How to Start an LLC in California (2026 Guide)
Filing a California LLC costs $70. That’s the easy part. The hard part — the thing most guides mention in a footnote somewhere near the bottom — is the $800 annual franchise tax you owe to the California Franchise Tax Board every single year, even if your LLC makes zero dollars.
Budget for both before you start. The $70 filing fee goes to the Secretary of State. The $800 goes to the Franchise Tax Board. They’re separate agencies, separate payments, separate due dates. And if you file your LLC in October, November, or December, you could owe $1,600 within a few weeks. More on that trap below.
Here’s the full picture of what it actually costs and exactly how to do it.
What You Need Before You Start
Get three things sorted before you touch the BizFile portal:
- Your LLC name. Have two or three options ready in case your first pick is taken.
- Your registered agent decision. Either you’ll serve as your own (free, but your home address goes on public record) or you’ll hire a service ($39–199/year).
- Your management structure. Member-managed means all owners run the business. Manager-managed means you designate specific people (or even a non-owner) to make decisions. Most small LLCs go member-managed.
Estimated total cost: $70 state filing fee + $0–39 for a formation service + $800 franchise tax in your first year. That’s the real number.
Time commitment: About 30 minutes of actual work. The Secretary of State processes online filings in 2–3 business days.
Step 1 — Choose Your California LLC Name
California requires your LLC name to include “Limited Liability Company,” “LLC,” or “L.L.C.” No abbreviations like “Ltd.” or “Co.” — it has to be one of those three.
Your name must also be distinguishable from every other business entity already registered with the Secretary of State. Check availability for free using the BizFile Online business search: https://bizfileonline.sos.ca.gov/search/business
Type in your name. If nothing identical or confusingly similar comes up, you’re clear.
You can reserve a name for 60 days by filing a Name Reservation Request through BizFile for $10. But if you’re ready to file your Articles of Organization right now, skip the reservation. It’s an unnecessary extra step.
One more thing: don’t pay a formation service to run a name search for you. The BizFile tool is free, it’s the same database they use, and it takes 30 seconds.
Step 2 — Pick Your Registered Agent
Every California LLC needs a registered agent — someone designated to receive legal documents (lawsuits, state notices, tax correspondence) on behalf of your business. This is required under California Corporations Code.
The rules are simple:
- Must have a physical street address in California. No PO Boxes.
- Must be available during normal business hours to accept service of process.
- Can be an individual (including you) or a registered agent company.
Your three options:
Yourself (free). If you have a California address you’re comfortable putting on public record and you’ll reliably be there during business hours, this works. The downside: your home address is visible to anyone who searches for your LLC.
A friend or family member. Same rules apply — they need a California street address, and they need to actually be there. If they miss a service of process delivery, that’s your problem.
A commercial registered agent service ($39–199/year). This is what most people choose. Your home address stays off public records, and the service handles everything. Northwest Registered Agent offers free registered agent service for your first year when you use their $39 formation package. ZenBusiness is another solid option starting at $0 for formation (plus state fees) with registered agent service included in their paid plans.
Step 3 — File Your Articles of Organization
This is the official step that creates your LLC. California handles this entirely online through BizFile Online: https://bizfileonline.sos.ca.gov/
Mail filing has been discontinued. BizFile is the only way.
Filing fee: $70. Pay by credit card, debit card, or bank account (ACH).
Here’s what you’ll fill out on the form:
- LLC name (the one you already searched)
- Business address (principal office — can be your home address)
- Registered agent name and street address
- Management structure (member-managed or manager-managed)
- Organizer name and signature (the person filing — doesn’t have to be a member)
- Future file date (optional — more on this in the franchise tax section)
Click through BizFile’s prompts. It walks you through each field. The whole thing takes about 15 minutes if you have your information ready.
Processing time: 2–3 business days for standard processing. California offers expedited processing, but it costs $350 for same-day and $750 for 4-hour service. For most people, waiting the 2–3 days makes a lot more sense than spending $350.
Once approved, you’ll get a stamped copy of your Articles of Organization through BizFile. Download it and save it — you’ll need it to open a bank account.
Using a formation service? Northwest Registered Agent ($39 + $70 state fee) or ZenBusiness ($0 + $70 state fee) will file the Articles of Organization for you and handle the BizFile portal on your behalf. You answer their questions, they submit the form. For a straightforward single-member LLC, the result is identical to doing it yourself.
The $800 Franchise Tax — California’s Biggest LLC Cost
This is the section that matters most. Read it carefully.
Every California LLC owes $800 per year to the Franchise Tax Board (FTB). Not the Secretary of State — the FTB. This is a completely separate payment from your $70 filing fee, paid to a completely separate agency.
