How to Start an LLC in California | 2025 Guide

California is, by far, the state with the most small businesses in the U.S. 4.2 million small businesses make up for 99.9% of all the businesses in the Golden State¹. If you’re thinking about joining them, keep reading and learn all about how to form an LLC in California.

With its massive economy, innovative startup culture, and diverse market opportunities, California continues to attract entrepreneurs from around the world. In this guide, we'll walk you through every step of the California LLC formation process, from choosing a name to filing your Statement of Information and meeting the annual minimum franchise tax requirements. We'll also discuss the Wise Business account. The global account that can help your company with all things cross-border.

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How to Start an LLC in California (Step-by-Step)

Step 1: Choose a Name for Your California LLC

Your LLC name must be unique and comply with state rules. It must include "LLC" or "Limited Liability Company" and avoid restricted words like “bank” or “insurance” unless approved. You can check name availability using the California Secretary of State’s business name search.

If you plan to use a different name for marketing purposes, you’ll also need to file a Fictitious Business Name Statement² with your county.

Step 2: Appoint a Registered Agent in California

Your California registered agent is responsible for receiving legal documents on behalf of your business entity. This can be an individual or a company with a physical address in California. You may act as your own registered agent, but using a service helps protect your privacy and ensures availability during business hours.

Step 3: File the Articles of Organization

To officially register your California LLC, file Form LLC-1 (Articles of Organization)³ with the California Secretary of State. You can do this online, by mail, or in person. The filing fee is $70.

This document includes your LLC name, address, registered agent information, and whether your company will be managed by one manager, multiple managers, or all LLC owners (members).

Step 4: Submit the Initial Statement of Information

Within 90 days of filing your California LLC Articles of Organization, you must submit Form LLC-12⁴, the Initial Statement of Information, and pay the $20 filing fee. This form includes key business details such as business addresses, member/manager names, and your registered agent information.

Step 5: Draft an Operating Agreement

Although not filed with the state, California law requires every LLC to maintain a written operating agreement. This document defines your business structure, ownership percentages, management duties, and rules for resolving disputes. Even single-member LLCs need one to preserve liability protection.

Step 6: Apply for an EIN from the IRS

Your Federal Employer Identification Number (EIN) acts like a Social Security Number for your business. Apply for free through the Internal Revenue Service website⁵. You’ll need an EIN to open a business bank account, hire employees, and file taxes.

Step 7: File to Register a Foreign LLC (If Applicable)

If your LLC was formed in another state but operates in California, you must register as a foreign LLC using Form LLC-5⁶. The fee is $70, and you must also file the Initial Statement of Information and designate a California registered agent.

Step 8: Open a Business Bank Account

To maintain liability protection and simplify bookkeeping, you need a separate business account for your LLC. Most banks will ask for your EIN, Articles of Organization, and operating agreement. A dedicated business bank account ensures you’re not commingling personal and business funds, which can jeopardize your legal protections.

Open a Wise Business Account: Manage Your US Business Finances With Ease

Once you have established your business with an LLC, you’ll need a business account to manage your US finances. A Wise Business account is easy to open online and comes with no monthly fees. You can convert funds from your home currency to USD with low, transparent fees.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in currencies. You can get major currency account details for a one-off fee to receive overseas payments like a local. You can also send money to countries.

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Major local account details to receive international payments with ease No monthly account fees just a simple one-off fee for account details Receive payments from e-commerce platforms such as Amazon or via Stripe. Create invoices using the Wise invoice generator or invoice templates. Accounting integrations, including a QuickBooks Bill Pay connection. Bill payments will be synced, matched, and categorized in QuickBooks for simple reconciliation. Access to BatchTransfer. Fast payment of up to 1,000 people.

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What Are the Business Requirements for a California LLC?

To successfully run an LLC in California, you need to stay on top of multiple state filings and tax responsibilities:

• Annual Franchise Tax: All LLCs must pay the California Franchise Tax Board a minimum annual franchise tax of $800, due by the 15th day of the fourth month after forming. This is one of the primary California LLC taxes that applies regardless of your business's income or activity.
• Form 568 (Return of Income): Filed with the appropriate California taxing authority and includes details about your LLC's earnings and members.
• Local Business Licenses and Permits: Many cities and counties require specific business licenses or tax registrations, depending on your industry and location. Use the CalGold website⁷ to determine your local requirements.
• Sales Tax Permit: If you sell physical goods or taxable services, you must register with the California Department of Tax and Fee Administration (CDTFA)⁸ to collect sales tax.

What Are the Benefits of Starting an LLC in California?

Despite the costs, there are significant advantages to choosing California as your base:

• Liability protection: Your personal assets are shielded from business debts and legal claims.
• Flexible taxation: You can choose pass-through taxation or elect corporate status.
• Strong market access: California offers access to one of the largest economies in the world.
• Credibility: A registered California LLC adds professional credibility, which can help with clients, investors, and vendors.

