California will let you form an LLC in an afternoon through the state’s online filing system. It will not let you forget you formed it. Every California LLC owes a minimum $800 franchise tax each year starting in its first year, whether it makes money or not, and a second fee kicks in once revenue passes $250,000. If you’re weighing California against Texas or Wyoming for the same business, the numbers behind that decision changed twice since 2021, and a lot of guides online still quote the old version.
Here’s how to start an LLC in California, step by step, plus the cost breakdown that actually matters.
Step 1: Confirm the name is available
California checks LLC names for exact and near-exact duplicates through the Secretary of State’s business search on BizFile Online. The name has to include "LLC" or "L.L.C." and can’t suggest you’re a bank, trust company, or insurer unless you actually are one. You can reserve a name for 60 days for a small fee, but if you’re filing within the next few days there’s no real reason to bother. Just file the Articles of Organization directly.
Step 2: Name an agent for service of process
California calls this role an "agent for service of process" rather than a "registered agent," though the job is the same: someone with a physical California address who’s available during business hours to accept legal documents for the LLC. You can act as your own agent if you have a California street address. Most people who work from home hire a commercial agent service instead, mainly to keep a home address off a public filing that anyone can search.
Step 3: File the Articles of Organization
This is Form LLC-1. As of 2025 it can only be filed online through BizFile Online; the Secretary of State no longer accepts the paper version by mail. The fee is $70. Standard processing takes 2 to 3 business days once the state accepts the filing, and a 24-hour expedite is available for an extra $350 if you need the LLC to exist by a specific date.
Step 4: File the initial Statement of Information
Within 90 days of the Articles of Organization being filed, California requires a Statement of Information (Form LLC-12) listing the LLC’s addresses, its manager or members, and its agent for service of process. The fee is $20. After that first filing, it’s due again every two years, during a six-month window tied to the month the LLC was originally formed. Miss it and the Franchise Tax Board can assess a $250 penalty, followed by suspension if it still isn’t filed.
This is also the filing people search for by name. "California statement of information" gets searched almost as often as the formation question itself, usually by someone who already has an LLC and just got a delinquency notice in the mail. Our full breakdown of that filing covers the fee split, the deadline window, and what triggers the automatic penalty.
Step 5: Put together an operating agreement
California law requires every LLC to have a written operating agreement, even single-member ones, though it isn’t filed with the state. In practice, banks ask to see it before opening a business account, and it’s the document that shows a court the LLC is being run as a separate entity rather than as an extension of your personal finances. Skipping it doesn’t stop the LLC from existing, but it removes one of the arguments for why your personal assets should stay protected if the business gets sued.
Step 6: Get an EIN
The IRS issues this for free at irs.gov. You’ll need it for the bank account and for filings with the Franchise Tax Board, regardless of whether the LLC ever hires anyone.
What a California LLC actually costs every year
Here’s the part that changes the decision for a lot of people.
Every California LLC owes an $800 minimum franchise tax annually, and since 2024 that includes the first year. There used to be a first-year exemption: Assembly Bill 85 waived it for LLCs formed between 2021 and 2023. That exemption expired, which is why a lot of older articles still say your first year is free. It isn’t. The first $800 payment (Form 3522) is due by the 15th day of the fourth month after the state approves your filing, and it’s owed whether the LLC turns a profit, breaks even, or never does business at all.
On top of that flat $800, LLCs with California-source gross receipts of $250,000 or more owe a second, separate fee that scales with revenue:
- $900 for receipts between $250,000 and $499,999
- $2,500 between $500,000 and $999,999
- $6,000 between $1,000,000 and $4,999,999
- $11,790 at $5,000,000 and above
This is estimated on Form 3536, due June 15 for calendar-year LLCs, and reconciled on the annual Form 568. It doesn’t replace the $800 tax. It’s added to it.
Then there’s the $20 Statement of Information every two years. Small on its own. Combined with the $800, it’s a big part of why California shows up near the top of almost every "most expensive state for an LLC" comparison.
How this stacks up against Texas and Wyoming
We’ve covered both of the other big states in this comparison already. Texas charges no franchise tax at all unless revenue crosses roughly $2.65 million, so most small LLCs there pay $0 in annual state tax. Wyoming charges a minimum annual report license tax of $60. California guarantees $800 from day one, with no threshold to stay under.
If you don’t live in California and won’t be doing business there, it’s worth asking why you’d form there at all. California doesn’t offer the privacy or charging-order protection that draws people to Wyoming, and it doesn’t offer Texas’s no-income-tax simplicity. What it offers is the largest state economy in the country. If that’s not where your customers or operations actually are, you’re paying for a market you’re not in.
Should you file it yourself or pay someone?
Filing directly through BizFile is the cheapest route: $70 plus $20, dealing with the state’s forms yourself. Services like Northwest Registered Agent or ZenBusiness charge more but handle the agent-for-service-of-process requirement and the paperwork for you, which is worth something if you’d rather not track a 90-day deadline and a two-year deadline on your own. We haven’t run a full cost test on a California-specific formation yet. See How We Test for what that process looks like when we do. Treat this as an honest rundown of two options, not a recommendation of either.
FAQ
Does a California LLC really owe the $800 tax in its first year?
Yes, for tax years starting in 2024 and after. The exemption some guides still mention applied only to LLCs formed between 2021 and 2023, and it has expired.
How much does it cost to start an LLC in California?
$70 for the Articles of Organization plus $20 for the initial Statement of Information, so $90 to form it. After that, budget at least $800 a year regardless of income, plus the scaled LLC fee if gross receipts reach $250,000.
Can someone who doesn’t live in California form an LLC there?
Yes. There’s no residency requirement for members or managers, but the LLC still needs an agent for service of process with a physical California address.
What happens if the Statement of Information is filed late?
The Franchise Tax Board can assess a $250 penalty, and continued non-filing can lead to suspension, which affects the LLC’s ability to do business and defend itself in California courts.
