The complete California LLC guide

Why it matters. A few businesses cannot legally operate as a California LLC. Catching this first avoids a rejected filing and a wasted $70.

California law bars an LLC from three activities outright: banking, issuing insurance policies or assuming insurance risk, and the trust company business.

Separately, §17701.04(e) says an LLC may not render "professional services" — meaning any service that may lawfully be provided only under a licence, certification or registration issued under the Business & Professions Code, the Chiropractic Act, the Osteopathic Act, or the Yacht and Ship Brokers Act. That is a definition, not a published list, so it sweeps in doctors, dentists, lawyers, CPAs, architects, engineers, land surveyors, psychologists, MFTs, LCSWs, optometrists, pharmacists, veterinarians, chiropractors, acupuncturists, nurses and licensed real-estate brokers, among others. Those professionals generally use a Professional Corporation instead; law, public accountancy, engineering, land surveying and architecture may also use a Registered LLP.

The important exception: licensed contractors CAN use an LLC (SB 392, 2010), but CSLB adds a $25,000 qualifying-individual bond, a $100,000 employee/worker bond, and liability insurance starting at $1 million.

If a licence is involved and it is not clearly settled, the licensing board — not us — is the authority, and we will refer the question out before filing.

What’s needed

A description of what the business actually does, and any professional license involved.

Timing

Before anything is filed

Authority

Corporations Code §17701.04

Who does it

Together

↗ Corp. Code §17701.04 ↗ CSLB — LLC licences

Why it matters. The Secretary of State rejects names that are not distinguishable from an existing entity. Three ranked choices means a rejection costs days, not weeks.

The name must contain "Limited Liability Company", "L.L.C." or "LLC". "Limited" may be shortened to "Ltd." and "Company" to "Co."

It may NOT contain: bank, trust, trustee, incorporated, inc., corporation, corp., insurer, insurance company, or anything implying it issues insurance.

It must be distinguishable in the Secretary of State's records from every existing California LLC, registered foreign LLC and reserved name. Names are NOT made distinguishable by: adding or dropping the entity designator; upper vs. lower case; punctuation, symbols or spacing; or "&" instead of "and". The SOS's own example: "Good Time Rest Home, LLC" and "Goodtime Rest Home LLC" are the same name.

Two cautions worth stating plainly. First, the bizfileOnline business search is explicitly a preliminary check only — it is not a formal availability determination, so do not order signage, print business cards or buy inventory until the filing is confirmed. Second, the SOS checks the name only against entity records. It does not check trademarks, service marks or fictitious business names, so name clearance and trademark clearance are two different questions.

What’s needed

Three name choices in priority order.

Timing

Before filing

Authority

Corporations Code §17701.08 · SOS Name Guidelines

Who does it

You

↗ Check a name (bizfileOnline) ↗ SOS name guidelines (PDF)

Why it matters. Useful when the filing has to wait — for a licence, a partner signature, or a chosen effective date.

A reservation costs $10 and holds the name for exactly 60 days. It cannot be renewed back-to-back — at least one day must pass between reservation periods. Most straightforward formations skip this and simply file.

What’s needed

Your go-ahead; the reservation is in the LLC organiser’s name.

Timing

Holds the name 60 days; cannot be renewed for consecutive periods

Authority

California Secretary of State

Government fee

$10

Who does it

We handle this

↗ SOS name reservations

Why it matters. Form LLC-1 requires a California street address for the designated office. A P.O. box will get the filing rejected.

The initial designated office must be a physical California street address — suite numbers are fine, P.O. boxes are not. The mailing address may be a P.O. box and may be out of state.

Both addresses become public record and are searchable on bizfileOnline. If you work from home and would rather not publish that address, tell us before we file; there are legitimate alternatives worth discussing first.

What’s needed

A California street address (no P.O. box) and a mailing address if different.

Timing

Before filing

Authority

Form LLC-1, Items 2–3

Who does it

You

↗ Form LLC-1 (PDF)

Why it matters. Form LLC-1 forces exactly one choice, and it decides who can legally bind the company.

Member-managed means every owner has authority to act for the LLC. It is the usual choice for a single owner or a small group who all work in the business.

Manager-managed means only the named manager(s) can bind the company. It suits passive investors, or an owner group that wants day-to-day authority concentrated.

This is a structural decision with real consequences and it belongs to you — we will lay out how each option works, and if the choice is genuinely close we will refer you to a business attorney rather than pick for you.

What’s needed

One of: all members manage · one manager · more than one manager.

