What Is an LLC in California?
A limited liability company organized in California is a distinct legal entity that combines the liability protection of a corporation with the operational flexibility and pass-through tax treatment more commonly associated with partnerships. LLCs in California are governed by the California Revised Uniform Limited Liability Company Act (Cal. Corp. Code § 17701.01 et seq.), which took effect on January 1, 2014.
Members of a California LLC are generally shielded from personal liability for the company’s debts and obligations; their exposure is ordinarily limited to what they have contributed to the business. Management may be vested in the members themselves or delegated to one or more managers, as provided in Cal. Corp. Code § 17704.07. For federal tax purposes, a single-member LLC defaults to disregarded-entity treatment, while a multi-member LLC defaults to partnership treatment; either type may elect corporate taxation by filing IRS Form 8832. Members may shape the LLC’s internal governance through an operating agreement, which California law requires every LLC to maintain.
California imposes an annual $800 minimum franchise tax on every LLC doing business in or organized in the state, collected by the Franchise Tax Board. LLCs with total California income exceeding $250,000 also owe an additional income-based fee.
California LLC Name Search
The name chosen for a California LLC must be distinguishable in the records of the Secretary of State from every other LLC name on file and must not be “likely to mislead the public.” Under Cal. Corp. Code § 17701.08, the name must contain the words “limited liability company” or the abbreviation “L.L.C.” or “LLC.” The word “Limited” may be abbreviated as “Ltd.” and “Company” as “Co.”
Certain words are expressly prohibited: the name may not include “bank,” “trust,” “trustee,” “incorporated,” “inc.,” “corporation,” “corp.,” or language suggesting the LLC is in the business of issuing insurance policies. Words implying a government affiliation, such as “Agency,” “Commission,” or “Department,” may also be rejected under the Secretary of State’s Business Entity Names Regulations. An organizer should run a preliminary search through the bizfile Online Business Search before filing, though a preliminary search is not a formal determination of availability.
Name Reservation: A name may be reserved for 60 days by submitting a reservation request through bizfile Online and paying $10.00. Under Cal. Corp. Code § 17701.09, consecutive 60-day reservations may not be issued to the same applicant or for the benefit of the same person—at least one day must lapse between reservation periods.
Note: The Secretary of State checks proposed LLC names only against other LLC names on record. The search does not cover trademarks, service marks, or fictitious business names filed with county clerks.
Choosing an LLC Registered Agent in California
Every California LLC must designate and continuously maintain both a California office and an agent for service of process within the state. Cal. Corp. Code § 17701.13 establishes these requirements and specifies that the agent receives service of process, legal notices, and official correspondence on behalf of the LLC.
The agent must be either an individual who resides in California or a corporation that has filed the requisite statement under Cal. Corp. Code § 1505 and whose capacity to serve as agent has not been terminated. If a corporate agent is designated, only its name, not its address, is listed in the articles of organization.
- Individual agent: Must be a California resident with a physical address in the state.
- Entity agent: Must be a California corporation or a foreign corporation authorized to transact business in California that has complied with Cal. Corp. Code § 1505.
The office the LLC maintains in California under Cal. Corp. Code § 17701.13(a) need not be a place of its business activity, but it must be a location where the LLC keeps certain records, including a current list of members and managers, copies of the articles of organization, the operating agreement, and six years of tax returns and financial statements. Failure to maintain a valid agent for service of process may result in the Secretary of State being designated to accept service on behalf of the LLC.
LLC Filing Requirements in California
A California LLC comes into existence when the Secretary of State files the LLC’s articles of organization. Under Cal. Corp. Code § 17702.01, one or more organizers may form an LLC by signing and delivering articles of organization on the form prescribed by the Secretary of State. California requires that initial formations be submitted online through bizfile Online.
The articles of organization must include:
- A statement that the LLC’s purpose is to engage in any lawful act or activity
- The LLC’s name, including a required designator
- The street address of the LLC’s initial principal office and its mailing address, if different
- The name and street address of the initial agent for service of process (if a corporate agent, name only)
- A statement that the LLC is manager-managed, if applicable
- A statement that the LLC will have only one manager, if applicable
The filing fee is $70.00. Payment is made by credit card through the online filing system. The LLC is formed when the Secretary of State has filed the articles—not upon submission, but upon the office’s acceptance and filing of the document.
