How to Start an LLC in California: A Step-by-Step Guide (2027)

How to Start an LLC in California (Quick Answer)

To start an LLC in California, file Articles of Organization (Form LLC-1) with the California Secretary of State through the bizfile Online portal and pay the $70 filing fee. Once accepted, your LLC legally exists, and from then on it owes California's $800 minimum annual franchise tax, due the 15th day of the 4th month after formation in year one and every April 15 after, regardless of income.

First-year cost: $70 if you file the Articles of Organization yourself. If you are not based in California, add a registered-agent service, commonly $35 to $300 a year, plus an optional name reservation of around $10. Note the $800 minimum franchise tax is also due in the first year, with no exemption for LLCs formed in 2024 or later.

California charges every LLC a minimum $800 franchise tax each year, whether the business made a dollar or not. There's no first-year pass anymore. The exemption that used to waive it expired at the end of 2023, so any LLC formed in 2026 owes the full $800 in year one.

Forming the LLC itself is a short filing. Staying compliant with California afterward is where the real cost and paperwork live, and that's the part most generic guides gloss over.

TL;DR

• The $800 tax is permanent: every California LLC owes an $800 minimum annual franchise tax, with no first-year exemption for LLCs formed in 2024 or later.
• Step 1, name: check availability with the California Secretary of State and reserve it for 60 days if you're not ready to file.
• Step 2, agent for service of process: California's term for a registered agent, and there's no separate form to change one.
• Step 3, Articles of Organization: file Form LLC-1 with the California Secretary of State through bizfile Online.
• Step 4, operating agreement: California requires one, though it's kept internally, not filed with the state.
• Step 5, EIN without an SSN: the IRS phone, fax, or mail route works for founders without an SSN or ITIN.
• Step 6, Form 5472: a 25%+ foreign-owned single-member LLC files this every year, even at zero revenue.
• Step 7, ongoing compliance: the $800 franchise tax, a biennial Statement of Information, and a gross-receipts fee above $250,000 in California income all run on separate schedules.
• Common mistakes: assuming a Wyoming or Delaware LLC dodges the $800 tax is the one that costs California-based founders the most.

Why Form Your LLC in California?

California gives founders access to the largest concentration of tech investors, engineering talent, and enterprise customers in the country. For a startup building in or around Silicon Valley, that proximity can matter more than the cost of forming elsewhere.

That access comes at a real price. California's $800 minimum franchise tax applies every year regardless of income, on top of a filing fee and a separate biennial report most other states don't require.

One caveat worth knowing before you form anything: venture investors typically want the company they're funding to be a Delaware C-corp, not a California LLC. An LLC alone doesn't unlock the fundraising advantage California's ecosystem is known for. Founders planning to raise equity funding should weigh that against the LLC route before filing.

Step 1: Choose and Reserve Your LLC Name

Your LLC's name has to be distinguishable from other entities already on file with the California Secretary of State.

• Include a designator like "LLC" or "Limited Liability Company."
• Search first. The Secretary of State's business search tool shows whether a name is already taken before you file anything.
• Not filing right away? California will hold your chosen name for 60 days through a reservation. The fee is commonly cited around $10, but we'd check that number on the Secretary of State's site before sending payment.
• No publication requirement for LLC formation itself. That rule exists for a separate fictitious business name (DBA) filing, not for forming the LLC.

Step 2: Appoint an Agent for Service of Process

California calls its registered agent an "agent for service of process." Functionally it's the same role: a person or company with a physical California address, available during business hours to accept legal documents on the LLC's behalf.

• An individual agent must be a California resident with a street address, not a PO box.
• A commercial agent registers with the state using Form 1505 before it can act as an agent for other businesses.
• There's no dedicated "change of agent" form. If you switch agents later, you update the change through your Statement of Information rather than filing a separate document, which trips up founders expecting a standalone form.

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

Form LLC-1 is the filing that legally creates your LLC. You file it with the California Secretary of State, most commonly through the bizfile Online portal.

• Filing fee: commonly cited at $70. This is the current fee as far as we could verify, but confirm it on the Secretary of State's site before you file, since fee schedules change.
• Standard processing time: California doesn't publish a fixed day count for standard filings, and it can vary, sometimes running several weeks depending on volume.
• 24-Hour Filing (Class C): $350.
• Same-Day Filing (Class B): $750, and the filing must arrive by 9:30 a.m.
• 4-Hour Filing (Class A): $500, available only for documents dropped off in Sacramento.
• 24-Hour Preclearance: $500, also drop-off only.
• Special handling fee: a $15 fee applies to drop-off filings on top of the expedite fee.

Once the Secretary of State accepts your Articles of Organization, your LLC legally exists, and the compliance clock covered in Step 6 starts immediately.

Step 4: Draft an Operating Agreement

California is one of the few states that requires an LLC operating agreement, though it isn't filed with the state or notarized.

