How to Start an LLC
in California
$70 state filing fee, 3–5 day processing — but there's a catch: California charges every LLC an $800/year franchise tax, even if you earn nothing. Here's everything you need to know.
California LLC at a Glance
The $800 franchise tax — what most guides bury
California charges every LLC an $800 minimum franchise tax per year, regardless of revenue. Even if your LLC makes $0, you owe $800 to the Franchise Tax Board. This is due within 3.5 months of formation, then annually on April 15.
Many formation services mention this in fine print or not at all. We lead with it because it fundamentally changes the math on whether a California LLC makes sense for your situation.
Bottom line: Your California LLC will cost at least $870 in year one ($70 filing + $800 franchise tax) before any formation service fees. Make sure your business revenue justifies this ongoing cost.
7 Steps to Form a California LLC
Choose your LLC name
Your California LLC name must be distinguishable from all entities on file with the Secretary of State. It must include "Limited Liability Company", "LLC", or "L.L.C." Check availability at the California Business Search. You can reserve a name for 60 days ($10 fee).
Designate an agent for service of process
California calls its registered agent the "agent for service of process." You need one with a physical California address. You can be your own agent, but your address goes on the public record. Eleet AI includes first-year agent for service of process with every California LLC formation.
File Articles of Organization (Form LLC-1)
File online through bizfile Online or by mail. The form requires your LLC name, business address, agent for service of process, management structure, and organizer signature. Filing fee: $70.
File Statement of Information within 90 days
Within 90 days of formation, file Form LLC-12 with the Secretary of State ($20). This lists your managers/members and addresses. After the initial filing, update every 2 years ($20). Failure to file results in penalties and potential suspension.
Pay the $800 franchise tax
Pay the $800 minimum franchise tax to the Franchise Tax Board by the 15th day of the 4th month after formation. Use Form 3522 (LLC Tax Voucher). This is non-negotiable — every California LLC pays this, every year, regardless of income.
Get an EIN and open a business bank account
Apply for your EIN for free at IRS.gov (5 minutes, immediate). Then open a business bank account using your EIN and Articles of Organization.
Create an operating agreement & stay compliant
California doesn't require an operating agreement by law, but banks need one to open your account. Ongoing compliance: $800 franchise tax annually (April 15), Statement of Information biennially ($20), and state income tax return (Form 568, due March 15). LLCs with income over $250,000 pay additional fees ($900–$11,790).
California LLC Cost Breakdown
The real costs — including the $800 franchise tax most guides downplay.
| Item | Cost | When Due |
|---|---|---|
| State filing fee (Form LLC-1) | $70 | At filing |
| Franchise tax (minimum) | $800 | Within 3.5 months |
| Statement of Information (Form LLC-12) | $20 | Within 90 days |
| Registered agent (first year) | $0–$299 | At filing |
| First-Year Total (DIY) | $890+ | — |
The $800 franchise tax is unavoidable for California LLCs. Factor this into your business plan before forming. Subsequent years: $800 franchise tax + $20 biennial Statement of Information.
Should You Form in California?
Form in California if:
- ✓ You live in California and do business primarily in California
- ✓ Your expected revenue justifies the $800/year franchise tax
- ✓ You need California-specific business licenses or permits
- ✓ You have California employees or physical locations
Consider another state if:
- ✗ You don't live in CA and don't do business in CA
- ✗ Your business is online-only with no CA employees or customers
- ✗ $800/year franchise tax is a dealbreaker for your budget
- ✗ You're forming a holding company with no CA operations
Warning: Forming in Nevada or Wyoming to "avoid" California taxes is a common misconception. If you conduct business in California, you must register as a foreign LLC and pay the $800 franchise tax regardless of where you formed. You'd end up paying fees in both states.
California LLC — Common Questions
How much does it cost to start an LLC in California?
The California Secretary of State charges a $70 filing fee for Articles of Organization (Form LLC-1). However, all California LLCs must pay an $800 annual franchise tax to the Franchise Tax Board — due within the first 3.5 months of formation, then annually on the 15th day of the 4th month. First-year true cost: $870 minimum (filing + franchise tax). If you use a formation service, add the service fee. Eleet AI's all-inclusive price covers the $70 state fee, formation filing, and first-year registered agent.
What is the California $800 franchise tax?
Every California LLC must pay an $800 minimum franchise tax to the Franchise Tax Board every year, regardless of income. Even if your LLC earns $0, you owe $800. This is due by the 15th day of the 4th month after formation (e.g., if you form in January, it's due April 15). After the first year, it's due annually on April 15. LLCs with gross receipts over $250,000 pay additional fees ($900-$11,790 based on revenue brackets). This tax is the single biggest reason some entrepreneurs choose to form in other states.
Can I avoid the $800 California franchise tax?
There is limited relief. California temporarily waived the first-year franchise tax for LLCs formed between 2021-2023, but that exemption has expired. As of 2026, all new LLCs owe the $800 in their first year. Some business owners form their LLC in a different state (like Wyoming or Nevada) to avoid California's franchise tax, but if you conduct business in California, you must register as a foreign LLC — which requires paying the $800 franchise tax anyway. There is no legal way to do business in California and avoid this tax.
How long does it take to form an LLC in California?
Standard online filings are processed in 3-5 business days. Mail filings take 5-10 business days. California offers expedited processing: same-day counter service ($350 extra) at the Sacramento office, or 24-hour rush processing ($750 extra). Eleet AI offers expedited processing at a fraction of the state's rush fees.
Do I need a registered agent in California?
Yes. Every California LLC must designate an "agent for service of process" (California's term for registered agent) with a physical street address in California. This can be an individual or a registered corporate agent. Eleet AI includes first-year agent for service of process with every California LLC formation.
What is the Statement of Information?
Within 90 days of forming your California LLC, you must file a Statement of Information (Form LLC-12) with the Secretary of State. The filing fee is $20. This form lists your LLC's managers/members, agent for service of process, and business addresses. After the initial filing, you must file an updated Statement of Information every two years (biennial, $20 each time). Failure to file can result in penalties and eventual suspension of your LLC.
Should I form my LLC in California or another state?
If you live in California and do business primarily in California, form in California. Forming in a "tax haven" state like Wyoming or Nevada sounds appealing but doesn't help: if you conduct business in California, you must register as a foreign LLC in California, pay the $800 franchise tax, AND pay filing/agent fees in the other state. You end up paying more, not less. Only form out of state if you genuinely conduct no business in California.
What do I need to do after forming my California LLC?
After the Secretary of State approves your Articles of Organization: (1) File the Statement of Information (Form LLC-12) within 90 days ($20), (2) Pay the $800 franchise tax to the Franchise Tax Board, (3) Apply for an EIN at IRS.gov (free), (4) Open a business bank account, (5) Draft an operating agreement, (6) Obtain any required local business licenses or permits, (7) If in a city like Los Angeles or San Francisco, check for local business tax registration requirements.
Ready to start your California LLC?
Eleet AI handles the formation and registered agent. You handle the franchise tax.
Form California LLC Now