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A California LLC is a limited liability company formed by filing Articles of Organization (Form LLC-1) with the California Secretary of State for $70. California requires every LLC to pay an $800 annual franchise tax regardless of income, plus a gross receipts fee ranging from $900 to $11,790 for LLCs earning over $250,000 per year.
If you want to start an LLC in California, the state filing fee is $70. However, California also charges an $800 annual franchise tax every year — regardless of income. That combination catches thousands of new owners off guard. This guide covers every step, every fee, and every deadline you need to form a California LLC in 2026 without surprises.
California is home to more active LLCs than almost any other state. It also has one of the most complex LLC tax structures in the country. For a broader overview of how to start an LLC across all 50 states, see our main formation hub first.
What does it cost to start an LLC in California?
A California LLC is formed by filing Articles of Organization (Form LLC-1) with the California Secretary of State for $70. California requires every LLC to pay an $800 annual franchise tax regardless of income, plus a gross receipts fee ranging from $900 to $11,790 for LLCs earning over $250,000 per year. First-year LLCs formed after January 1, 2021 are exempt from the $800 tax.
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If you want to start an LLC in California, the state filing fee is $70. However, California also charges an $800 annual franchise tax every year — regardless of income. That combination catches thousands of new owners off guard. This guide covers every step, every fee, and every deadline you need to form a California LLC in 2026 without surprises.
California home to more active LLCs than almost any other state. It also has one of the most complex LLC tax structures in the country. For a broader overview of how to start an LLC across all 50 states, see our main formation hub first.
How to Start an LLC in California: 7 Required Steps
The process of forming an LLC in California follows seven distinct steps. Each step has specific rules, fees, and deadlines under California law. Working through them in order prevents delays and avoids penalties.
Step 1 — Choose Your California LLC Name
Your LLC name must be unique in California and must include "Limited Liability Company," "LLC," or "L.L.C." at the end. It cannot imply a government affiliation or contain restricted words such as "Bank" or "Insurance" without additional state licensing. Furthermore, your name must be distinguishable from every existing entity in the Secretary of State database.
Before filing, use our tool to check LLC name availability instantly. You can also run a California LLC name search via the official secretary of state business name search. Name reservation is optional and costs $10 for 60 days.
Step 2 — Designate a Registered Agent
Every LLC in California must appoint a registered agent with a physical California street address — P.O. boxes are not accepted. The agent must be available Monday through Friday during standard business hours to receive legal documents. To understand what is a registered agent for an LLC and when a professional service makes sense, read our full guide.
You can act as your own registered agent. Nevertheless, most owners prefer a professional service for privacy and reliability. Our top recommendation is Northwest Registered Agent LLC formation, which includes a full year of registered agent service in their $39 package.
Step 3 — File Articles of Organization (Form LLC-1)
Filing Form LLC-1 with the California Secretary of State officially creates your LLC. The California LLC filing fee is $70. Online filing through BizFile Online adds a $5 convenience fee but is significantly faster than mail.
Create a BizFile Account
Go to bizfile.sos.ca.gov and register. This is California's official online filing portal managed by the Secretary of State's Business Programs Division.
Complete Form LLC-1
Enter your LLC name, principal address, registered agent details, and organizer information. The form takes under 15 minutes to complete online.
Pay the $70 State Fee
Pay by credit card online (plus $5 convenience fee) or by check if mailing. Online filing is recommended for speed and confirmation tracking.
Receive Approval
Standard online California LLC processing time is 5–7 business days. Expedited service costs $350 for 24-hour processing or $750 for same-day in-person service. Once approved, the SoS issues your official California LLC file number.
Step 4 — File Your Statement of Information Within 90 Days
After your LLC is approved, you must file a Statement of Information (Form LLC-12) within 90 days of your approval date. After that initial filing, you submit it every two years. The fee is $20 per filing. Missing the 90-day window triggers a $250 penalty — entirely avoidable with a simple calendar reminder set on approval day.
Step 5 — Apply for a Federal EIN
An Employer Identification Number is your LLC's federal tax ID. You need it to open a business bank account, hire employees, and file tax returns. The IRS issues EINs at no cost. Follow our guide on how to apply for an EIN for an LLC directly through the IRS website — the online application takes under 10 minutes and you receive your EIN immediately.
Step 6 — Open a Business Bank Account
Separating your personal and business finances is essential for maintaining liability protection. Mixing them — known as "piercing the corporate veil" — can expose your personal assets in litigation. Some banks may request your Articles of Organization, EIN, and operating agreement to open an LLC bank account. Online-first banks like Mercury, Relay, and Found are popular among California LLCs for their low fees and fast setup.