Timing

Before filing

Authority

Form LLC-1, Item 5

Who does it

You

Why it matters. Every California LLC must have someone at a California street address to receive lawsuits and official notices. There is no way to file without one.

Option A — an individual. Must actually reside in California and must give a physical street address, never a P.O. box. That address becomes public record.

Option B — a registered corporate agent. The company must be active and already have a Form 1505 on file with the Secretary of State. You list the company's name only; adding an address for a corporate agent will get the filing rejected.

Two rules that trip people up: you may not list both an individual and a company, and a business entity cannot act as its own agent.

The practical trade-off is privacy and reliability. An individual agent is free but publishes a home address and must be reachable during business hours. A commercial agent typically runs $50–$150/year and keeps your address off the public record.

What’s needed

Either an individual California resident with a street address, or a registered corporate agent.

Timing

Before filing

Authority

Form LLC-1, Item 4

Who does it

You

↗ SOS business entity FAQs

Why it matters. Ownership percentages drive the operating agreement and the tax filings. The responsible party is required to get an EIN.

Member names and ownership percentages are NOT filed with the Secretary of State on Form LLC-1 — but they are the backbone of your operating agreement, and they determine how the LLC is taxed.

Ownership percentages should total 100%.

The IRS responsible party must be a real individual — "the person who ultimately owns or controls the entity" — with a valid SSN or ITIN. It cannot be a company, and it cannot be a nominee. The IRS issues only one EIN per responsible party per day.

One member or several also decides your default federal tax treatment: a single-member LLC is disregarded (reported on your personal return), a multi-member LLC defaults to a partnership.

What’s needed

Full legal name, address, ownership % for each member; who is the responsible party.

Timing

Before filing

Authority

IRS Form SS-4 · RULLCA

Who does it

You

↗ IRS — Form SS-4 instructions

Why it matters. We verify identity before filing anything in your name, and banks will ask for the same records later.

We will request specific documents rather than a generic pile. Upload only what is on your list.

We do not need — and will never ask for — Social Security cards, full SSNs by email, bank passwords or login credentials. If anything claiming to be from us asks for those, stop and call us.

What’s needed

Whatever appears in your document checklist — typically a government photo ID per member.

Timing

Before filing

Authority

Internal verification policy

Who does it

You

Why it matters. Nothing is filed until you confirm the details are right. Corrections after filing cost money and time.

Read the summary carefully — especially the spelling of the LLC name, the addresses and the agent details. Amending Articles of Organization after the fact means another filing and another fee.

What’s needed

Your review and confirmation.

Timing

Before filing

Who does it

You

Why it matters. A rejected filing costs days. We check distinguishability and the designator rules before submitting.

We search the SOS records for conflicts, confirm the designator and prohibited-word rules, and assemble Form LLC-1 with the statutory purpose language California requires:

"The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the California Revised Uniform Limited Liability Company Act."

That wording is fixed. You do not describe your specific business on the LLC-1.

What’s needed

Nothing from you.

Timing

1–2 business days after sign-off

Authority

California Secretary of State

Who does it

We handle this

Why it matters. This is the moment the LLC legally exists.

The filing fee is $70. Note that the SOS's own LLC-1 PDF still carries stale language about a fee waiver that expired on 30 June 2023 — the $70 is due.

Processing as of early August 2026: online filings roughly 1 business day, mail and in-person roughly 3 business days. Turnaround stretches near calendar and fiscal year-end. Expedited options exist if you have a hard deadline: 24-hour $350, same-day $750, 4-hour $500 (drop-off, preclearance required). Counter drop-off adds a non-refundable $15 whether or not the filing is accepted.

Since 1 August 2026, filing online through bizfileOnline requires User Access — a control the SOS added to stop unauthorised submissions against an entity's record.

When it clears you receive the stamped Articles and a 12-digit entity number. Keep both; every downstream step asks for them.

What’s needed

Nothing from you — we file and send you the stamped copy.

Timing

Online filings are currently processing in about 1 business day

Authority

California Secretary of State, Form LLC-1

Government fee

$70

Who does it

We handle this

↗ bizfileOnline ↗ SOS processing times

Why it matters. Without one, California’s default statutory rules govern your company — and they are rarely what owners actually want.

An operating agreement is not filed with the Secretary of State and is not required to form the LLC. Under RULLCA it can even be oral or implied. None of that makes it optional in practice.

