Starting a business can be an exciting and rewarding journey, and forming a Limited Liability Company (LLC) in California is a popular choice for entrepreneurs looking to protect their personal assets while gaining flexibility in managing their business.

California, known for its dynamic economy and vast opportunities, is home to numerous small and large businesses, making it an ideal state for launching your LLC. However, the process of setting up an LLC in California requires understanding and completing a series of steps, each with its own legal and financial implications.

In 2025, the process of forming an LLC in California remains relatively straightforward but involves some specific legal requirements that must be followed to ensure compliance. Whether you are starting a small business, a startup, or even a side hustle, forming an LLC is a smart way to separate your personal and business liabilities. By doing so, your personal assets like your home or car are generally protected from any legal or financial issues your business might face.

This guide will walk you through the essential steps of forming an LLC in California, from choosing a unique name for your business to filing important forms with the state and understanding your ongoing compliance responsibilities. Additionally, we’ll provide tips and insights to help you navigate the process efficiently and avoid common pitfalls, ensuring that your business starts off on the right foot. Let’s dive into how to establish your LLC in California in 2025.

Steps to forming an LLC in California

Forming an LLC in California is a clear and structured process, but it involves several important steps. From selecting your LLC name to filing required forms and paying necessary fees, each step ensures your business is legally established and compliant with state laws. Here’s a breakdown of what you need to do.

1. Search Your LLC Name

One of the first and most crucial steps in forming your LLC is choosing a name. The name you select must be unique and comply with California’s naming rules.

Key points to keep in mind:

• Uniqueness: Your LLC’s name must be distinguishable from the names of other businesses that are already registered in California. To check if your name is available, you can use the business name search tool provided by the California Secretary of State’s office.
• Required Words: The name of your LLC must include the term “Limited Liability Company,” “LLC,” or “L.L.C.” For example, “Tech Innovations LLC” or “Bright Future Enterprises, L.L.C.” You can also abbreviate “Limited” as “Ltd.” and “Company” as “Co.” in the name.
• Prohibited Words: There are specific words that cannot be included in your LLC name without additional permissions. For example, the terms “bank,” “insurance,” and “corporation” are restricted and may require extra documentation or approval.

After you’ve chosen a name, it’s important to verify its availability. The California Secretary of State’s office provides a business name search tool on its website, where you can check whether your desired LLC name is available. If the name you want is already in use, you’ll need to come up with a different one.

2. Choose a Registered Agent

The next step in forming your LLC is selecting a Registered Agent. A Registered Agent is a person or company that agrees to accept legal documents, government notices, and tax documents on behalf of your LLC. This is a critical step because it ensures that your LLC will receive important legal notices promptly.

Who can be an LLC Registered Agent?

A Registered Agent must meet certain criteria. You can either appoint:

• An Individual: A person who is a resident of California and who has a physical street address (not a P.O. box) in the state.
• A Professional Service: A company that provides Registered Agent services, typically for a fee. Many business owners choose to go this route for added convenience and professionalism.

We recommend Northwest Registered Agent

For many new LLC owners, choosing a professional Registered Agent service is a smart decision. One of the most reputable services in the industry is Northwest Registered Agent. They offer high-quality, personalized service and ensure that all your LLC’s legal documents are handled correctly and efficiently. While there are many Registered Agent services available, Northwest Registered Agent is highly recommended for its excellent customer service, privacy protection, and ease of use.

3. File Articles of Organization with the Secretary of State

Once you’ve chosen your LLC name and Registered Agent, it’s time to officially form your LLC by filing the Articles of Organization with the California Secretary of State. This form, also known as Form LLC-1, is the document that officially establishes your LLC in California.

Steps for Filing Articles of Organization:

• Fill out the form: The Articles of Organization form asks for basic information about your LLC, including your LLC’s name, the address of your Registered Agent, and the management structure of your company (whether it will be managed by members or managers).
• File online: California offers the ability to file your Articles of Organization online, which is the most efficient method. You’ll need to pay a filing fee of $70. If you prefer, you can file by mail, but online filing is faster.
• Processing time: When you file online, it usually takes about 2-3 business days for the California Secretary of State to process your LLC registration.

Once the Articles of Organization are filed, your LLC will be officially formed in California.

4. Create an Operating Agreement

While California does not legally require LLCs to have an Operating Agreement, it’s highly recommended. The Operating Agreement outlines how your LLC will be run, who will make decisions, how profits and losses will be divided, and what happens if a member decides to leave the business.

