California LLC Frequently Asked Questions

How do I form an LLC in California?

You file Articles of Organization (Form LLC-1) with the California Secretary of State through the bizfile Online portal. Paper mail filing has been retired for this document, so it is done online. You provide your LLC name, business addresses, management structure, and an agent for service of process. Once the state processes the filing, your LLC is active and appears in the public business search.

How long does formation take?

Standard online filings generally process in a few business days, depending on the Secretary of State's workload. If you are on a deadline, the state offers paid expedited handling, including same-day service, for an additional fee.

Can I form a California LLC from another state or country?

Yes. There is no residency requirement for members or the organizer. The only California-presence requirement is the agent for service of process, who must have a physical California street address — a requirement a commercial agent service satisfies on your behalf.

Do I need a lawyer to form an LLC?

No. Most straightforward LLCs are formed without an attorney. A lawyer becomes valuable when ownership is complex, partners have differing contributions, or you are structuring investment. A filing service like Mainstay Filing handles the paperwork; an attorney handles legal strategy.

What is the California franchise tax?

Every LLC registered or doing business in California owes a minimum annual franchise tax to the Franchise Tax Board, payable whether or not the business made any money. It is separate from your income tax and separate from anything the Secretary of State charges. This is the single most common thing new California owners overlook.

Is there still a first-year exemption?

No. For a few years California waived the minimum franchise tax for an LLC's first year, but that exemption has expired. New LLCs owe the tax starting in their first year, so budget for it from day one.

Is there an additional LLC fee on top of the franchise tax?

Yes, once your California-source gross receipts pass set thresholds. This tiered LLC fee is separate from and in addition to the minimum franchise tax, and it scales up as gross receipts rise. It is paid to the Franchise Tax Board.

Where do I pay these?

All of it goes to the Franchise Tax Board, not the Secretary of State. Mainstay Filing does not handle franchise tax payments — that obligation is between you and the FTB. We handle the Secretary of State filings.

What is an agent for service of process?

It is California's term for a registered agent — the designated contact who accepts lawsuits and official notices for your LLC. Every California LLC must name one on the Articles and keep one on file for the life of the company.

Can I be my own agent?

Yes, if you have a physical California street address (not a P.O. box) and are available during business hours. The tradeoffs are that your address goes on the public record and you have to be present to accept service, including being handed a lawsuit in person.

Why do people use a commercial agent?

Privacy, reliability, and — for out-of-state owners — necessity. A commercial registered corporate agent puts a professional California address on the record instead of your home, guarantees someone is available to receive documents, and lets owners without a California address meet the requirement.

How do I check if my LLC name is available?

Use the California business search. Your name must be distinguishable from every other registered entity and must include an LLC designator such as "LLC" or "Limited Liability Company." Certain words like "bank" or "insurance" require regulatory approval.

What is the 90-day Statement of Information deadline?

Within 90 days of the Secretary of State accepting your Articles, you must file an initial Statement of Information (Form LLC-12). After that, California LLCs file it every two years — it is biennial, not annual. It updates your addresses, agent, and management. Missing it triggers a penalty and can lead to suspension.

What is the difference between the Statement of Information and the franchise tax?

Two different things going to two different agencies. The Statement of Information is an informational filing with the Secretary of State (biennial). The franchise tax is a payment to the Franchise Tax Board (annual). You have to keep up with both.

Do I need a business license?

California has no single statewide general business license, but most cities and counties require a local business license or tax certificate, and many trades and professions require separate state licensing. If you sell taxable goods, you also need a seller's permit from the California Department of Tax and Fee Administration.

How is a California LLC taxed?

By default, a single-member LLC is a disregarded entity (reported on your personal return) and a multi-member LLC is taxed as a partnership, with profits passing through to members. You can elect S-corporation or C-corporation treatment with the IRS if it makes sense. Regardless of income-tax treatment, the LLC still owes California's franchise tax and, past certain thresholds, the tiered LLC fee.

Do I need an operating agreement?

California does not require you to file one, but under RULLCA it carries real legal weight and you should have one. It protects the liability shield for single-member LLCs and prevents disputes in multi-member LLCs. It stays private and is never filed with the state.

How do I close a California LLC?

You file dissolution paperwork (typically a Certificate of Cancellation, sometimes with a Certificate of Dissolution) with the Secretary of State, wind up the business, and settle up with the Franchise Tax Board — including any final-year franchise tax. Formally dissolving is what stops the annual franchise tax from continuing to accrue, so do not simply abandon the LLC.