California is not the most business-friendly state for LLC formation, the $800 annual franchise tax and multiple filing requirements add cost and complexity. But if you're doing business in California, you'll need a California LLC (or to register a foreign LLC there). Here's how.
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California LLC: The Key Facts Upfront
| Detail | Info |
|---|---|
| Filing fee | $70 |
| Annual franchise tax | $800 minimum (regardless of income) |
| Processing time | 5–10 business days standard |
| Statement of Information | Due within 90 days of formation, then every 2 years ($20) |
| Publication requirement | None (California eliminated this requirement) |
| Registered agent required | Yes |
The $800 annual franchise tax is the biggest gotcha. Every California LLC pays at least $800 per year to the Franchise Tax Board, regardless of whether the business makes any money. New LLCs are exempt the first year (since 2021).
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Step 1: Name Your California LLC
Requirements:
- Unique in California, search the California Secretary of State Business SearchCalifornia Secretary of State Business Searchhttps://bizfileonline.sos.ca.gov
- Must include "LLC," "L.L.C.," or "Limited Liability Company"
- Cannot use restricted words (Bank, Insurance, Trust, etc.) without approval
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Step 2: File Articles of Organization
File online at [bizfileonline.sos.ca.gov](https://bizfileonline.sos.ca.gov)
Form LLC-1, Articles of Organization
Filing fee: $70
Processing time: 5–10 business days; expedited available for additional fee
Required info: LLC name, registered agent, and management structure (member-managed or manager-managed).
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Step 3: Appoint a California Registered Agent
Must have a physical California address. Can be yourself (if you have a CA address), an individual California resident, or a registered agent service.
Registered agent services: Northwest Registered Agent, Incfile, ZenBusiness, $49–$125/year.
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Step 4: File Statement of Information
Within 90 days of forming your LLC, you must file a Statement of Information (Form LLC-12) with the California Secretary of State.
Fee: $20
This must also be filed every 2 years after that. It updates your registered agent, address, and member information.
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Step 5: Get Your EIN
Free at IRS.gov/EINIRS.gov/EINhttps://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online. Instant.
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Step 6: Pay the California Franchise Tax
Every California LLC pays a minimum $800/year franchise tax to the California Franchise Tax Board.
First-year exemption: LLCs formed on or after January 1, 2021 are exempt from the $800 tax in their first taxable year.
Due: 15th day of the 4th month after your LLC's tax year begins.
Register with the California Franchise Tax Board at ftb.ca.govftb.ca.govhttps://www.ftb.ca.gov.
Additional LLC fee if gross income exceeds $250,000:
- $250,001–$499,999: +$900
- $500,000–$999,999: +$2,500
- $1,000,000–$4,999,999: +$6,000
- $5,000,000+: +$11,790
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Step 7: Register for California Sales Tax
If you sell taxable products or services, register for a California Seller's Permit (free) at cdtfa.ca.govcdtfa.ca.govhttps://www.cdtfa.ca.gov.
California state sales tax: 7.25% base rate. Combined with district taxes, rates in Los Angeles, San Francisco, and other cities often reach 9.5–10.5%.
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Total First-Year Cost to Form a California LLC
| Expense | Cost |
|---|---|
| Articles of Organization | $70 |
| Statement of Information | $20 |
| Registered agent service | $49–$125/year |
| Annual franchise tax (Year 1 exempt if formed 2021+) | $0–$800 |
| Total first year | $139–$1,015 |
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Should You Form in California or Delaware/Wyoming?
Many online sources suggest forming your LLC in Delaware or Wyoming to avoid California's $800 tax. This only works if you don't actually do business in California. If you live in California and run a business there, California will still require you to register as a Foreign LLC and pay the $800 tax. There's no way around it if you're operating in CA.
