In short
- An LLC is formed by filing Articles of Organization. A corporation is formed by filing Articles of Incorporation. Both go to the Secretary of State, which accepts them online, by mail or in person.
- The state filing fee is $70 for an LLC and $100 for a stock corporation.
- The Secretary of State says corporations and LLCs are required to designate an agent for service of process.
- Two follow-ups catch many first-timers: the first Statement of Information, due within 90 days, and California's yearly $800 tax.
- This guide does not pick an LLC or a corporation for you. That choice depends on your own tax and business situation.
The two state offices you will deal with
Forming a company in California mostly means dealing with two state offices. Knowing which one does what makes the rest of the process easier to follow.
Secretary of State
Keeps California's official list of businesses. It files the paperwork that creates the company, and the short reports that keep its record current.
Files: Articles, Statement of InformationFranchise Tax Board
California's business tax office. It collects the yearly tax that most corporations and LLCs owe, and their state tax returns.
Collects: the $800 tax, tax returnsLLC or corporation: what each one is
The Secretary of State describes the two most common types this way:
- A California corporation "generally is a legal entity which exists separately from its owners."
- A California LLC (limited liability company) "generally offers liability protection similar to that of a corporation but is taxed differently."
Which one fits a particular business depends on things like taxes, owners and plans, so it is a question for a licensed attorney or tax professional. The Secretary of State's business entity types page describes these and the other types.
These are the general rules the state publishes, not advice for your company. Check with a licensed professional before acting on them.
How to form a California LLC or corporation, step by step
These are general steps, each based on what a state or federal office publishes. Each one links to the official page.
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Check that the name is available
The Secretary of State's bizfile business search shows names already on file. The Secretary of State says this search "is only a preliminary search." The Secretary of State reviews the name when the Articles are filed.
A name has to be "distinguishable in the records" from existing companies of the same type, and it cannot mislead the public. An LLC's name has to include "Limited Liability Company," "LLC" or "L.L.C." The Secretary of State's name guidelines say "Limited" and "Company" may be shortened to "Ltd." and "Co." A name can be held for 60 days with a name reservation, which costs $10. The reservation is optional.
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Name an agent for service of process
An agent for service of process, often called a registered agent, is the person or company that accepts lawsuits and other legal papers for the business. The Secretary of State says corporations and LLCs "are required by statute to designate an agent for service of process." The agent is named when the company is formed, and again on each Statement of Information.
The Secretary of State's business entity FAQs explain who can serve as an agent.
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File the Articles online
An LLC files Articles of Organization. The fee is $70. A stock corporation files Articles of Incorporation. The fee is $100. Both can be filed online on bizfile Online, the Secretary of State's filing website. The Secretary of State says all business forms can also be submitted by mail or in person. Filing online takes a bizfile Online login, as the Secretary of State's account setup guide explains.
The Secretary of State posts its current processing dates online.
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Get a federal tax ID number
An EIN (Employer Identification Number) is the business's federal tax ID number, issued by the IRS (the Internal Revenue Service). The IRS says "you never have to pay a fee for an EIN." It also says to form a corporation or LLC with the state before applying. The IRS EIN page has the application.
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File the first Statement of Information within 90 days
The Statement of Information is a short report that lists who runs the company, its addresses and its agent. The first one is due within 90 days of forming. After that, a stock corporation files every year and an LLC files every two years. The fee is $25 for a stock corporation and $20 for an LLC. Our Statement of Information guide explains the schedule.
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Plan for the $800 yearly tax
The Franchise Tax Board says every LLC "doing business or organized in California must pay an annual tax of $800." A corporation pays tax on its income, with an $800 minimum. The first year has its own rules, covered in the next section and in our $800 tax guide.
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Check for other registrations
Depending on the business, other offices may be involved:
- City and county licenses. CalGold, a state website, helps find the permits a business type needs in a city or county. It does not issue permits itself.
- Seller's permit. The California Department of Tax and Fee Administration says a seller's permit is needed by a business that is engaged in business in California and sells or leases goods that would normally be subject to sales tax. Its seller's permit FAQ says the permit is free, though a security deposit may be required.
- Employer account. The Employment Development Department says an employer must register within 15 days after paying more than $100 in wages in a calendar quarter. Its employer registration page explains the rules.
- A different trade name. The Secretary of State says fictitious business names (sometimes called DBAs) are filed with the county where the business's main office is.
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Keep the company's records
Bylaws, operating agreements and meeting minutes stay with the company. The Secretary of State says they are not filed with its office. California Corporations Code section 1500 says a corporation "shall keep minutes of the proceedings of its shareholders, board and committees of the board." Our annual minutes guide explains more.