By Mail or In Person: Although initial formation is filed online, other LLC filings such as amendments (Form LLC-2) may be submitted by mail or in person. The mailing address is Secretary of State, Document Filing Support, P.O. Box 944228, Sacramento, CA 94244-2280. In-person drop-off is available at 1500 11th Street, Sacramento, CA 95814, Monday through Friday, 8:00 a.m. to 5:00 p.m., excluding state holidays. A $15.00 special handling fee applies to each in-person drop-off request, in addition to the filing fee.
Expedited processing is available through bizfile Online or by drop-off at the Sacramento office:
| Service Level | Fee | Turnaround |
| 24-Hour (Class C) | $350.00 | Filing response within 24 hours |
| Same Day (Class B) | $750.00 | Filing response by 4:00 p.m. same day (must submit by 9:30 a.m) |
| 4-Hour (Class A) | $500.00 | Filing response within 4 hours (drop-off only; preclearance required) |
Statement of Information: Within 90 days of filing the articles of organization, the LLC must file an initial Statement of Information with the Secretary of State and pay $20.00. The statement is filed online through bizfile Online and must be renewed every two years. Failure to file results in a $250.00 penalty collected by the Franchise Tax Board.
How Much Does it Cost to Create an LLC in California?
| Cost | Mandatory or Optional | Amount | When It Applies | Official Source |
| Articles of Organization (online filing) | Mandatory | $70.00 | At formation | California LLC Forms and Fees |
| Statement of Information | Mandatory | $20.00 | Within 90 days of formation, then biennially | Statement of Information—LLC |
| Annual Franchise Tax (FTB) | Mandatory | $800.00 | Due by the 15th day of the 4th month after formation, then annually | FTB — Limited Liability Company |
| Name Reservation | Optional | $10.00 | Before formation, if reserving a name | Name Reservations — California Secretary of State |
| 24-Hour Expedited Filing (Class C) | Optional | $350.00 | At formation, if expedited processing is requested | Service Options — Business Entities |
| Same Day Expedited Filing (Class B) | Optional | $750.00 | At formation, if same-day processing is requested | Service Options — Business Entities |
| Drop-Off Special Handling Fee | Optional | $15.00 | If filing in person in Sacramento | Service Options — Business Entities |
| Certified Copy | Optional | $5.00 per document | If a certified copy of the formation documents is needed | California LLC Forms and Fees |
| Certificate of Status | Optional | $5.00 per entity | If proof of good standing is needed | California LLC Forms and Fees |
| Seller’s Permit (CDTFA) | Conditional | No fee | If selling taxable goods or services | CDTFA Online Registration |
| LLC Income-Based Fee | Conditional | $900 to $11,790 | If the annual California income exceeds $250,000 | FTB — Limited Liability Company |
LLC Operating Agreement in California
California requires every LLC to have an operating agreement. Cal. Corp. Code § 17701.10 provides that the operating agreement governs the relations among the members, the rights and duties of managers, the activities of the LLC, and the means for amending its own terms. The operating agreement is not filed with the Secretary of State—it is an internal governance document maintained at the LLC’s designated California office alongside the articles of organization, tax returns, and other records required under Cal. Corp. Code § 17701.13(d).
Although California mandates that an LLC “shall have” an operating agreement, the statute does not require it to be in writing for all purposes. Certain provisions, however—including modifications to fiduciary duties and indemnification terms—must be outlined in a written operating agreement under Cal. Corp. Code § 17701.10(d) and (e). A written agreement is strongly advisable for any California LLC, regardless of size.
Where the operating agreement is silent, the statute’s default rules govern. Key defaults include:
- Member-Managed (Default): Management and conduct of the LLC are vested in the members, with each member holding equal rights, unless the articles of organization provide otherwise (Cal. Corp. Code § 17704.07).
- Voting: Members vote in proportion to their interests in current profits, unless the articles or a written operating agreement provide otherwise.
- Distributions: No statutory rule allocates profits in specified proportions by default; instead, the operating agreement governs. Distributions before dissolution are subject to the rules in Cal. Corp. Code § 17704.05.
- Transfer of interests: A transferee of a member’s transferable interest does not automatically become a member without the consent required by the statute or the operating agreement.