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California Business Resources
- California Secretary of State: sos.ca.govsos.ca.govhttps://www.sos.ca.gov, LLC formation
- California Franchise Tax Board: ftb.ca.govftb.ca.govhttps://www.ftb.ca.gov, franchise tax
- California SBDC Network: Free consulting statewide
- IBank: California small business financing programs
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*FoundersPie builds a personalized business roadmap for California founders, covering every compliance step and business milestone. Start your free plan →Start your free plan →https://getfounderspie.com*
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California LLC Cost Breakdown (2026)
Here is what forming and running a California LLC actually costs in your first year, with no surprises hidden in the fine print.
| Item | Cost | When It Is Due |
|---|---|---|
| Articles of Organization (Form LLC-1) | $70 | At formation |
| Statement of Information (Form LLC-12) | $20 | Within 90 days, then every 2 years |
| Annual franchise tax | $800 | Every year you operate |
| Registered agent (optional, if you hire one) | $0 to $300/yr | Ongoing |
| LLC fee (only if revenue is over $250,000) | $900 to $11,790 | Annually, tiered by revenue |
Most single-owner California LLCs pay roughly $90 to start and then the $800 franchise tax every year after. The extra LLC fee only kicks in once your gross receipts pass $250,000, so early-stage founders rarely hit it in year one.
How to Form Your California LLC: The Exact Steps
1. Pick a compliant name. It must include "LLC" or "Limited Liability Company" and be distinguishable from existing California entities. Check availability on the Secretary of State business search before you commit.
2. Choose a registered agent. This is the person or service that accepts legal mail. You can be your own agent if you have a physical California address.
3. File the Articles of Organization (LLC-1). File online through the California Secretary of State bizfile portal. The $70 fee is paid here.
4. File the Statement of Information (LLC-12). Due within 90 days of formation. Missing this triggers a $250 penalty, so do it early.
5. Get your EIN from the IRS. It is free and takes about 10 minutes. See our guide to getting an EINguide to getting an EIN/blog/how-to-get-an-ein-number for the walkthrough.
6. Pay the $800 franchise tax. Due to the Franchise Tax Board by the 15th day of the 4th month after formation.
7. Open a business bank account. Keep personal and business money fully separate to protect your liability shield.
How Long Does It Take?
Online filings are typically processed in 5 to 8 business days. Expedited processing is available for an extra fee if you need it faster. Paper filings can take several weeks, so file online whenever possible.
Is an LLC Even the Right Structure for You?
Not every California founder needs an LLC on day one. If you are testing an idea with little liability risk, a sole proprietorship costs nothing to start. If you plan to raise venture capital, a corporation may fit better. We break down the tradeoffs in sole proprietorship vs LLCsole proprietorship vs LLC/blog/sole-proprietorship-vs-llc and LLC vs corporationLLC vs corporation/blog/llc-vs-corporation-which-business-structure-is-right-for-you.
You will also likely need to register your business nameregister your business name/blog/how-to-register-a-business-name and possibly get a business licenseget a business license/blog/how-to-get-a-business-license depending on your city and industry.
Frequently Asked Questions
Can I avoid the $800 California franchise tax?
No. Any LLC registered or doing business in California owes the $800 minimum tax each year, even if the business made no money. The only relief is that LLCs formed in 2021 through 2023 had their first-year tax waived, but that waiver has expired for new formations.
Do I need a lawyer to form a California LLC?
No. The filing is straightforward and the state portal walks you through it. A lawyer is worth it only for complex ownership structures or unusual liability concerns.
Can I form a California LLC if I do not live in California?
Yes, but if you live elsewhere and do business in California, you will still owe the $800 tax and must register. Forming in another state to dodge the tax usually backfires because you end up registering as a foreign LLC in California anyway.
How much does it really cost the first year?
Plan on about $90 in filing fees plus the $800 franchise tax, so roughly $890 total for a simple single-member LLC with no hired registered agent.
When is the $800 tax due for a brand new LLC?
By the 15th day of the 4th month after you form. So if you form in January, it is due by April 15.
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