Sources: the Secretary of State's corporation forms, LLC forms, name reservations, name guidelines, service of process and FAQ pages; the Franchise Tax Board's LLC page.
The first year and the $800 tax
Many people believe the first year is free. That is out of date for LLCs. Here is what the Franchise Tax Board says, in its own dates:
- LLCs, the old exemption. The first-year exemption covered tax years beginning on or after January 1, 2021, and before January 1, 2024. That period has ended.
- LLCs, a coming change. For taxable years beginning on or after January 1, 2027, and before January 1, 2030, the Franchise Tax Board says the first-year annual tax for an LLC is reduced from $800 to $400.
- When the first LLC payment is due. The Franchise Tax Board says the first-year tax is due by "the 15th day of the 4th month from the date you file with the SOS." SOS is short for Secretary of State.
- Corporations. The Franchise Tax Board says newly incorporated corporations "are not required to pay the minimum franchise tax in their first year." Tax on income can still apply.
Sources: the Franchise Tax Board's LLC page, C corporation page and what's new page.
Every company's situation is different. A licensed attorney or tax professional can tell you what applies to yours.
What forming can cost
| Item | Amount | Paid to |
|---|---|---|
| Articles of Organization (LLC) | $70 | Secretary of State |
| Articles of Incorporation (stock corporation) | $100 | Secretary of State |
| Name reservation (optional) | $10, holds the name for 60 days | Secretary of State |
| Statement of Information | $20 for an LLC, $25 for a stock corporation | Secretary of State |
| EIN (federal tax ID) | No fee | IRS |
| LLC annual tax or corporation minimum tax | Generally $800 a year; see the first-year rules above | Franchise Tax Board |
| LLC fee, only for California total income of $250,000 or more | $900 to $11,790, depending on income | Franchise Tax Board |
| Seller's permit, if needed | No fee; a security deposit may be required | California Department of Tax and Fee Administration |
City and county license fees vary, and CalGold points to the offices that set them. Our $800 tax guide covers the tax in full.
Common surprises
- The 90-day deadline. The first Statement of Information is due within 90 days of forming, and it is easy to forget.
- Quiet years still count. The Franchise Tax Board says of the LLC annual tax: "This yearly tax will be due, even if you are not conducting business, until you cancel your LLC."
- Look-alike letters. After forming, many companies get mail from private businesses that looks official. The Secretary of State warns about these on its misleading solicitations page.
- Beneficial ownership reports. Some older guides say every new company has to file one with FinCEN, a federal agency. FinCEN now says companies created in the United States are exempt.
All guides
Guides for problems that come up after a company is formed:
Corpgate, Inc. publishes these guides. About Corpgate, Inc.
A reminder: this is general information. Before making a decision about your own company, talk to a licensed California attorney or tax professional.
Questions about forming a company
How much does it cost to form an LLC in California?
The Secretary of State's fee for Articles of Organization is $70. The first Statement of Information is $20. The Franchise Tax Board's annual tax is generally $800 a year, with the first-year rules it lists.
How much does it cost to incorporate in California?
The Secretary of State's fee for Articles of Incorporation for a stock corporation is $100. The Statement of Information is $25. The Franchise Tax Board says a new corporation does not pay the $800 minimum tax in its first year, though tax on income can still apply.
Do you have to pay the $800 California LLC fee every year?
The Franchise Tax Board calls it the annual tax. It says every LLC doing business or organized in California must pay an annual tax of $800. Its first-year exemption covered only tax years beginning in 2021 through 2023. For taxable years beginning in 2027 through 2029, it lists a $400 first-year tax.
Does an LLC owe the $800 tax if it is not doing business?
The Franchise Tax Board says of the LLC annual tax: "This yearly tax will be due, even if you are not conducting business, until you cancel your LLC." Its LLC page also lists the first-year rules.
How long does it take for an LLC to be approved in California?
The Secretary of State posts its current processing dates on its website.
Does a California LLC or corporation need a registered agent?
Yes. The Secretary of State says corporations and LLCs are required by statute to designate an agent for service of process.
About this information
Corpgate, Inc. is not a law firm or a tax professional and does not give legal or tax advice. This page is general information about California business filings, drawn from official government sources, and it may not fit your situation. Reading it does not create an attorney-client relationship with anyone. Fees, deadlines and rules change; check the official source linked on this page before you act. For advice about your own corporation or LLC, talk to a licensed California attorney or tax professional. Corpgate, Inc. provides registered agent service and does not prepare legal documents.