6 Steps to Starting Your LLC in California

Selecting the correct entity to form as is an essential part of running a successful small business in California. If you've never done it before or are a little rusty, use this blog as your guide to understanding the benefits of forming as an LLC in the state, along with detailed instructions on how to make your business official! 

What are the benefits of starting an LLC in California?

California offers a large workforce, diverse industries, and a robust economy, which makes starting a California LLC a great decision.

Other benefits of starting an LLC in California include:

• Asset protection
• Limited liability for LLC members
• Pass-through taxation
• Management structure

How to start your LLC in California

There are 6 steps you’ll need to complete to establish your LLC in California.

Step 1: Name Your LLC

The first step to forming an LLC in California is to select a name. Your LLC name must be distinguishable from other businesses. 

You'll search the California Business Search records to see if your LLC name is available. After identifying your business name, you have the option to reserve it for a small fee.

Finding a unique brand name and a usable domain to go with it can be a bit of a time-sink. This free tool from Business Name Zone generates name and domain combos for you based on your input – and it only takes a few minutes.

Here are other things you should consider when creating or choosing your LLC name:

• The name should have Limited Liability Company, LLC, or  L.L.C. (can be abbreviated or not)
• Your business name must be unique
• It should not include words that imply that your company is a government entity or unit (e.g., Commission, Municipal, “Department of,” Village, City, etc.)
• Professorial Corporation or Prof Corp is not allowed
• Must not include words that imply insurance if you are not in that business (e.g., Insurance, Insurance Broker, or Insurance Agency)

Step 2: California Registered Agent

The second step to starting an LLC in California is to meet the registered agent requirement. In California, registered agents are known as an agent for service of process. A California state agent for service of process can be a professional corporation or an individual. 

If the registered agent service is a corporation, the corporation must have filed a Registered Corporate Agent for Service of Process Certificate or Form 1505. If the California registered agent for service of process is an individual, the individual must live in California.

Step 3: File Articles of Organization

For the third step, you’ll file Articles of Organization. The information you’ll provide includes the following: 

• LLC name
• LLC information (business address, city, zip code of initial designated office)
• Agent for Service of Process 
• Management option 
• Purpose statement
• Signature

You can file the California LLC Articles of Organization online.

Step 4: Get an EIN

The fourth step to starting an LLC in California is to get an EIN. There are several options to get your EIN, but it’s free no matter which option you choose. You can apply by fax, by postal mail, or apply for an EIN online.

Step 5: File Initial Statement of Information

The penultimate step to starting an LLC in California is to file your initial Statement of Information. The state of California has three requirements for the Statement of Information:

• You’ll complete the Statement of Information within the first 90 days of filing your Articles of Organization. 
• After filing your initial Statement of Information, it’s due every two years. 
• It will be due either every odd year or every even year, based on the year of your initial registration.

Step 6: Create an Operating Agreement

The final step to creating an LLC in California is to draft an operating agreement. LLCs in California must maintain operating agreements, but LLCs aren’t required to file it with the Secretary of State. 

An operating agreement will contain detailed information about your LLC, including:

• Basic Information
• Contributions, Interest, Members
• Management Information
• Leaving or Terminating Information
• Conditions for transfer of ownership
• Liability Clauses
• Dissolution procedures
• Governing laws
• Amendment agreements

Some basic information you’ll need includes your LLC name, Articles of Organization information, and registered agent information. You’ll also need to provide the duration of your LLC and more. 

Other Considerations

In addition to your responsibilities forming your LLC, you'll also need to generate biennial reports and select your membership structure.

Manager or Member Management

The first consideration you’ll need to make is how you’ll manage your LLC. You have two options, either a manager or member-managed. 

If your LLC is member-managed, it will include a single managing member. If a manager manages the LLC, a hired manager who is an employee will manage the LLC.

Biennial Report

The second consideration you’ll make is to complete the Biennial Report in compliance with the Statement of Information requirement. 

You’ll complete the Biennial Report every two years after the year of initial registration.

How much does it cost to form an LLC in California?

The costs of forming an LLC in California will vary and depend on whether you use a service or file on your own. 

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

Forming a multi-member LLC in California may take up to a few weeks to complete. You may submit some required forms online to the California Secretary of State, who typically processes electronic documents faster than those received via postal mail. There is also an option to deliver the forms in person to the Secretary of State's office.  

LLC fees in California

California will collect a number of fees associated with starting your LLC. 

• Articles of Organization ($70) 
• Articles of Organization certified copy ($5, optional fee)
• Statement of Information ($20) 
• Name Reservation Costs ($10 optional fee)

Let Our Experts Help You Start Your LLC in California

Establishing your LLC in California is exciting, but it can also be overwhelming if you're just starting out. That's why so many California owners and entrepreneurs trust 1-800Accountant, America's leading virtual accounting firm for small businesses, for their LLC formation needs.

Whether it's a complimentary business formation, tax advisory, or any of our professional accounting services, we have the solution you need at a price that works for you. Schedule a quick consultation – usually 30 minutes or less – to learn how we can help make your business official in California.