• It stays with your internal business records, not with the Secretary of State.
• It lays out management structure, ownership percentages, and how profits and losses are split among members.
• It backs up your liability protection by showing the LLC is genuinely run as a separate entity, not just a formality on paper.
• A single-member LLC still benefits from one, since banks and other institutions sometimes ask to see it before opening an account or extending credit.

Step 5: Get an EIN, Even Without an SSN

Most founders apply for an EIN online and get it in minutes. Founders without a Social Security Number or an Individual Taxpayer Identification Number (ITIN) can't use that tool, but the EIN itself is still free and still required to open a US bank account or file taxes.

Without an SSN or ITIN, you apply using Form SS-4 by phone, fax, or mail instead of online.

The manual route's speed depends mostly on volume and whether the responsible-party details are filled in correctly the first time. A rejected submission means starting the wait over.

Open a US Business Bank Account

Once you have your EIN, open a dedicated business bank account before you start moving money through the LLC.

• Keeping business and personal funds separate is one of the clearest ways to preserve the liability protection an LLC is supposed to provide, since commingled funds are a common argument for piercing the corporate veil.
• Banks typically ask for the Articles of Organization, the EIN confirmation letter, and the operating agreement before opening the account, so have all three ready.
• A separate account also makes bookkeeping and tax filing simpler, since every business transaction runs through one place instead of getting mixed in with personal spending.

Step 6: File Form 5472 if the LLC Is Foreign-Owned

A California LLC owned 25% or more by a non-US person carries a federal obligation on top of everything the state requires: an annual Form 5472 filing with the IRS, due even in a year the LLC brought in no revenue. Where the LLC happens to be formed doesn't change this; it's tied to ownership, not geography.

• A pro forma Form 1120 rides alongside it. The LLC doesn't owe corporate tax as a disregarded entity, but the IRS still wants this placeholder return submitted with the 5472.
• The form documents money moving between owner and LLC, covering things like capital put into the business or amounts paid for services rendered.
• The deadline tracks your income tax return, and the same extension options generally apply.

Skipping it is expensive: the IRS sets a $25,000 floor for the penalty on a late or unfiled Form 5472, assessed per form, per year, with no reduction for an LLC that had zero activity. Even a California LLC sitting completely dormant still has to file.

Step 7: Handle California's Ongoing Compliance

This is where California diverges most from cheaper formation states. Three separate obligations run on three separate schedules, and missing any one of them can put your LLC out of good standing.

The $800 Minimum Annual Franchise Tax Never Goes Away

Every LLC "doing business" in California, or one whose Articles were simply accepted by the Secretary of State, owes an $800 minimum franchise tax every year. It's owed regardless of income, profit, or activity level.

The first-year exemption under AB 85 expired December 31, 2023. It only ever applied to LLCs organized between January 1, 2021 and December 31, 2023. Any LLC formed in 2024 or later, including one formed in 2026, owes the full $800 in its first year, with no waiver.

• First-year due date: the 15th day of the 4th month after formation.
• Every year after: due April 15.
• This is separate from income tax. California LLCs pass income, gains, losses, and credits through to members' personal returns, and the $800 franchise tax is levied on top of that, whether or not the LLC has any profit at all.

The Statement of Information Runs on Its Own Clock

Form LLC-12, the Statement of Information, files with the California Secretary of State rather than the tax agency, and it costs $20. It's due every two years, not annually.

• First filing: due within 90 days of formation.
• After that: due every two years during your LLC's anniversary month, with a filing window that opens six months before it's due.
• Late filing: a grace period of about 60 days applies before a penalty kicks in, commonly cited around $250, though we'd treat that specific figure as worth confirming directly with the Secretary of State.

A Gross-Receipts Fee Kicks In Above $250,000

LLCs with total California income of $250,000 or more owe an additional fee on top of the $800 franchise tax, tiered by income band from $900 to $11,790.

• Paid via Form 3536, an estimated payment due June 15.
• Reconciled on Form 568, the LLC's annual return.
• Applies on top of, not instead of, the $800 minimum franchise tax.

California LLC Costs Breakdown

The formation fee is one of the smaller numbers here. California's recurring obligations are where the real money sits, and they run on three separate schedules. Two figures below are worth confirming on the Secretary of State's site before you pay: the $70 filing fee and the roughly $10 name reservation.

How Long Does It Take to Form an LLC in California?

California doesn't publish a fixed day count for standard filings. Turnaround varies with volume and can sometimes run several weeks, so treat the standard queue as unpredictable rather than planning a launch date around it.

If you can't wait, California sells speed at published prices. 24-Hour Filing (Class C) is $350, and Same-Day Filing (Class B) is $750, with the document required to arrive by 9:30 a.m.

The 4-Hour Filing (Class A) and 24-Hour Preclearance tiers are $500 each, but both are drop-off only, and drop-off filings add a $15 special handling fee on top of the expedite fee.

