How to Form an LLC in California 2026: Complete Guide

Forming a Limited Liability Company (LLC) in California provides personal liability protection while offering tax flexibility. This comprehensive guide covers everything from choosing a business name to ongoing compliance requirements.

Why Form an LLC in California?

An LLC offers several advantages:

• Limited Liability Protection: Personal assets are protected from business debts and lawsuits
• Pass-Through Taxation: Profits and losses pass through to owners' personal tax returns
• Flexibility: Choose how to manage and structure your business
• Credibility: Professional image with customers and vendors
• Less Formality: Fewer corporate requirements than C-corporations

Step-by-Step Formation Process

Step 1: Choose Your LLC Name

Your California LLC name must:

• Be distinguishable from existing business names
• Include "Limited Liability Company," "LLC," or "L.L.C."
• Not contain restricted words like "bank," "insurance," or "corporation" without proper licensing
• Comply with California naming regulations

Name Search: Check name availability on the California Secretary of State website before filing.

Step 2: Designate a Registered Agent

Every California LLC must have a registered agent with a physical California address to receive legal documents and official correspondence.

The registered agent must:

• Have a physical California street address (no P.O. boxes)
• Be available during normal business hours
• Be either an individual California resident or a business entity authorized to do business in California

Step 3: File Articles of Organization (Form LLC-1)

Submit Form LLC-1 to the California Secretary of State. You can file:

• Online: Faster processing (usually 1-3 business days)
• By Mail: Longer processing time (2-3 weeks)
• In Person: At Sacramento office

Filing Fee: $70

Required information includes:

• LLC name
• Registered agent name and address
• Business purpose (can be general)
• Management structure (member-managed or manager-managed)
• Organizer information

Step 4: Create an Operating Agreement

While not required to be filed with the state, an operating agreement is highly recommended. It outlines:

• Ownership percentages
• Member roles and responsibilities
• Voting rights
• Profit and loss distribution
• Buy-sell provisions
• Dissolution procedures

Step 5: Obtain an EIN (Employer Identification Number)

Get a free EIN from the IRS. You'll need this to:

• Open a business bank account
• Hire employees
• File business tax returns

Apply online at IRS.gov (immediate processing) or by mail (4-6 weeks).

Step 6: File Statement of Information (Form LLC-12)

Within 90 days of LLC formation, file Form LLC-12 with the California Secretary of State.

Filing Fee: $20

This form includes:

• LLC name and file number
• Principal office address
• Registered agent information
• Names and addresses of LLC managers or members

Complete Cost Breakdown

Ongoing Compliance Requirements

Annual Requirements

• Franchise Tax: $800 minimum, due annually
• LLC Fee: Based on total California income (only if income exceeds $250,000)

Biennial Requirements

• Statement of Information: File Form LLC-12 every 2 years ($20 fee)

Other Obligations

• Maintain registered agent
• Keep accurate financial records
• Update operating agreement as needed
• Obtain necessary business licenses and permits

Frequently Asked Questions

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

Online filings are typically processed in 1-3 business days. Mail filings take 2-3 weeks. You can pay for expedited processing (24-hour or same-day service) for an additional fee.

Can I be my own registered agent?

Yes, if you're a California resident with a physical street address in California. However, many business owners prefer to use a professional registered agent service for privacy and reliability.

Do I need a business license?

Most California cities and counties require a general business license. Check with your local city clerk or county clerk's office for specific requirements.

What's the difference between member-managed and manager-managed?

Member-managed: All members participate in day-to-day business decisions (most common for small LLCs).
Manager-managed: Members appoint one or more managers to run daily operations (common when members are passive investors).