Start a California LLC for FREE^*

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LLCs are a type of business entity that have the key benefit of providing liability protection to its owners (referred to as members). This means the members’ personal assets are generally safeguarded against the company’s debts or legal disputes, except in cases where they may be personally liable under other laws. 

In the state of California, an LLC is defined as “a domestic entity formed under this title or an entity that becomes subject to this title pursuant to Article 13” (Corp C §17001.02(k)). That means an LLC in California is a company created within the state or a company that becomes subject to California’s state regulations surrounding LLCs (Title 2.6). 

LLCs are popular among business owners because they offer flexibility and simplicity in managing their operations. Owners have the option to decide whether the company will be managed by its members or by appointed managers. Additionally, compared to corporations, LLCs typically have fewer legal compliance requirements and a more straightforward operational structure. 

Finally, LLCs allow business owners to pay taxes for business income as part of their individual taxes, although LLC owners may elect to pay their business taxes as a separate entity, similar to how a corporation is taxed. This can give business owners more flexibility to choose the tax classification that is right for them as they grow and evolve their business. 

LLCs can protect your personal assets against business debts and lawsuits in many cases, as long as you take careful steps to separate your business and personal affairs and maintain compliance.

Here are some common ways to separate your affairs and stay compliant:

• Take care to maintain separate bank accounts.
• Keep your personal and business assets separate.
• Keep records of your business matters.
• Formally document business decisions.
• Conduct business under your business name.
• Uphold LLC compliance requirements in California, including:
  • Filing biennial reports, also known as "Statement of Information," "SOI," or "Annual Report."
  • Fulfilling franchise tax obligations.
  • Properly maintaining corporate records.

If you don't maintain your compliance obligations or fail to properly separate your business and personal matters, then you may be opening yourself up to personal liability for business activities or responsibilities.

You may want to register for an LLC in California when:

• You own or want to start a business in California, or want to expand an existing business into California, and want to stay legally compliant. 
• You own or want to start a business, and want more flexibility on how you will manage the business or pay taxes than a corporation would provide.
• You want to protect your personal assets from potential liability resulting from business you conduct in the state of California. 
• You own or want to start a business, and want to register in California to open accounts, lease or buy property, secure funding, or hire employees.

There are a few steps required to start your LLC in California, including:

• Find a unique name for your LLC. California has a few requirements on business names, including a requirement to be unique. You can search the state of California's database of business entities in the state to ensure your business' name is unique. Rocket Lawyer can also help you identify a unique name when you register your business.
• Provide a California address that will be used as your official LLC address. The address that you list may either be your home, an office, or another physical location, but it cannot be a PO box.
• Appoint a registered agent. A registered agent is the person or company that serves as the contact point between the state and the LLC. The registered agent also receives official correspondence from other businesses. In many cases, you can act as your own registered agent if you have a business address in California, but you may consider using a registered agent service if you are not located in California or would like an extra layer of privacy. Rocket Lawyer can act as your registered agent or specify your registered agent when you register your LLC.
• File your Articles of Organization with the state of California to register your LLC. Once you have a business name and registered agent identified, you can register your business as a California LLC with the California Secretary of State by filing your Articles of Organization. Rocket Lawyer can assist you in filing your LLC's Articles of Organization with the California Secretary of State.
• Obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN is crucial for tax filing, payroll management, employee payments, and opening a business bank account. Rocket Lawyer can assist you with securing your LLC's EIN in order to do these vital business tasks.
• Create your LLC Operating Agreement (Optional). In California, it is not required to have an LLC Operating Agreement, which helps govern the ownership structure, member rights and responsibilities, and decision-making process of your LLC, among other things.

To start an LLC in California, you must file a document called Articles of Organization with the state of California. This document may be referred to informally as an LLC's "Articles," or in other states, it may be called a "Certificate of Organization," "Certificate of Filing," or "Certificate of Formation."

In California, you will need the following information to file your Articles of Organization:

• The name of the LLC.
• The company's business address.
• The name and address of the LLC's agent for service of process, also known as a registered agent in other states.
• The management structure of the LLC (member-managed or manager-managed).

In California, there are a few fees that you may be charged when you choose to start your LLC. They include the following:

State fee: $70

• Fee to expedite your filing: $350.

Rocket Lawyer filing fee: $0 $99.99

• First filing FREE for RocketLegal+ members.
• Get additional filings HALF OFF with RocketLegal+.

Processing time: 2-3 weeks

•  Expedited processing time: 5-7 business days.

Note: The above state fees and processing times (including expedited processing fee and time) are provided as a summary and may encompass various fees mandated by your state or local authorities. If you have questions, speak to a Rocket Lawyer representative to understand the costs and processing times that apply to your specific filing.

Taxes for your LLC will depend on how you file and how much your LLC earns.

The default method for LLC taxes is called "pass-through taxes." This means that the profits and losses of the LLC are passed through to the individual members, who report them on their personal tax returns. The share of profits or losses each member receives and reports on their taxes is determined by the terms in the LLC's operating agreement. With pass-through taxes, the LLC itself does not file its own tax returns, and the owners only pay taxes on the business once. (Note: The term "pass-through taxes" is an informal term. Single-member LLCs are treated as a "disregarded entity" and taxed as a sole proprietorship, and LLCs with multiple members are treated as a partnership.)