Keep in mind that the annual franchise tax applies regardless of your income, which makes it less favorable for businesses with low or no revenue.

How Much Does It Cost to Start an LLC in California?

Here’s a breakdown of common California LLC formation costs:

Expense	Cost
Articles of Organization (Form LLC-1)	$70
Statement of Information (Form LLC-12)	$20
Annual Franchise Tax (minimum)	$800/year
Registered Agent (optional service)	$100–$300/year
Business Licenses and Permits	Varies
Operating Agreement (DIY or attorney)	Varies

Note: The California franchise tax board requires payment of the $800 annual tax even in years your LLC is inactive or reports no income.

Can I Open an LLC in California Without Living There?

Yes. You can form a California LLC even if you don’t live in the state. There’s no residency requirement for members or managers. However, you must appoint a California-registered agent with a physical address in the state.

Can a Nonresident Open a Company in California?

Absolutely. Foreign nationals can legally form either a domestic or foreign LLC in California. You’ll still need to file with the California Secretary of State, appoint a registered agent, and obtain a U.S.-based business bank account. Depending on ownership structure, you may also need to file reports with the Financial Crimes Enforcement Network (FinCEN)⁹.

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Comparison with Other States

Feature	California	Texas	Nevada	Arizona
Formation Fee	$70	$300	$75	$50
Annual Report Requirement	Yes ($20/2 yrs)	Yes ($0)	Yes ($150)	Yes ($45)
Franchise Tax / Annual Fee	$800 minimum	Yes (varies)	No	No
Privacy Protections	Limited	Moderate	Strong	Moderate
Processing Time	5–20 business days	3–5 business days	1–2 business days	2–3 business days
Registered Agent Required	Yes	Yes	Yes	Yes
Foreign Ownership Allowed	Yes	Yes	Yes	Yes

• California offers vast market access, strong brand credibility, and proximity to innovation hubs like Silicon Valley and Los Angeles. The $800 minimum annual franchise tax, layered compliance requirements, and limited privacy protections make it one of the most expensive and complex states for LLC owners.
• Texas is attractive for its lack of personal income tax and low regulatory burden, but the franchise tax structure can be confusing and varies depending on revenue and business type. Still, it's a popular choice for LLCs serving the broader southern U.S. market.
• Nevada is known for its strong privacy protections, lack of state income tax, and absence of annual franchise tax, making it appealing for asset protection and tax savings. Its reputation for being a “haven” state can trigger extra scrutiny from banks and regulators.
• Arizona offers a low-cost, streamlined formation process and a light regulatory load, making it ideal for small business owners and first-time entrepreneurs. It’s a practical option for those seeking simplicity and affordability.

FAQs About California LLCs

Are There Privacy Protections for California LLCs?

California offers limited privacy protections. Member and manager names must be listed on the Statement of Information, and there is no option to create an anonymous LLC in California.

Why Do People Use California for LLCs?

Many choose California LLC formation due to the state's vast consumer base, access to venture capital, and global reputation. It's especially popular among tech startups, media companies, and professional services operating within the state.

Is a California LLC Tax-Free?

No. California is not a tax-free state for LLCs. All entities must pay the annual minimum franchise tax of $800. Additionally, LLCs classified as partnerships or disregarded entities must file Form 568 and may be subject to additional fees based on gross income.

What Are the Disadvantages of a California LLC?

Don’t forget to consider the disadvantages before you decide to form an LLC in California.

• High annual tax obligations, even for inactive businesses.
• Limited privacy—owner and agent information is public.
• Strict compliance rules with harsh penalties for late filings.
• Local business licenses and sales tax registrations can create complex setup processes.

Conclusion

Once you learn how to form an LLC in California, you’ll have the power to build a compliant, legally protected business. The paperwork may seem overwhelming at first, but when you break it down and delegate what you can, it becomes manageable.

Stay organized, file your Statement of Information, pay taxes, keep your business bank account separate, and check for local business licenses. With the right foundation, your California LLC will thrive.

Learn How to Form an LLC in State
Connecticut
Colorado
Arizona

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Sources:

1. Office of Advocacy - 2024 Small Business Profile
2. Who Should File a Fictitious Business Name – LA County
3. LLC Cannabis Forms & Fees – California Secretary of State
4. California LLC Labor Regulation Compliance Form (LLC-12)
5. Employer Identification Number – IRS
6. Foreign LLC Forms – CA Secretary of State
7. CalGOLD – California Business Permit Assistance
8. California Department of Tax and Fee Administration (CDTFA)
9. Financial Crimes Enforcement Network – FinCEN