How to Form an LLC in California

How to Form an LLC in California

A step-by-step guide to forming a Limited Liability Company (LLC) in the state of California.

steps to form an llc in california

Running a new business is a complex job with many moving parts and potential risks, and providing a formal structure to the company is an important early step. There are many benefits to such structure, from more straightforward tax filings to key financial and legal protections. When you want your business in California recognized as a limited liability company (LLC), there are six steps to follow. Successfully completing the process empowers you to legally do business under this structure in California. You will need to choose your name, designate a Registered Agent, file California Articles of Organization and an Initial Statement of Information, create an operating agreement, and pay a $70 fee.

This step-by-step guide offers a simple way to understand what you must do to set up a new LLC in California.

Step 1. Select a name for your California LLC.
Step 2. Choose your California Registered Agent.
Step 3. File California Articles of Organization.
Step 4. File an Initial Statement of Information within 90 days.
Step 5. Create an Operating Agreement.
Step 6. Apply for and receive your EIN

Step 1. Select a name for your California LLC

How will others know your company? Before you can begin the process of forming a California LLC, you will need a unique name without it having potentially confusing similarities to existing business names. Issues with naming are a common cause of delays and due diligence at this stage can save time later. There are several important considerations when naming an LLC.

1. Follow California’s guidelines on proper LLC naming
  • All California LLCs must have a name that ends with “Limited Liability Company” or “LLC.” “L.L.C.,” “Ltd.” and “Co.” are acceptable substitutes.
  • No words that would imply that the business operates in the insurance industry. Prohibited terms include: insurance company, insurer, corporation, corp., inc., incorporated, bank, trustee, or trust.
  • Avoid other words typically subject to restriction, e.g. Attorneys at Law or University. Usage of such words may necessitate additional approvals and permitting.
  • Fully review the California Code of Regulations on business naming for full details on all guidelines.
2. Check for availability

Before you begin filing applications and paying fees to the state, you should ensure that the name you’ve selected is not currently in use in California. The California Secretary of State has an online business name database where you can conduct a quick search. Once you’ve checked availability, you may file for a 60-day reservation period to put a hold on your chosen name.

3. Reserve your LLC name

To reserve your name, complete the Name Reservation Request form and submit it one of two ways:

  • By mail and containing a self-addressed stamped envelope. Send applications to:

    1500 11th Street
    3rd Floor
    Sacramento, California, 95814

  • In-person in the lobby at the Sacramento-based office of the California Secretary of State, located at the same address.

There is a $10 fee to reserve applications by mail. There is an additional $10 handling fee for in-person drop-offs.

Note: The name you select at this stage does not have to be the name you use in daily operations. However, California’s rules for “doing business as” or “fictitious” names are complex and can vary by county. Review California’s “Guide to DBAs” for full guidelines on how to appropriately apply for and receive a DBA different from your legal LLC name.

Step 2. Choose your California Registered Agent

Every state must have a means of making official contact with a business, particularly in cases where legal action has been taken, and service of process must take place. In most states, this point of contact is called your LLC’s “Registered Agent.” In California, the term is “Agent of Service for Process.”

You must designate an agent that meets the following criteria:

  • Be a full-time resident of California, or
  • A corporation based in California authorized to act as an Agent of Service of Process, such as those found on CA Secretary of State’s website.
  • Must have a non-P.O. box street address for mailing.

You may elect yourself or another member of the LLC as well so long as the Agent meets residency requirements.

Step 3. File California Articles of Organization.

To formally organize your LLC, you must lodge Form LLC-1 “Articles of Organization” with the Secretary of State’s office in Sacramento. Review your application for completeness and validity before you submit. A complete application should include:

  • The name chosen or reserved for your new LLC.
  • The purpose of the LLC.
  • Management structure information.
  • The LLC’s official address.
  • Name and address of the Agent of Service of Process.

There are three ways to submit your application:

  1. Online via the Secretary of State’s website. To file online, first select the “Articles of Organization – CA LLC” link, click “FILE ONLINE” and setup an account.
  2. By mail, addressed to:

    Secretary of State
    Business Entities Filings
    P.O. Box 944228
    Sacramento, CA 94244

  3. Or delivered in person:

    1500 11th St.
    Sacramento, CA 95814
    8 am to 5 pm, Mondays through Fridays

The fee for all LLC filings is a non-refundable $70. Forms delivered in person incur a $15 special handling fee. Expedited service is available for additional fees.

Are you looking to expand a business formed elsewhere, into California? You will need a Foreign LLC registration. Complete form LLC-5 and submit your completed application by mail to the following address:

Secretary of State
Business Entities Filings Unit
P.O. Box 944228
Sacramento, CA, 94244

There is a $70 fee for registering a foreign LLC in California.

Step 4. File an Initial Statement of Information with 90 days

To maintain up-to-date data on businesses in the state, California requires all new LLCs to file a Form LLC-12 “Statement of Information” no later than 90 days after the formal organization of the business. LLCs must also file this form every two years subsequently. Options include:

  1. Use the California Secretary of State online portal.
  2. Download the LLC-12 form and submit it one of the following ways:

    In-person, at:
    Secretary of State
    1500 11th St
    Sacramento, CA, 95814

    By mail, to:
    Secretary of State
    Statement of Information Unit
    P.O. Box 944230
    Sacramento, CA, 94244

There is a non-refundable $20 fee to file the LLC-12. A $15 handling fee applies for in-person submissions.

Step 5. Create an Operating Agreement

Operating agreements explicitly define an LLC’s ownership and management structure while also delineating how it will operate and who will make key decisions. Operating agreements help to mitigate the risk of serious disagreements and business conflicts by laying out plans that all parties must follow. California requires new LLCs to have an operating agreement on file before they conclude the formation process. A business lawyer can assist you in creating an effective and comprehensive operating agreement for your California LLC.

Step 6. Apply for your EIN

When you form an LLC with more than one member, the federal government requires you to have an officially assigned Employer Identification Number, or EIN, from the Internal Revenue Service. This requirement is mandatory even if you do not currently employ other individuals. Single-member LLCs that opt for a corporate tax or plan to hire workers must also apply for an EIN. Converting a sole proprietorship to an LLC also requires the issuance of a new EIN.

Having an EIN is a time-saving step that simplifies access to business bank accounts, makes tracking taxes simpler, and streamlines portions of the hiring process. It does not cost anything to file for an EIN. To request your number:

  • Use the IRS online portal.
  • Submit your application via fax to (855) 641-6935.
  • Mail a completed SS-4 application form to the following address:

    Internal Revenue Service
    Attn: EIN Operation
    Cincinnati, OH, 45999