Where there is no agreement, RULLCA's defaults fill every gap — how profits are split, how a member exits, what happens on death or deadlock, whether anyone can be forced to buy anyone out. Banks routinely ask for one to open an account. So do most lenders and investors. And for a single-member LLC it is a core piece of evidence that the company is genuinely separate from you personally, which is the whole point of limited liability.

We provide a standard written agreement covering ownership, capital, distributions, management, transfers and dissolution. If your ownership is unusual — unequal capital versus profit splits, vesting, investors, non-US members — that is attorney territory and we will say so.

What’s needed

Agreement among the members on the terms; signatures.

Timing

As soon as possible after formation

Authority

California RULLCA (Corp. Code §17701 et seq.)

Who does it

Together

↗ SOS FAQs

Why it matters. You need it to open a bank account, hire anyone, and file most tax returns.

An EIN is free. Apply online at IRS.gov and it is issued immediately; by fax takes about four business days, by mail about four weeks. Anyone charging a fee to "obtain" your EIN is charging for a free government service.

Apply only AFTER the Articles are filed, so the legal name on the EIN matches the entity name exactly.

The IRS treats most new single-member LLCs as needing an EIN, and one nuance catches people out: even when a single-member LLC is disregarded for income tax, it must use its own name and EIN for employment and excise taxes.

The responsible party must be a natural person with a valid TIN, and the IRS issues one EIN per responsible party per day.

What’s needed

The responsible party’s legal name and SSN or ITIN.

Timing

After the LLC is formed, before banking or payroll

Authority

IRS, Form SS-4

Government fee

Free

Who does it

Together

↗ IRS — Apply for an EIN online ↗ IRS — Single member LLCs

Why it matters. This is the deadline that most often goes wrong. Missing it triggers a $250 penalty and can suspend the LLC.

The initial LLC-12 is due within 90 days of formation and costs $20.

After that it is biennial. The filing window is the six months ending on the last day of your registration anniversary month — an LLC registered in January files between 1 August and 31 January; one registered in June files between 1 January and 30 June.

If nothing has changed since the last complete statement you may file Form LLC-12NC, also $20. Amendments filed between periods are free.

Miss it and the Franchise Tax Board assesses a $250 penalty on the Secretary of State's certification, and the entity can be suspended or forfeited. A suspended LLC loses the right to transact business, loses the right to use its own name, and cannot bring or defend a lawsuit — a genuinely serious position to be in. Waivers exist for reasonable cause but are not automatic.

What’s needed

Confirmation that your addresses, agent and management details are still current.

Timing

Within 90 days of the Articles being filed — then every 2 years

Authority

California Secretary of State, Form LLC-12

Government fee

$20

Who does it

We handle this

↗ SOS — Statements of Information ↗ FTB penalty chart

Why it matters. Mixing personal and business money is the single most common way owners lose limited liability protection.

Open the account before the first dollar comes in. Every business expense should run through it, and owner draws should be recorded as transfers rather than direct personal spending.

Courts look at exactly this when deciding whether to disregard an LLC and hold owners personally liable. Clean separation is cheap; reconstructing it later is not.

What’s needed

Stamped Articles, EIN letter, operating agreement, photo ID. Some banks want a certified copy ($5) or Certificate of Status ($5).

Timing

Before taking any revenue

Who does it

You

Why it matters. California charges every LLC $800 a year whether or not it made a dollar — and the first-year exemption no longer exists.

Read this one twice, because most of the internet still gets it wrong. The AB 85 first-year waiver applied only to tax years beginning on or after 1 January 2021 and before 1 January 2024. It has expired. An LLC formed in 2026 owes $800 for its first year.

The payment is due on the 15th day of the 4th month after formation. FTB's own worked example: Articles filed 19 June → $800 due 15 September. After the first year it is due 15 April for calendar-year LLCs.

The tax is owed every year the LLC exists — regardless of profit, regardless of activity — until you file a Certificate of Cancellation with the Secretary of State. Dormant is not the same as closed.

One narrow exception, the 15-day rule: if the LLC did no business in California AND its tax year was 15 days or shorter, no annual tax is owed. In practice that means forming on or after roughly 17 December with no operations.

What’s needed

Payment to the Franchise Tax Board.

Timing

15th day of the 4th month after the LLC is formed, then annually

Authority

Franchise Tax Board, Form 3522

Government fee

$800

Who does it

You

↗ FTB — LLC guidance ↗ FTB Publication 3556

Why it matters. This is an extra graduated fee on top of the $800, and underpaying carries a 10% penalty.

The fee is based on total California income, not profit — so a business with high revenue and thin margins still pays it.