Formation is only the first leg. Once the Secretary of State accepts Form LLC-1, the EIN comes next, in minutes online if you have an SSN or ITIN, or anywhere from same day to several weeks by Form SS-4 without one.

The bank account can only follow the EIN, and the Statement of Information is due within 90 days of formation either way.

Common Mistakes to Avoid

• Forming in Wyoming or Delaware to dodge the $800 tax: this mostly fails if you actually live or operate in California. "Doing business" is defined broadly, and a California resident running a Wyoming LLC from home generally still owes California's $800 tax and has to foreign-qualify there too, paying to register in a second state on top of it. This only avoids California tax with genuinely zero California nexus, no physical presence and no business conducted there at all.
• Treating the $800 tax as optional in a slow year: it's owed whether the LLC made money or not, and it doesn't scale down for a quiet year.
• Missing the Statement of Information's separate deadline: it's easy to assume the franchise tax payment covers everything, but the Secretary of State's filing runs on its own two-year clock.
• Thinking the EIN wraps things up: if the LLC is foreign-owned, getting the EIN is really where the annual Form 5472 obligation begins, not where the to-do list ends.
• Using a home or friend's address as the agent for service of process: it exposes a personal address on public record and can put the LLC out of good standing if that person moves.

How FinStackk Helps

FinStackk is an accounting and tax compliance platform for U.S. businesses, helping you go from incorporation to ongoing accounting, tax, and compliance, all in one place.

We handle California LLC formation end to end through Fin-Start, including the Articles of Organization filing, agent for service of process, and EIN application.

Once your LLC exists, Fin-Tax tracks the $800 franchise tax, the Statement of Information, and the gross-receipts fee on a proactive deadline calendar instead of leaving you to track three separate schedules yourself. Book a free demo to see both in action.

FAQ

Does California still waive the $800 franchise tax in an LLC's first year?

No. That waiver came from AB 85 and only applied to LLCs organized between January 1, 2021 and December 31, 2023. It expired at the end of 2023. Any LLC formed in 2024 or later, including one formed in 2026, owes the full $800 minimum franchise tax in its first year, due the 15th day of the 4th month after formation.

Can I avoid California's $800 LLC tax by forming in Wyoming or Delaware instead?

Generally, no, if you actually live or operate in California. The state taxes any LLC "doing business" in California regardless of where it was formed, and that definition is broad. A California resident running an out-of-state LLC typically still owes the $800 tax and has to register as a foreign LLC in California, paying a second state's compliance costs on top. This only works with genuinely zero California nexus, no physical presence and no business conducted there.

What happens if I miss California's Statement of Information deadline?

The Statement of Information (Form LLC-12) is separate from the franchise tax and due within 90 days of formation, then every two years after. A grace period of roughly 60 days typically applies before a penalty, commonly cited around $250, can be assessed. Missing it repeatedly can also put the LLC out of good standing with the Secretary of State.

Is an operating agreement required for a California LLC?

Yes. California is one of the few states that requires an LLC to have an operating agreement, though it isn't filed with the state or notarized. It stays with your internal business records rather than going to the Secretary of State.

It should lay out management structure, ownership percentages, and how profits and losses are split among members. A single-member LLC still needs one, and that is where the requirement is most often overlooked.

Banks and other institutions sometimes ask to see it before opening an account or extending credit, so keep a signed copy with your business records.

Can a non-US resident start an LLC in California?

Yes. California sets no residency or citizenship requirement to own a California LLC. You will still need an agent for service of process, California's term for a registered agent, at a physical California address, which usually means a paid service if you're not in the state. Because you won't have an SSN, you apply for your EIN on Form SS-4 by phone, fax, or mail instead of the online tool. If your LLC is single-member and 25% or more foreign-owned, you also file Form 5472 with the IRS every year, even at zero revenue, or risk a $25,000 minimum penalty.

What are the annual filing requirements for a single-member LLC in California?

Every California LLC, including a single-member one, owes the $800 minimum franchise tax every year, due the 15th day of the 4th month after formation in year one and April 15 thereafter, regardless of income. It also files a Statement of Information (Form LLC-12), due within 90 days of formation and every two years after, for $20. An LLC with California income of $250,000 or more owes an added gross-receipts fee, tiered from $900 to $11,790. A single-member LLC that is 25% or more foreign-owned additionally files Form 5472 with the IRS every year, even at zero revenue.

Does a California LLC pay income tax?

California LLCs are pass-through entities, so income, gains, and losses flow through to the members' personal returns rather than being taxed at the entity level. On top of that, every LLC owes the $800 minimum franchise tax each year regardless of profit, and there is no first-year waiver for LLCs formed in 2024 or later since the AB 85 exemption expired at the end of 2023. An LLC with California income of $250,000 or more also owes a tiered gross-receipts fee, from $900 to $11,790, on top of the $800.