Step 7 — Obtain Required Licenses and Permits
California does not issue a single statewide general business license. Instead, requirements vary by city, county, and industry. Most California businesses need at least a local license from their city or county. Certain industries — contractors, healthcare, food businesses, real estate agents — also require state-level licensing. Check business.ca.gov for a searchable list specific to your industry and location.
California LLC Cost Breakdown (2026)
Understanding the full California LLC cost requires separating one-time formation fees from recurring annual obligations. The California LLC filing fee of $70 is competitive. However, the California LLC annual fee — driven by the $800 franchise tax — makes ongoing costs among the highest in the country.
The $90 minimum applies only if your LLC qualifies for the first-year franchise tax exemption and earns under $250,000. Use our tool to get a full LLC cost breakdown by state, or compare your total LLC formation cost across different formation options. For a curated comparison of formation services, see the best LLC formation services.
The $800 Annual Franchise Tax — California's Hidden Ongoing Cost
California's $800 annual franchise tax is the most important cost to understand before forming your LLC. The Franchise Tax Board charges every LLC doing business in California $800 per year — regardless of income, profit, or business activity. This applies even to LLCs with zero revenue or LLCs that operated at a loss.
Moreover, if your LLC earns $250,000 or more in California-sourced gross income, an additional gross receipts fee applies on top of the $800. This fee scales by tier and calculates on total revenue — not profit. Consequently, an LLC with $300,000 in revenue but only $10,000 in profit still owes the full $900 gross receipts fee.
California LLC Fee Schedule by Gross Income (2026)
| California Gross Income | Annual Franchise Tax | Gross Receipts Fee | Total Annual Obligation |
|---|---|---|---|
| Under $250,000 | $800 | $0 | $800 |
| $250,000 – $499,999 | $800 | $900 | $1,700 |
| $500,000 – $999,999 | $800 | $2,500 | $3,300 |
| $1,000,000 – $4,999,999 | $800 | $6,000 | $6,800 |
| $5,000,000 or more | $800 | $11,790 | $12,590 |
Source: California Franchise Tax Board — Schedule IW, Form 568 (2026)
Payment Deadlines and Forms
For calendar-year filers, the $800 franchise tax is due by April 15 each year using FTB Form 3522. If you expect gross income over $250,000, you must also estimate the gross receipts fee using Form 3536 by June 15. The actual amount reconciles on your annual Form 568, due April 15 the following year. Underpaying the estimated fee triggers a 10% penalty on the shortfall.
Should You Elect S-Corp Status in California?
If reducing your overall tax burden is a priority, use our S Corp vs LLC tax savings calculator to run the numbers before making any decision. For a full strategic breakdown of S Corp vs LLC taxes in California — including how the $800 interacts with an S-Corp election — our dedicated guide covers every scenario.
California LLC Tax Overview
Beyond the franchise tax, California LLC taxes follow a pass-through structure. The LLC itself does not pay state income tax on profits. Instead, income passes through to members, who report it on their personal California returns. California's individual income tax rates reach 13.3% at the top bracket — the highest in the United States.
To understand how are LLCs taxed at both federal and state level, read our full guide. For strategies to reduce your tax burden, explore the tax advantages of an LLC. Not sure which structure fits your situation? Take our what business structure should I choose quiz.
California LLC Operating Agreement
California law does not require a written operating agreement. Nevertheless, it is strongly recommended for every LLC — especially single-member and multi-member structures. Without one, your LLC defaults to California's standard rules under the Revised Uniform LLC Act, which may not reflect your actual intentions.
If you've wondered do I need an operating agreement for my LLC, the practical answer is yes — banks require it to open a business account, and courts use it as primary evidence that your LLC operates separately from your personal finances. A solid agreement should cover ownership percentages, profit distribution, voting rights, and procedures for adding or removing members.
California LLC Ongoing Compliance Requirements
Staying compliant after formation involves several recurring obligations in California. Failing to meet even one can result in FTB suspension, loss of good standing, or costly reinstatement fees. Consequently, tracking your deadlines from day one is essential.
Annual and Biennial Filing Obligations
What Happens If You Miss a Filing in California
Missing a single filing in California moves fast toward suspension. The FTB suspends LLCs that fail to pay the $800 franchise tax or file Form 568 on time. A suspended LLC cannot enter contracts, open or maintain bank accounts, file lawsuits, or legally operate. Reinstatement requires paying all back taxes, penalties, interest, and a Secretary of State reinstatement fee — a process far more expensive than staying current.
Track every filing deadline automatically with our LLC annual report due date tracker. For a full explanation of California's biennial Statement of Information requirement and how it differs from the standard annual report for LLC in other states, see our dedicated guide.
