To start a California LLC, file Articles of Organization with the Secretary of State, draft an operating agreement, get an EIN from the IRS, open a separate bank account, register for state tax accounts (Franchise Tax Board, CDTFA where applicable), and file your initial Statement of Information within 90 days. The cost is a $70 filing fee plus an $800 annual franchise tax (waived for the first year for new LLCs). Most DIY formations skip the operating agreement and the proper bank account — both are critical for the veil to actually protect you.
If you're starting a business in California, you may want to consider operating as a limited liability company (LLC). This guide walks through the entire setup, from naming your company through filing taxes.
Your name must include the phrase "limited liability company" or "LLC" and must be distinguishable from existing corporations, LLPs, or other entities registered in California. The name cannot use words implying government approval (FBI, Treasury, etc.) or any term restricted by law.
Run a name search through the California Secretary of State to confirm availability. Generic names ("Auto Business LLC") are technically acceptable but risk overlapping with out-of-state LLCs, which can delay your EIN application or confuse vendors and customers. Once you've chosen a name, register it with the Secretary of State.
The Articles of Organization document the essential facts of your LLC: name, purpose, principal office address, agent for service of process, and member or manager names. It also specifies whether the LLC will be member-managed or manager-managed. Once filed, you are legally recognized as an LLC.
After filing the Articles, you'll need an Operating Agreement. This document outlines ownership, management, and operational details, profit and loss sharing, decision-making rights, fiduciary duties, capital contributions, dissolution procedures, and more. An attorney can ensure the agreement complies with California law and accurately reflects the partners' intent.
You'll need a business license before legally operating. Depending on your industry and city, additional licenses may be required. Check with your local government office.
Apply for an Employer Identification Number (EIN) through the IRS. You'll also need to apply for any necessary federal or state tax permits depending on your business type.
Open a dedicated business bank account. Mixing personal and business finances can pierce the corporate veil, meaning a court could disregard the LLC's separate existence and reach your personal assets in a lawsuit. Separation also makes tax filing dramatically easier.
If you'd like an attorney to handle the formation and write a tailored Operating Agreement for your business, we offer free initial consultations.
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