With pass-through taxes, Social Security and Medicare taxes are not withheld from the members' paychecks, so they are responsible for paying these as "self-employment taxes" instead. In addition to Social Security and Medicare taxes, LLC members will need to pay taxes as a percent of their share of profits every quarter as estimated taxes. LLC members can also deduct business expenses and losses from their personal tax returns, which can significantly reduce the amount of profits reported to the IRS.

Alternatively, if the LLC members prefer not to utilize pass-through taxes, they have the option to elect for the LLC to be taxed as a corporation instead. This may be preferred when the corporate tax rate is lower. To elect a different tax classification, you need to file the necessary forms with the IRS.

In California, all LLCs are required to pay an annual Franchise Tax of $800 each year.

If you do not want to tackle your LLC's taxes alone, our Rocket Tax services can help you by gathering some information about your business and then matching you with the right tax professional.

The state of California requires that the names of all LLCs in the state:

• Include the term "LLC" or "Limited Liability Company," also known as an "entity designator." 
• "L.L.C." and the abbreviations "Ltd." and "Co." are acceptable.
• Contain no words indicating the company is a bank, trust, insurer, government agency, or any other entity that is not allowed to be structured as an LLC.
• Are not too similar to existing LLCs in the state.

Rocket Lawyer can help you determine whether your business' name is eligible for registration in California and may be able to help you reserve the name before you file your LLC.

Any LLC that does business in California must file with the State of California. California defines doing business as "entering into repeated and successive transactions of its business in this state" (California Corporations Code section 191). This means that if your LLC engages in any transaction in California for financial gain, it is considered to be doing business there.

LLCs based in California are called "domestic LLCs," and out-of-state LLCs are called "foreign LLCs." Foreign LLCs and domestic LLCs may have different filing and compliance requirements -- Rocket Lawyer can help you navigate foreign LLC registration, regardless of where you live.

If you are planning to conduct business in another state, you may need to register an LLC in that state. Rocket Lawyer can help you determine which states you should register in. 

Other states may have their own rules for taxing foreign LLCs that originate in California or domestic LLCs that also operate in California. Talk to an attorney to understand the tax requirements for the state(s) in which you plan to operate.

Yes, LLCs with only one owner can still register their business in California. In this case, the LLC would be referred to as a single-member LLC (SMLLC), where if there is more than one owner, the LLC may be called a multi-member LLC. 

The main difference between single-member and multi-member LLCs lies in ownership structure and management. With a single-member LLC, you have full control over the business. In contrast, a multi-member LLC has multiple owners, each with a specific percentage of ownership as defined in the operating agreement. This means that in a multi-member LLC, owners share profits, losses, and tax responsibilities based on their ownership percentage.

However, many aspects of LLCs remain the same whether they are single-member or multi-member. Both types of LLCs default to pass-through taxation (though separate filing is an option), and owners can choose to manage the LLC themselves ("member managed") or hire designated managers to handle day-to-day operations ("manager managed").

An LLC is a structure establishing your business as an entity that can legally conduct business in the state(s) within which it is filed. Alternatively, a "Doing Business As" filing (or "DBA"), is a legal mechanism to specify another name under which you plan to do business. DBAs may also be called a "fictitious business name" (or "FBN"), "assumed business name" (or "ABN"), and are commonly confused with sole proprietorships. While DBAs can help you specify a name for a business, they do not establish a legal business entity and also do not provide business owners with liability protection. In California, filing a DBA, or fictitious business name, is required if your business is planning to operate under a different name than the one that is filed with your articles of organization.

If you have an existing company and would like to conduct business under a new or additional name, a DBA will allow you to conduct business with the new name through your existing LLC, S-Corp, C-Corp or Nonprofit. If you're not sure if you should form an LLC or file a DBA, a Rocket Lawyer representative can help you understand the differences and take the next step.

After organizing an LLC in California, the state requires you to:

• Create an Operating Agreement: California requires companies to create an Operating Agreement. We can help you create your California LLC Operating Agreement online.
• File your Statement of Information: California requires that LLCs file a Statement of Information within 90 days of being formed, as well as every two years from then on. This form simply provides updated information about your LLC to the California Secretary of State's office on a regular basis.
• Issue membership certificates to each of the owners: This certificate states that the individual owns part of the company and how much of the company they own.
• Establish a Registered Agent and Office: All California LLCs must assign and maintain a registered agent and office within the state at all times. If you don't have an agent or office, our Registered Agent Services can help you meet these requirements.

Although not required, you may also want to:

• Hold a meeting: A first meeting with members of an LLC is not required by law, but it is highly suggested in order to get organized. Also, unlike corporations, LLCs are also not required to maintain Meeting Minutes, but these documents are also recommended as they provide records for important decisions made.

An LLC is one of the easiest businesses to maintain. Here are a couple things to keep in mind when looking to maintain your California LLC:

• California requires LLCs to submit a Statement of Information every two years, along with a fee.
• The state also requires all LLCs in the state to pay an annual Franchise Tax, even if the LLC does not do business in California that year.

The state of California requires the following information to be kept:

• A list of the names of all members or shareholders with a transferable interest, along with the last known address, contribution and profits and losses of each member.
• The full name and business or residence address of each manager.
• A copy of the company's Articles of Organization along with any amendments.
• A copy of the LLC's Operating Agreement and any amendments executed.
• A copy of the company's last six fiscal years' tax returns.
• Books and records pertaining to the company's current and past four fiscal years' operations.