And yes, you owe it even if your LLC earns nothing. Zero revenue. Zero profit. Still $800.
The first-year exemption under AB 85 expired on December 31, 2023. LLCs formed in 2026 pay the full $800 starting in their first year.
When is it due?
Your first $800 payment is due by the 15th day of the 4th month after you file your Articles of Organization.
Example: you file on June 18, 2026. Count four months forward → October. Your first franchise tax payment is due October 15, 2026.
Your second $800 payment is due April 15, 2027 (for the 2027 tax year).
After that, it’s $800 every April 15.
The Q4 filing trap. This is where people get burned. If you form your LLC in October, November, or December 2026, your first $800 payment is due in early 2027 — and your second $800 payment is due April 15, 2027. That’s $1,600 within weeks of each other.
Example: you file on November 1, 2026. First payment due March 15, 2027. Second payment due April 15, 2027. That’s $1,600 in one month.
The fix: if you’re forming late in the year, BizFile lets you set a future file date. Set it to January 1, 2027. Your LLC won’t officially exist until then, but you avoid the double-payment crunch. This only makes sense if you don’t need the LLC to be active before January.
One more thing for higher-revenue LLCs: if your California LLC earns over $250,000 in gross receipts, you owe an additional fee on top of the $800. The scale:
| Gross Receipts | Additional Fee |
|---|---|
| $250,000 – $499,999 | $900 |
| $500,000 – $999,999 | $2,500 |
| $1,000,000 – $4,999,999 | $6,000 |
| $5,000,000+ | $11,790 |
This is why some people talk about forming in Nevada or Wyoming instead. But here’s the reality: if you’re physically operating in California — you live here, your customers are here, your work happens here — you owe the California franchise tax regardless of where your LLC is registered. Forming in Nevada just means you pay Nevada fees and California taxes. Don’t fall for that pitch.
Statement of Information — Don’t Miss This
After your Articles of Organization are approved, you have a second filing requirement: the Statement of Information.
- Filed with: Secretary of State (through BizFile)
- Due: Within 90 days of formation, then every 2 years
- Fee: $20
- Late penalty: $250
This is not optional. Miss the 90-day window and you’re hit with a $250 penalty. The Secretary of State can also suspend your LLC for failing to file.
The Statement of Information includes your LLC name, business address, manager/member names and addresses, registered agent information, and a brief description of your business. File it online at https://bizfileonline.sos.ca.gov/ — same portal you used for your Articles of Organization.
Set a calendar reminder for 60 days after your formation date. Don’t rely on getting a notice.
Step 4 — Get Your EIN (Free)
Your EIN (Employer Identification Number) is your LLC’s federal tax ID. You need it to open a business bank account, hire employees, and file federal taxes.
Apply directly at IRS.gov. It’s free. Always has been. Takes about 15 minutes.
Do not pay a service to get your EIN. Some formation companies charge $50–100 for “EIN service.” They’re filling out the same free IRS form you’d fill out yourself. It’s one of the easiest upsells to decline.
The online application is available Monday through Friday, 7:00 AM to 10:00 PM Eastern Time. You’ll receive your EIN immediately after completing the application — no waiting.
You’ll need your approved Articles of Organization first, since the IRS asks for your LLC’s legal name and formation date.
Step 5 — Create Your Operating Agreement
California does not legally require an operating agreement. But you should have one anyway. Here’s why:
- Banks often ask for it when you open a business account.
- It defines ownership percentages, profit distribution, voting rights, and what happens if a member leaves or the LLC dissolves.
- Without one, California’s default LLC rules under the Revised Uniform Limited Liability Company Act govern your business. Those defaults might not match what you actually want.
- It strengthens your liability protection. Courts are more likely to “pierce the veil” of an LLC that operates informally without clear documentation.
Single-member LLCs need one too. It sounds silly to write an agreement with yourself, but it’s the document that proves your LLC is a separate entity from you personally.
You don’t need a lawyer for a standard operating agreement. Northwest Registered Agent includes a free operating agreement template with their formation package. You can also find free templates from reputable legal sites. For complex multi-member LLCs with unequal ownership splits or unusual management structures, a California business attorney ($300–500 for this document) is worth the money.
Step 6 — Open a Business Bank Account
Your LLC exists. You have an EIN. Now separate your money.
Bring these to the bank:
- EIN confirmation letter (the one you got from the IRS)
- Approved Articles of Organization (download from BizFile)
- Operating agreement
- Your personal government-issued ID
Why this matters: commingling personal and business funds is one of the fastest ways to lose your LLC’s liability protection. A creditor or court can argue your LLC is just an alter ego of you personally, making your personal assets fair game. Keeping finances separate prevents that argument.