Under $250,000: $0. $250,000–$499,999: $900. $500,000–$999,999: $2,500. $1,000,000–$4,999,999: $6,000. $5,000,000 or more: $11,790.

Underpayment costs 10% of the shortfall. There is a safe harbour: no penalty if your estimated payment for the current year is at least the total fee you actually owed for the prior year.

What’s needed

A realistic estimate of total California income.

Timing

15th day of the 6th month of the tax year

Authority

Franchise Tax Board, Form 3536

Who does it

You

↗ FTB — LLC fee

Why it matters. Every California LLC files it — including a single-member LLC that is invisible to the IRS.

Due dates differ by classification, which is a common and expensive mix-up. An LLC taxed as a partnership files by the 15th day of the 3rd month after year end — 15 March for calendar-year filers. A single-member LLC owned by an individual files by the 15th day of the 4th month — 15 April.

The six-month extension to 15 October is automatic, but it extends the time to file, not the time to pay. Use Form FTB 3537 to pay with an extension.

What’s needed

Your bookkeeping for the year; your CPA files it.

Timing

15 March (multi-member) or 15 April (single-member) for calendar-year LLCs

Authority

Franchise Tax Board, Form 568

Who does it

You

↗ FTB — business due dates

Why it matters. The default treatment is automatic. Changing it (S-corp, C-corp) is an election with deadlines and consequences.

By default a single-member LLC is disregarded (Schedule C, E or F on your personal return, with self-employment tax) and a multi-member LLC is a partnership.

You can elect corporate treatment — Form 8832 for C-corp, Form 2553 for S-corp. An S-corp election can reduce self-employment tax at certain profit levels, but it adds payroll, a reasonable-salary requirement and a separate return, and California still charges the $800 plus a 1.5% S-corp tax.

Whether that trade is worth it depends on numbers we are not qualified to run. This is a CPA decision and we will not make it for you.

What’s needed

A conversation with a CPA or tax professional.

Timing

Election deadlines apply — ask early

Authority

IRS Forms 8832 / 2553

Who does it

You

↗ IRS — Form 8832

Why it matters. Selling tangible goods in California without a permit is a violation, and it is free to get.

Required if you are engaged in business in California and sell or lease tangible personal property that would ordinarily be subject to sales tax at retail. It applies to wholesalers as well as retailers.

There is no fee, though CDTFA may require a security deposit against future unpaid tax. A temporary permit covers operations of 90 days or less at one location — useful for pop-ups and event sellers.

Services are generally not taxable, but the line between a service and a product is blurrier than people expect. If you are unsure, ask CDTFA directly.

What’s needed

Business details and the EIN.

Timing

Before making taxable sales

Authority

California Department of Tax and Fee Administration

Government fee

Free

Who does it

You

↗ CDTFA — seller’s permit

Why it matters. The trigger is $100 in wages in a quarter, and the clock is 15 days.

The threshold is low and it is easy to cross without noticing: more than $100 in wages in a calendar quarter, and you must register within 15 days. Wages include cash, cheques, electronic payments and the reasonable cash value of non-cash payments such as meals or lodging.

Household employers have their own thresholds — $750 to $999.99 in cash wages per quarter means registering and withholding SDI; $1,000 or more adds UI and ETT.

Paying someone as a contractor to avoid this is a well-worn path to an expensive audit. California's worker-classification rules are strict.

What’s needed

Registration through EDD e-Services for Business.

Timing

Within 15 days of paying more than $100 in wages in a calendar quarter

Authority

Employment Development Department

Government fee

Free

Who does it

You

↗ EDD — am I required to register?

Why it matters. There is no minimum. One employee triggers it, and the penalties are severe.

Every California employer with one or more employees must carry coverage. There is no small-employer exemption.

Going without is a misdemeanour carrying a fine of at least $10,000 and up to a year in county jail, civil penalties up to $100,000, a stop order shutting the business down, and either twice the premiums you should have paid or $1,500 per employee, whichever is greater. If an injury claim reaches the WCAB it is $10,000 per employee for a compensable claim. On top of all of that the owner is personally liable for the injury costs and exposed to a civil suit.

This is the single most expensive corner anyone cuts.

What’s needed

A policy from a licensed carrier or the State Fund.

Timing

Before the first employee starts

Authority

Labor Code §3700

Who does it

You

↗ DIR — employer FAQs

Why it matters. California has no statewide business licence — it is local, and nearly every city requires one.

