Quick Answer

To start a California LLC, file Articles of Organization (Form LLC-1) with the Secretary of State ($70 filing fee). Most importantly, you must pay an $800 minimum annual franchise tax to the Franchise Tax Board every year, regardless of your LLC's income. California is the most expensive state in the US to maintain an LLC.

California LLC filing fee

The state filing fee for the Articles of Organization is $70. You can file online through the state's bizfileOnline portal or by paper mail. The first-year franchise tax exemption expired in 2024, meaning you will owe the $800 tax shortly after formation.

Step 1: Choose a name

Your LLC name must be unique in the California Secretary of State's records. The name must end with "Limited Liability Company," "L.L.C.," or "LLC". It cannot contain words like "bank," "trust," "trustee," or "insurance" without special government approval.

Step 2: Appoint a registered agent

California requires all LLCs to appoint an Agent for Service of Process (registered agent). This can be an individual living in California or a registered corporate agent. The agent must have a physical street address in California (no P.O. Boxes) to receive legal documents.

Step 3: File formation documents

To legally form your LLC, you must file Articles of Organization (Form LLC-1) with the Secretary of State. You must provide the LLC's name, management structure, and registered agent details. Filing online for $70 is highly recommended over paper mail.

Step 4: Create an operating agreement

Unlike most states, California legally requires LLCs to adopt an operating agreement (either oral or written, though written is standard). This document dictates your LLC's internal rules and ownership structure. You do not file this with the state, but you must keep it at your principal place of business.

Step 5: Get an EIN

An Employer Identification Number (EIN) is a free 9-digit federal tax ID issued by the IRS. It functions like a Social Security Number for your business, and you need it to open a California business bank account, hire employees, or file federal tax returns.

Step 6: Register for state taxes if needed

You must register with the California Franchise Tax Board (FTB). Every LLC must pay the $800 annual franchise tax by the 15th day of the 4th month of their tax year. If your LLC makes over $250,000 in gross income, you must pay an additional LLC Fee ranging from $900 to $11,790. You must also register for an employer payroll tax account if you hire employees, and a seller's permit if you sell physical goods.

Step 7: File annual reports and stay compliant

Within 90 days of formation, you must file an initial Statement of Information (Form LLC-12) and pay a $20 fee. After that, you must file this statement every two years to keep the state updated on your address and management. Don't forget that the $800 franchise tax is due every single year.

California LLC Cost

Fee Type Amount
Formation fee $70
Registered agent estimate $39 - $150 / year
Statement of Information $20 (Initial, then every 2 years)
Franchise tax $800 minimum / year
Gross Receipts LLC Fee $900 to $11,790 (if revenue > $250K)
Other recurring fees Local business licenses (varies)
WHEN THIS MAY NOT APPLY

If you do not live in California, do not operate from California, and do not have a specific California-related reason for forming there, a California LLC may not be the best default choice. You may still need to register the LLC as a foreign LLC in the state where you actually operate, which can create duplicate filing fees, registered agent costs, and annual compliance requirements.

California currently charges $70 to form a domestic LLC. Annual reports are currently $800 minimum franchise tax + $20 biennially. For many purely online businesses, it is usually worth comparing your home state with commonly used business-friendly states such as Wyoming, which charges $100 to form an LLC and has a $60 minimum annual license tax, before choosing California.

Should you form your LLC in California?

A California LLC usually makes sense if you live in California, operate your business from California, or have a clear legal or tax reason to use California. If you live and operate somewhere else, forming in California may create extra registered agent costs, foreign qualification requirements, and duplicate compliance obligations. California may appeal to some owners, but compare it with Wyoming, Delaware, Nevada, and your home state in our guide to the best state for an online business LLC. For a comprehensive overview of starting a business, visit our LLC formation hub.

Situation Is a California LLC usually a good fit?
You live in California Usually yes
Your business operates in California Usually yes
You want privacy Depends on state rules
You live in another state Usually only if you have a specific reason
You are a non-US resident Depends on banking, taxes, and compliance needs

California LLC vs Wyoming LLC

A Wyoming LLC is significantly cheaper than a California LLC. Wyoming has no state income tax, a low $60 minimum annual report fee, and no franchise tax. California charges an $800 minimum franchise tax, has personal income tax rates up to 13.3%, and places member names on the public record (unlike Wyoming's privacy). However, as stated above, if you live in California, forming in Wyoming will not save you from California's $800 tax.