A single-member LLC should also maintain a written operating agreement to reinforce the separation between the member’s personal affairs and the LLC’s operations—a distinction that courts may examine if limited liability is challenged.
Note: Because California law mandates an operating agreement, operating without one means the LLC’s internal affairs will be governed entirely by the statute’s default provisions, which may not align with the organizer’s intentions.
How to Get an EIN for an LLC in California
A federal Employer Identification Number (EIN) is a nine-digit number the Internal Revenue Service assigns to identify a business for tax purposes. Any California LLC that has employees, files federal excise tax returns, or withholds taxes on income paid to a nonresident alien must obtain an EIN. A single-member LLC with no employees is not strictly required to have one, but California banks typically require an EIN to open a business account, and the Franchise Tax Board uses the EIN for state tax filings.
The fastest application method is the IRS EIN Online Application, which issues the number immediately. The online tool is available Monday through Friday, 7:00 a.m. to 10:00 p.m. Eastern Time, and requires the applicant to hold a valid Taxpayer Identification Number (SSN or ITIN). The LLC must be located in the United States or a U.S. territory.
An applicant may also complete IRS Form SS-4 and submit it by fax (approximately 4 business days) or by mail (approximately 4 to 5 weeks). The application requires the name and Taxpayer Identification Number of the LLC’s responsible party—the individual who controls, manages, or directs the entity and its funds and assets.
There is no fee to apply for an EIN.
Registering for State Taxes in California
California imposes several tax obligations on LLCs that go beyond federal pass-through treatment. Every LLC organized or doing business in the state owes a minimum annual franchise tax of $800 to the Franchise Tax Board, payable using an LLC Tax Voucher (FTB 3522). The tax is due by the 15th day of the 4th month after the beginning of the LLC’s taxable year. The first-year exemption for LLCs formed between 2021 and 2023 under Assembly Bill 85 has expired. LLCs formed in 2024 and later owe the full $800 in their first year.
An LLC with total California income exceeding $250,000 also owes an additional fee, estimated and paid by the 15th day of the 6th month of the current tax year. The fee ranges from $900 (for income of $250,000 to $499,999) to $11,790 (for income of $5,000,000 or more), as detailed on the FTB Limited Liability Company page.
- Sales and Use Tax: An LLC that sells or leases tangible personal property in California must obtain a seller’s permit from the California Department of Tax and Fee Administration (CDTFA). Registration is free and completed through the CDTFA Online Registration portal. The statewide base sales tax rate is 7.25%, though combined local rates vary by jurisdiction.
- Income Tax: California imposes a personal income tax. Members of a pass-through LLC report their distributive share of the LLC’s income on their California personal income tax returns. An LLC that elects corporate taxation files a separate California corporate franchise tax return.
Registering as an Employer in California
An LLC that hires employees in California must register with the Employment Development Department and secure workers’ compensation coverage before the first day of work.
Unemployment Insurance and Payroll Taxes: California combines unemployment insurance (UI), employment training tax (ETT), state disability insurance (SDI), and personal income tax (PIT) withholding under a single employer payroll tax account administered by the Employment Development Department (EDD). Employers register through e-Services for Business to obtain an employer payroll tax account number. New employers pay a UI contribution rate of 3.4% on the first $7,000 of each employee’s wages.
Workers’ Compensation Insurance: California requires every employer, even those with only one employee, to carry workers’ compensation insurance. Coverage must be obtained through a private insurance carrier or through a lawful self-insurance program. The Division of Workers’ Compensation within the Department of Industrial Relations oversees compliance and adjudicates disputes.
New Hire Reporting: Federal and state law require employers to report all newly hired and rehired employees to the California New Employee Registry within 20 calendar days of the employee’s start-of-work date.
| Obligation | Agency | Registration Method |
| Unemployment Insurance / SDI / PIT Withholding | Employment Development Department (EDD) | e-Services for Business |
| Workers’ Compensation Insurance | Division of Workers’ Compensation (DIR) | Private carrier; DWC Employer Information |
| New Hire Reporting | Employment Development Department (EDD) | New Employee Registry |
The LLC must also comply with federal employer obligations, including filing IRS Form 941 (quarterly payroll tax return), paying FUTA (Federal Unemployment Tax Act) taxes, and completing Form I-9 (Employment Eligibility Verification) for each new hire.