How to Create an LLC in California

By Michelle Kaminsky, J.D.

How to Create an LLC in California

By Michelle Kaminsky, J.D.

To form an LLC in California, you must file articles of organization with the California Secretary of State and pay the appropriate fee. There are several steps to complete on the way to filing and thereafter, some of which are state specific, so be sure to follow the steps below closely when forming a California LLC.

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Step 1: Choose a name for your LLC.

California law has strict LLC naming requirements, which the Secretary of State explains more fully in the publication Business Entity: Name Regulations & Additional Statutory Requirements and Restrictions.

The most basic naming requirement is that you must include the phrase "limited liability company," or the abbreviations "LLC" or "L.L.C.," at the end of the name. As for abbreviations, "Limited" may be "Ltd." and "Company" may be "Co."

Moreover, the name of your California LLC must also not be identical to the name of an existing California corporation, or similar enough to it as to be likely to deceive the public.

You may use the California Secretary of State's free online search of business entities registered in California to determine whether the desired name for your LLC is already taken. Note that this database only includes names of other registered LLCs in California, which means it does not include "doing business as" names.

Step 2: Designate a registered agent for your LLC.

You must name a registered agent for your LLC on your articles of organization. A registered agent is a person or business that agrees to receive service of process and other legal documents on behalf of the LLC in case it is sued.

The LLC may not serve as its own registered agent, but if you are a California resident, you may designate yourself as the registered agent for your LLC if you are willing to list your home address and contact information on your articles of organization. You also have the option of hiring a registered agent service. California maintains a list of some registered agent service companies, though it is not exhaustive.

Note that corporate agents must be in compliance with the California Corporations Code, having filed a Section 1505 Certificate.

Step 3: File Form LLC-1, Articles of Organization.

Form LLC-1 is available on the California Secretary of State's website or in person.

On the LLC-1, you must list the name of your LLC and the name and address of the LLC's registered agent. You must also include the LLC's purpose and disclose if one manager, more than one manager, or all LLC owners—also called "members"—will manage your LLC.

For the purposes of filling out your articles of organization, the person managing your LLC is the person who makes the day-to-day business decisions about its operation. While many small LLCs are managed by their members, other members may choose to passively own their LLC and hire another person—called a "manager"—to actually run the business.

Your LLC-1 form must be signed and dated by at least one LLC member, and you can file it in person or by mail along with the $70 filing fee. If you are filing in person at the Sacramento office, you may pay more for expedited filing.

Step 4: File Form LLC-12, Statement of Information.

Within 90 days of filing Form LLC-1, all LLCs registered in California must file a Statement of Information, Form LLC-12, available on the Secretary of State's website, and pay a $20 filing fee. This statement must provide all requested information, including the name and address of any managers and the chief executive officer or, if these officers haven't been selected, of all LLC members.

A statement of information must be filed every two years during the applicable filing period, as explained on the California Secretary of State's website.

The first statement of information must be filed in person or by mail, while subsequent filings can also be done online.

Step 5: Take care of taxes.

California LLCs are responsible for paying an annual $800 tax to the California Franchise Tax Board (FTB), unless they have elected to be taxed as corporations, in which case they must follow California's corporate tax regulations. LLCs with profits over a certain amount may also be required to pay an additional fee.

The required Form 568, Limited Liability Company Return of Income, must be filed by the 15th day of the fourth month after the close of the LLC's tax year.

Note that your LLC may be required to comply with other tax laws, including federal, sales, and employer taxes; and your LLC may also require a business license, depending on the type and location of your enterprise.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.