California LLC Basics & Helpful Information
General Overview of the California LLC
This article is meant to be a general overview of the California LLC formation process and other basic issues related to LLCs.
California Filing Fees
A California LLC is formed when the Articles of Organization are filed with the Secretary of State in Sacramento. The California filing fee for the Articles of Organization is $70.00. The Articles of Organization must be completed on paper and then mailed or hand carried to the Sacramento Secretary of State’s office. The Articles of Organization cannot be completed online at this time. If you hand deliver it there is an additional fee of $15. You can request an expedited filing for an additional fee if you hand deliver the Articles of Organization to the Sacramento Secretary of State.See full fee schedule and California SOS forms →
California Filing Time
Processing times depend on the document filed and when it is received by the Sacramento office.See current processing times →
California Annual Compliance Requirements
LLCs doing business in California are required to pay a minimum $800 yearly tax to the California Franchise Tax Board.Read more about franchise taxes →
Also every California LLC is required to file a Statement of Information with the Secretary of State, within 90 days after the filing of its original Articles of Organization, and every two years thereafter during a specific 6-month filing period based on the original file date, as described in the chart below. Thereafter, changes to information contained in a previously filed Statement of Information can be made by filing a new form at no charge.
Currently, Statements of Information for limited liability companies must be submitted on paper, by mail or hand delivered ($20 fee applies to hand deliveries).Information about the required Statement of Information →
Form an LLC in California
You can use this checklist to help guide you through the process of forming a California LLC:
Step 1: Decide on a Business Name
The first step in creating an LLC in California is naming your business. You’ll need to check with the California Secretary of State to make sure the name you’ve chosen is available. You can do this online via the California Business Search.
The preliminary check of the availability of a name is free. An available name may be reserved for up to 60 days by filing a Name Reservation Request Form. The form must be mailed or hand delivered to the California Secretary of State’s office. An LLC name may be adopted if the name is distinguishable on the records of the California Secretary of State or if the name is not misleading to the public. Under California law, an LLC’s name must include: LLC, L.L.C., Limited Liability Company, Limited Liability Co., Ltd. Liability Co. or Ltd. Liability Company; and may not include: bank, trust, trustee, incorporated, inc., corporation, or corp., insurer, or insurance company.See California name requirements and restrictions →
It is also highly recommended that you check the US Patent and Trademark Office to see if someone has a federal trademark of the business name you want (the California Secretary of State will not check other state’s databases or the federal trademark database). You can click here to have a comprehensive name availability search performed for you.
California Fictitious Business Names
A fictitious business name is similar to a “doing business as” (DBA) name. Fictitious names are not filed with the state, but rather at the county level.
Step 2: Register your LLC with the State
California Articles of Organization
Your California LLC is formed by signing and filing Articles of Organization with the California Secretary of State. The completed form must be on paper form and mailed to the Secretary of State or dropped off at the Secretary of State’s office. Articles of Organization may not be filed online at this time.
The Articles of Organization must include at a minimum:
- Name of the California LLC
- Statement of Purpose
- Registered Agent’s Name and Address
- Street address (PO Boxes not allowed) and mailing address of the LLC
- Management Structure of the LLC
- Organizer’s Name and Signature
Under California law, LLCs cannot be formed to provide professional services. Professional services include any service that requires a professional state license or certification. If your business is required to be licensed, certified or registered, it is recommended that you contact the appropriate licensing authority in order to determine whether your services are considered professional.
California Registered Agent Information
California requires that an LLC have a Registered Agent, which is an individual or a business entity the LLC appoints for the purpose of accepting service of process (lawsuit papers or legal documents) for the LLC. An LLC cannot be a registered agent, but the LLC can appoint any resident of California or a registered corporate agent that agrees to be the initial registered agent. If a corporate registered agent is the registered agent do not include the address, as it is already on file with the California Secretary of State.Read more about Registered Agents →
Step 3: Create and Sign the LLC’s Governing Document
The governing document for an LLC is called the “company agreement” or sometimes the “operating agreement”. The company agreement is to an LLC like a partnership agreement is to a partnership (or bylaws to a corporation). The company agreement governs the internal operation of the LLC and is typically a private document that is kept in the company book and the principal place of business (it is NOT filed with the state). The company agreement can address many issues, some of the more common concepts found within a company agreement are:
- Limitations on the members liabilities
- The level of consent needed to take various actions (i.e. simple majority required to add new members)
- The percentage of the LLC that each member owns
- How profits and losses are allocated between the members (typically based on ownership percentages)
- Limitations on transferability
- What each member is contributing to the LLC and what happens is such contributions are not made.
- The authority of the members, officers, managers, committees, etc.
- How meeting are conducted
One of the reasons we recommend using an LLC formation company like IncFile is that they can provide you with a company agreement in connection with their LLC formation services.
Step 4: Get an EIN
After you form an LLC in California, you can get the EIN. There are a few different ways to get an EIN:
- Apply Online Yourself: The IRS has an online EIN Application you can use to get an EIN. The turn around time on the EIN using this method is only a few minutes.
- Use Form SS-4: You can get an EIN the old fashion way by completing Form SS-4 and mailing or faxing into the IRS. How long does it take to get the EIN this way? According to the IRS: if you mail in Form SS-4, it will take 4-5 weeks to get your EIN. If you fax in Form SS-4 you should have the EIN back in a week if you provide a fax number or 2 weeks if you don’t have a fax number.
- Have a Third-Party Obtain: All of the LLC formation companies have the ability to get the EIN for you. The EIN obtainment charge varies by company, but it is generally between $50 and $100. If you get one of the higher priced packages, they will sometimes throw in the EIN for free.
Step 5: Get Licenses and Permits
After you create your new California LLC, you’ll need to determine if your business/profession requires any licenses or permits to conduct business.Read more about California licensing and permitting → Read more about local licenses →
Registering a Foreign LLC in California
If you have a non-California LLC (aka Foreign LLC) and you are doing business in California, you may need to register the Foreign LLC in California. Each state has a different definition of “doing business”. In California, an LLC is considered to be doing business in California if it enters into repeated and successive transactions of business in California, other than in interstate or foreign commerce. The kinds of activities that would and would not constitute “doing business” are outlined in the California Corporations Code Section 17708.03 as follows:
- Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement of those, or the settlement of claims or disputes.
- Carrying on any activity concerning its internal affairs, including holding meetings of its members or managers.
- Maintaining accounts in financial institutions.
- Maintaining offices or agencies for the transfer, exchange, and registration of the limited liability company’s own securities or maintaining trustees or depositories with respect to those securities.
- Selling through independent contractors.
- Soliciting or procuring orders, whether by mail or electronic means or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts.
- Creating or acquiring indebtedness, evidences of indebtedness, mortgages, liens, or security interests in real or personal property.
- Securing or collecting debts or enforcing mortgages or other security interests in property securing the debts and holding, protecting, or maintaining property so acquired.
- Conducting an isolated transaction that is completed within 180 days and is not in the course of a number of repeated transactions of a like nature.
- Transacting business in interstate commerce
The filing fee for the Application To Register a Foreign LLC in California is $70, plus an additional $15 if you drop off the application.See more about registering a foreign LLC in California → Additional guidance on what is considered doing business in California →