Having an Operating Agreement in place is crucial because it helps prevent conflicts between members. It also provides clarity on various operational matters, even in the event of disputes. This document is essential if you have multiple members in your LLC, as it clearly defines everyone’s role and responsibilities.

If you’re the sole owner of the LLC, having an Operating Agreement can still be useful as it adds credibility to your LLC and helps establish a formal structure for your business.

5. Get an EIN for Your LLC

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is required for all LLCs that will have employees or that plan to open a business bank account. It is used by the IRS to identify your LLC for tax purposes.

How to get an EIN:

The good news is that obtaining an EIN is free. You can apply directly on the IRS website, and you’ll receive your EIN almost immediately.

Why is an EIN important?

• It’s required to file taxes.
• You’ll need it to open a business bank account.
• It allows you to hire employees (if applicable).

You can apply for an EIN online through the IRS website, and the process takes just a few minutes.

6. File Your Statement of Information

Within 90 days of filing your Articles of Organization, California requires LLCs to file a Statement of Information with the Secretary of State. This document provides updated information about your LLC, including the name and address of your LLC, its Registered Agent, and the members or managers who are responsible for running the business.

Filing Details:

• Form LLC-12 is the Statement of Information form, and it costs $20 to file.
• Due date: The Statement of Information is due within 90 days of the filing of your Articles of Organization, and you must file it every two years thereafter.
• Filing method: You can file your Statement of Information online or by mail.

If you don’t file the Statement of Information on time, you risk penalties or even the suspension of your LLC.

7. Pay the $800 Annual Franchise Tax & Estimated Fee

Once your LLC is formed, you must pay the Annual Franchise Tax of $800 to the California Franchise Tax Board. This tax is due every year, regardless of whether your LLC makes any money.

Important Details About the Annual Franchise Tax:

• Amount: $800.
• Due Date: The annual franchise tax is due by the 15th day of the 4th month after the beginning of your LLC’s tax year.

Additionally, if your LLC generates more than $250,000 in gross income, you may be required to pay an Estimated Fee based on your total income. The fee can range from $900 to $11,790, depending on your income bracket.

How to file and pay:

You can pay your franchise tax online through the California Franchise Tax Board website. The Estimated Fee (if applicable) is also paid via the same platform.

8. File Form 568 (or 100 or 100S)

Finally, depending on how your LLC is taxed, you’ll need to file the appropriate tax forms. If your LLC is taxed as a partnership, you’ll file Form 568. If it’s taxed as a corporation, you’ll file Form 100 (C Corporation) or Form 100S (S Corporation).

These forms are due annually by the 15th day of the 4th month after the beginning of your LLC’s tax year.

What Do I Do After My LLC Is Approved?

Once your LLC is approved, there are a few key things you’ll want to do to ensure that your business runs smoothly:

Open a Business Bank Account

It’s essential to keep your business finances separate from your personal finances. Opening a business bank account will help you manage your LLC’s finances, protect your personal assets, and simplify accounting. Be sure to bring your EIN, Articles of Organization, and Operating Agreement (if applicable) when you go to open your account.

Obtain Business Licenses and Permits

Depending on the nature of your business, you may need specific licenses or permits to operate legally in California. Check with local city and county offices to determine what you need. Common permits include health permits, zoning permits, and business licenses.

Set Up Accounting and Bookkeeping Systems

Proper bookkeeping is critical for managing your LLC’s finances and ensuring you stay compliant with state and federal tax laws. You can hire an accountant or use accounting software to manage your business’s finances.

Comply with Employment Laws

If you have employees, make sure you understand California’s labor laws. This includes paying wages, providing benefits, and complying with worker’s compensation and unemployment insurance requirements.

FAQs

How much does it cost to start an LLC in California?

The initial costs to form an LLC in California include:

• Articles of Organization filing fee: $70
• Statement of Information filing fee: $20
• Annual Franchise Tax: $800
• Estimated Fee (if applicable): Varies based on income

How long does it take to form an LLC in California?

It usually takes 2-3 business days to process your Articles of Organization when filed online. However, filing by mail may take longer.

Can I form an LLC in California if I’m not a resident?

Yes, non-residents can form an LLC in California, but they must appoint a California-based Registered Agent.

What happens if I don’t file the Statement of Information?

Failure to file the Statement of Information on time can result in penalties or even the suspension of your LLC, which could affect your ability to do business.