Licensing happens at the city and county level, and requirements and fees vary enormously by jurisdiction and business type. Home-based businesses are generally not exempt — many cities have a specific home occupation permit.

CalGold is the state's permit-assistance database. Enter your business type and location and it returns the federal, state, county and city permits that apply, with contact details for each agency.

Industry-specific licensing sits on top of this: food handling and health permits, alcohol (ABC), contractor (CSLB), childcare, transportation, cannabis, cosmetology, and more.

What’s needed

Your business address and a description of your activity.

Timing

Usually before opening; many cities backdate and add penalties

Authority

City / county · CalGold

Who does it

You

↗ CalGold permit finder

Why it matters. Operating under a name other than the exact LLC name requires a county filing and newspaper publication.

If "Coastal Ventures LLC" trades as "Half Moon Coffee", that second name needs a Fictitious Business Name statement.

File with the county clerk where your principal place of business sits — or Sacramento County if you have no California place of business — within 40 days of commencing business. Then, within 45 days of filing, publish in a newspaper of general circulation in that county once a week for four consecutive weeks, and file the affidavit of publication within 45 days of finishing.

A statement expires five years from the filing date. Fees and forms vary by county; the deadlines above are statewide.

What’s needed

County filing and four weeks of publication.

Timing

File within 40 days of starting; publish within 45 days of filing

Authority

Business & Professions Code §17900 et seq.

Who does it

You

Why it matters. The rule changed in 2025 and a lot of outdated advice is still circulating. Right now domestic LLCs file nothing.

FinCEN's interim final rule of 26 March 2025 redefined "reporting company" to mean only foreign entities registered to do business in the United States. Every entity created in the US — including all California LLCs — and their beneficial owners are exempt from the reporting requirement. FinCEN had already announced in February 2025 that it would not issue fines or penalties in connection with BOI deadlines.

So: if you formed a California LLC, you have no BOI filing obligation today. Anyone telling you otherwise, or charging you to file one, is working from the pre-2025 rules.

The caveat worth keeping: this rests on an INTERIM rule. No final rule had been published as of August 2026, and litigation and legislation are still moving. We re-check fincen.gov each quarter and will tell you if it changes.

What’s needed

Nothing today. We monitor it.

Timing

No current deadline for domestic LLCs

Authority

FinCEN · Corporate Transparency Act

Who does it

We handle this

↗ FinCEN — BOI

Why it matters. Same $250 penalty and suspension risk as the initial statement.

We calendar this from your formation date and prompt you well ahead of the window closing. If nothing has changed, LLC-12NC is the shorter form at the same $20.

What’s needed

Confirm your details are current when we prompt you.

Timing

Six-month window ending the last day of your registration anniversary month

Authority

California Secretary of State, Form LLC-12 / LLC-12NC

Government fee

$20

Who does it

We handle this

↗ SOS — Statements of Information

Why it matters. These recur every single year the LLC exists.

For a calendar-year LLC the rhythm is: 15 March — Form 568 if taxed as a partnership. 15 April — Form 568 if single-member, and the $800 for the current year. 15 June — Form 3536 estimated fee if California income will hit $250,000. 15 October — extended Form 568 deadline.

We keep these on your case calendar and email you ahead of each one.

What’s needed

Bookkeeping and a CPA.

Timing

$800 by 15 April · estimated fee by 15 June · Form 568 by 15 March or 15 April

Authority

Franchise Tax Board

Government fee

$800

Who does it

You

↗ FTB — business due dates

Why it matters. Limited liability is not automatic — it is something a court can take away.

Practical habits that matter: keep the business bank account strictly separate; sign contracts in the LLC's name with your title; keep the operating agreement current and record significant decisions in writing; keep books that would survive an audit; carry appropriate insurance; and never let the LLC be undercapitalised for what it actually does.

When a plaintiff argues the LLC is your alter ego, this is the list they go through.

What’s needed

Ongoing discipline.

Timing

Continuous

Who does it

You

Why it matters. An LLC you stop using still accrues $800 a year until it is formally cancelled.

Walking away is not closing. The $800 keeps accruing, penalties stack, and the balance follows the members.

Closing properly means filing a final Form 568 marked final, paying anything outstanding, and filing a Certificate of Cancellation with the Secretary of State. There is no fee for the cancellation filing itself.

What’s needed

Final return and cancellation filings.

Timing

As soon as you stop operating

Authority

SOS Form LLC-4/7 or LLC-4/8 · FTB

Government fee

Free

Who does it

You

↗ FTB — dissolve or cancel