California LLC Formation Requirements

How to start an LLC in California

The following highlights some of the steps you need to take when forming a limited liability company (LLC) in California to help ensure your business is legally compliant and set up for success. Understanding these steps will help you navigate the process smoothly and establish a solid foundation for your business.

Step 1: Choose a name for your California LLC

Naming your business is an important step that needs to be considered carefully. There are many business and compliance requirements to weigh before making the final decision. California has very specific regulations when it comes to LLC names:

• Unique. The name of your LLC cannot be the same or too similar to an existing California business, and it can’t be misleading.
• Required words. The name of the LLC must end with "Limited Liability Company," "LLC", or "L.L.C." ("Limited" and "Company” may also be abbreviated to "Ltd." and "Co.")
• Prohibited words. A California LLC is prohibited from using certain words in its name such as “bank”, "trust", insurance company", "incorporated", “inc.”, "corporation", and “corp.”

Step 2: Determine management structure (member vs. manager)

One of the reasons you may have selected an LLC as your business type is the management structure. LLCs can have one of two management structures: member-managed, or manager-managed. (“Member” is the term used to describe an owner of an LLC.) The difference between the two comes down to the relationship between management and ownership:

• Member-managed. All members (owners) are active in the decision-making processes for day-to-day operations.
• Manager-managed. A designated manager(s) makes the day-to-day decisions for the LLC.

When starting your LLC, it is critical to understand how you plan to manage your business. Read our article LLC members vs. LLC managers for more information on LLC management structure.

Step 3: Select your California registered agent

A registered agent (also often referred to as agent for service of process) is a person or business you appoint to receive and forward important legal and tax information. California requires a registered agent at the time of formation and the business must maintain a registered agent throughout its existence.

If the registered agent is an individual, then they must reside in California and have a physical address (i.e., not a PO box). If you decide to use a professional business as your registered agent, then that agent must be registered or qualified with the California Secretary of State and have a current Corporate Registered Agent (1505) Application on file.

LLC member/manager information

The following are California’s requirements for the members/managers of LLCs:

• Minimum number. LLCs must have one or more members/managers.
• Residence requirements. California does not have a provision specifying where members/managers must reside.
• Age requirements. California does not have member/manager age requirements.
• Inclusion in the Articles of Organization. Member/manager names and addresses are not required to be listed in the Articles of Organization. However, member/manager information will need to be included in the Statement of Information filing.

California Articles of Organization requirements

Articles of Organization is the document for forming an LLC in California. The information required varies by state. California's requirements include:

• LLC name. The name of a California LLC must include "Limited Liability Company," "LLC", or "L.L.C." See "Step 1: Decide on a name for your California LLC" for additional rules.
• Management. Indicate if the LLC will be managed by one manager, more than one manager, or all LLC members (owners).
• Address. Provide the street address of the LLC’s designated office in California.
• Registered agent. LLCs must list the name and address of a registered agent (agent for service of process) with a physical address (no post office boxes) in California. The registered agent must be available during normal business hours to accept important legal and tax documents for the business.

What is a Statement of Information?

California requires LLCs to file a Statement of Information. This report provides the state with current information about the LLC, such as the business address, officers or managers, and the LLC’s registered agent.

The initial statement is due within 90 days from the LLC’s formation or registration date. The LLC must then file a statement every two years. The deadline for these subsequent filings is based off the formation or registration month and is a window that runs from the first day of the fifth month preceding the LLC's formation anniversary date but no later than the last day of the anniversary month. So, an LLC that was created in January has from August 1 to January 31 to file its subsequent reports.

Failure to submit a Statement of Information in a timely manner will result in a financial penalty.

California LLC taxes and fees

The following are common taxation requirements and ongoing fees in California for LLCs. For information on other state taxes for California LLCs, visit the State of California website.

• Biennial report (Statement of Information). The fee for the Statement of Information filing that is due every two years is $20.
• Annual franchise tax. California has a minimum yearly franchise tax of $800. This annual tax will be required, regardless of whether you are conducting business, until you officially dissolve your LLC.
• Annual LLC fee. LLCs that make more than $250,000 will need to pay a yearly fee based on total income from all sources derived from or attributable to California.

Business Licenses in California

Business licenses and/or permits are required for most businesses. The BizFilings Business License Application Package can help you stay on top of these requirements.

Can professionals form an LLC in California?

California does not allow professionals (such as accountants and attorneys) to form an LLC or a professional limited liability company (PLLC). But depending on the type of profession, professionals may have the option of choosing an LLP or a professional corporation (PC) structure.

What is a California FEIN for an LLC?

A FEIN, which stand for federal employer ID number, is a business identification number that is issued by the IRS. Commonly referred to as an EIN or federal tax ID number, this number is used for federal tax filings and in various business activities.

The California Employment Development Department (EDD) issues a state employer identification number (SEIN) to businesses that employ one or more employees. This number is used for various functions, including paying payroll taxes.

Another state-issued business identification number is an entity ID issued by the California Secretary of State’s office to the LLC at the time of formation or registration. (For corporations, this number is referred to as a California Corporation Number.) This California entity number is used for state tax and various business filings.

Additional California information

View the following additional resources BizFilings has for forming and maintaining companies in California:

• I have an LLC, now what? 7 things you should do after you form an LLC
• California Corporation Formation