporations

LLCs that elect to be taxed as corporations are subject to California’s corporate income tax. As of 2025, the corporate income tax rates are:

• C Corporations: 8.84% of net income
• S Corporations: 1.5% of net income

Visit the Franchise Tax Board website for more information on tax rates by entity. 

Sales and use tax

LLCs selling tangible personal property or certain taxable services are required to collect sales tax from customers. The statewide base sales tax rate is 7.25%, but local jurisdictions may impose additional rates. 

Employment taxes

LLCs with employees are responsible for withholding state income tax from wages and paying unemployment insurance (UI) tax, among other employment-related taxes. For 2025, UI tax rates range from 1.5% to 6.2% on the first $7,000 of each employee's wages. New employers typically start with a rate of 3.4%.

Register with the California Employment Development Department (EDD) to manage these obligations.

California-related resources

• California Secretary of State (SOS): The Secretary of State oversees LLC formation and business entity filings. LLC owners must file Articles of Organization and submit required reports through this office.
• California Employment Development Department (EDD): This department manages employer payroll taxes, including unemployment insurance (UI), disability insurance (SDI), and state income tax withholding for businesses with employees. 
• California Franchise Tax Board (FTB): The FTB administers LLC taxes, including the $800 annual franchise tax and gross receipts fees. LLCs must file tax returns and comply with state tax laws through this agency.
• California Small Business Development Center (SBDC): The SBDC provides free business advising, training, and resources to help new LLC owners with business planning, funding, and growth strategies. There are centers throughout the state.

Federal-related resources 

• Small Business Administration (SBA): The SBA supports small businesses through various loan programs, provides resources for government contracting, and offers counseling and training programs to help entrepreneurs start and grow their businesses.
• Internal Revenue Service (IRS): The IRS provides essential information for LLCs, including tax classifications, employer identification numbers (EINs), and filing requirements. Its Small Business and Self-Employed Tax Center offers guidance on tax obligations specific to LLCs.
• U.S. Patent and Trademark Office (USPTO): For businesses looking to protect their intellectual property, the USPTO provides resources on how to apply for patents and register trademarks, which can be essential for safeguarding your unique products or services.
• U.S. Department of Labor (DOL): The DOL's website offers information on federal labor laws, workplace safety regulations, and employee benefits that LLC owners need to consider when hiring staff.

Disclaimer: 

This content is for information purposes only and information provided should not be considered legal, accounting or tax advice or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. cannot warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.