Your options:
- Online banks like Relay or Mercury — no monthly fees, easy to set up, good integrations with accounting software. Mercury is popular with tech startups. Relay works well for service businesses.
- Local California credit unions — often lower fees than big banks, and you get actual human support at a branch.
- Big banks (Chase, Bank of America, Wells Fargo) — the widest branch and ATM networks, but often charge $12–15/month unless you maintain minimum balances.
For most new LLCs, an online bank keeps costs lowest. You can always switch later.
California LLC Ongoing Requirements
Here’s your annual to-do list after formation:
| Requirement | Amount | Due Date | Paid To |
|---|---|---|---|
| Franchise Tax | $800/year | April 15 (first year: 15th of 4th month) | Franchise Tax Board |
| Statement of Information | $20 | Within 90 days, then every 2 years | Secretary of State |
| Federal taxes | Varies | April 15 (or per IRS schedule) | IRS |
| City/county business license | Varies ($0–300+) | Varies | Your local city/county |
Business licenses: California doesn’t have a statewide general business license. But your city or county almost certainly requires one. Los Angeles, San Francisco, San Diego, San Jose — all have their own business tax registration or license requirements. Check with your city clerk’s office. This varies wildly by location and industry.
California does not require an annual report for LLCs. The Statement of Information (biennial, $20) is the closest equivalent.
Pay your franchise tax online through the FTB’s website or by mailing Form 3522 (LLC Tax Voucher). Don’t confuse this with the Secretary of State — the FTB handles franchise tax, the SOS handles the Statement of Information.
How Much Does a California LLC Cost? (Full Breakdown)
One-time costs:
| Item | Cost |
|---|---|
| Articles of Organization (SOS) | $70 |
| Formation service (optional) | $0–39 |
| Operating agreement (DIY) | $0 |
| EIN | $0 |
| Total one-time | $70–109 |
Annual costs:
| Item | Cost |
|---|---|
| Franchise Tax (FTB) | $800 |
| Statement of Information (every 2 years) | $20 (works out to $10/year) |
| Registered agent service (optional) | $0–199 |
| City/county business license | $0–300+ |
| Total annual | $810–1,309 |
Realistic first-year total: $880–1,418 depending on your choices. The franchise tax is the dominant cost. Everything else is minor by comparison.
For context: California is the most expensive state for LLC maintenance among the states we cover. Texas has no franchise tax for small LLCs. Florida charges $138.75/year for its annual report. Georgia charges $50/year. California charges $800/year no matter what. That’s the price of doing business in the largest state economy in the country.
FAQ
How long does it take to form an LLC in California?
Standard processing through BizFile takes 2–3 business days. If you need it faster, expedited processing is available for $350 (same-day) or $750 (4-hour). The actual form takes about 15–30 minutes to complete.
Do I need a business license for my California LLC?
California has no statewide general business license requirement. But most cities and counties require their own business license, business tax certificate, or registration. Los Angeles requires a Business Tax Registration Certificate. San Francisco requires a Business Registration Certificate. Check with your specific city clerk’s office — requirements and fees vary significantly.
Can I be my own registered agent in California?
Yes. You need a physical California street address (not a PO Box) and you must be available during business hours to accept legal documents. The tradeoff: your home address becomes part of the public record, searchable by anyone. A commercial registered agent service ($39–199/year) keeps your personal address private.
What’s the difference between an LLC and a sole proprietorship in California?
A sole proprietorship is the default — you start working and you’re a sole proprietor automatically. No filing, no fees. But you have zero liability protection. A customer sues your business, they can go after your house, your car, your savings. An LLC creates a legal wall between your business liabilities and your personal assets. That wall costs $70 to create and $800/year to maintain in California.
Can I form a California LLC if I don’t live in California?
Yes. You don’t need to be a California resident. You do need a registered agent with a physical California address, which means hiring a commercial registered agent service if you don’t have someone in-state. Keep in mind: if you live in another state, you may also need to register as a foreign LLC in your home state.
When should I form my LLC to avoid the double franchise tax payment?
If it’s October or later and you don’t need the LLC immediately, set a future file date of January 1 on your Articles of Organization through BizFile. This avoids the situation where your first $800 and second $800 franchise tax payments land within weeks of each other in early the following year.
Is the $800 franchise tax deductible?
Yes. The California franchise tax is a deductible business expense on your federal tax return. It doesn’t make the $800 hurt less, but it does reduce your overall tax burden.
Your next step: search for your LLC name at BizFile Online. If it’s available, you’re 30 minutes away from having a California LLC. Just make sure you’ve budgeted for that $800 franchise tax payment — it’s coming whether your business is profitable yet or not.