California vs. Neighboring States
California's ongoing LLC costs are significantly higher than those of most neighboring states. However, it also offers the largest state economy in the US and direct access to the world's most active venture capital market. Here's how the California LLC cost compares to its three neighbors:
| State | Filing Fee | Annual Obligation | State Income Tax | Year 1 Minimum |
|---|---|---|---|---|
| California | $70 | $800 franchise tax | Up to 13.3% | $90 (with exemption) |
| Oregon | $100 | $100 annual registry | Up to 9.9% | $200 |
| Nevada | $425 total | $350+ license + list | None | $775+ |
| Arizona | $50 | None for LLC | 2.5% flat | $50+ |
Arizona is the cheapest neighbor by a wide margin. Nevada is popular for privacy and asset protection, but considerably more expensive upfront. Importantly, forming in another state does not eliminate California's tax obligations. If your LLC conducts business in California — even if incorporated in Wyoming or Nevada — you must register as a foreign LLC and pay the $800 annual franchise tax. This is one of the most expensive mistakes entrepreneurs make when trying to reduce their tax burden. For a thorough analysis of where to form based on your specific goals, see our guide on the best state for LLC taxes.
Explore Neighboring States
Frequently Asked Questions — California LLC
Formation, Costs and Timeline
How much does it cost to start an LLC in California?
The minimum cost is $70 for the Articles of Organization plus $20 for the Statement of Information. If your LLC qualifies for the first-year franchise tax exemption — formed on or after January 1, 2021 — your minimum first-year total is approximately $90. Without the exemption, add $800. From year two onward, the $800 annual franchise tax applies regardless of income.
How long does it take to form an LLC in California?
Standard online processing through BizFile Online takes 5–7 business days. Mail filings take 4–6 weeks. Expedited processing costs $350 for 24-hour service or $750 for same-day in-person service. For most businesses, standard online filing is the most cost-effective option.
What is the Statement of Information for a California LLC?
Form LLC-12 is California's biennial filing requirement. File it within 90 days of your LLC's approval date, then every two years. The fee is $20. Missing the 90-day window triggers a $250 penalty from the Secretary of State. Unlike most states that require annual reports, California only requires this filing every two years after the first submission.
Can I be my own registered agent in California?
Yes, if you have a physical California street address — P.O. boxes are not permitted — and you are available during standard business hours. Many owners instead choose a professional service to keep their personal address off public records and avoid missing legal notices while traveling.
Taxes, Compliance and the $800 Franchise Tax
Does California waive the $800 franchise tax for new LLCs?
Yes, for LLCs formed on or after January 1, 2021 that had not previously conducted business. However, the exemption only covers the base $800 — not the gross receipts fee. If your LLC earns $250,000 or more in year one, the gross receipts fee still applies. From year two forward, every California LLC owes the full $800 regardless of profit.
What happens if I don't pay California's $800 franchise tax?
The FTB suspends your LLC. A suspended California LLC cannot conduct business, enter contracts, maintain a bank account, or defend itself in court. Reinstatement requires paying all back taxes, penalties, interest, and a reinstatement fee — far more expensive than paying on time.
Do I need an operating agreement for my California LLC?
California does not legally require one. However, it is strongly recommended. Without it, your LLC defaults to California's standard rules. Banks typically require an operating agreement to open a business account. Additionally, it is your primary evidence that your LLC operates separately from your personal finances — which courts examine directly when liability protection is challenged.
Structure, Dissolution and Special Situations
Is a California LLC better than an S-Corp for taxes?
At lower income levels, standard LLC taxation works well. Once profits consistently exceed $40,000–$60,000 above a reasonable owner salary, S-Corp election can reduce self-employment taxes. However, California charges a 1.5% S-Corp franchise tax with an $800 minimum. The net benefit depends on your income level and structure — consult a California tax professional before electing.
How do I dissolve an LLC in California?
File a Certificate of Cancellation (Form LLC-4/7) with the Secretary of State — no filing fee. You must also file a final Form 568 with the FTB and pay all outstanding taxes through your final taxable year. Full dissolution typically takes 2–4 weeks from filing to completion.
Can a non-US resident form an LLC in California?
Yes. California imposes no residency requirement on members or organizers. You must appoint a registered agent with a physical California address and obtain an EIN from the IRS. All California tax obligations — including the $800 annual franchise tax — apply regardless of where members reside.
Starting an LLC in California costs $70 upfront and $800 every year thereafter — making it one of the most expensive states for ongoing LLC maintenance in the country. New LLCs formed after January 1, 2021 qualify for a first-year exemption on the $800 tax, reducing the initial cost to as little as $90. File through BizFile Online, set a reminder for your 90-day Statement of Information deadline, and plan for the $800 from year two onward.
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