CALIFORNIA

Why Form a Limited Liability Company (LLC)?


$49 + State Fee & 1st Year FREE Registered Agent

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Quick 6 Steps to Forming Your California LLC

California is a center of technology, entertainment, innovation and businesses that are changing the world. Some of the biggest brand names have started their business in California — from Dollar Shave Club and Snapchat to the big tech giants such as Facebook, Apple and Google. California is at the forefront of technology, and is brimming with top employee talent and beautiful locations to live. If you’re inspired to start your own business in California, one of the best ways to do so is by forming an LLC. Limited Liability Companies (LLCs) are a business entity designed for startups, and small- and medium-sized businesses.

LLCs are simple and inexpensive to set up in California. They provide you with many of the protections and advantages of larger corporations without all the rules, regulations and compliance issues common to other types of California business entities. First, let's understand the advantages of forming an LLC in California:

Advantages of Forming an LLC in California

LLCs in California have many benefits...

  • Setting up a California LLC is quick and easy — you can complete all the paperwork online in an hour or less and then file it with the Secretary of State
  • An LLC limits your personal liability — any liabilities your business has (debts, obligations and other liabilities) are separate from you as the business owner or founder
  • California LLCs are easy to maintain — there’s no need for formal annual meetings, boards of directors or complex rules or regulations. LLCs are very easy to manage and you can add and amend members and make other changes with just a little paperwork.
  • Doing your taxes is simple — any income you earn through your LLC is reported on your personal tax returns, both federal and local California state. This means you won’t run into “double taxation” issues common with larger corporations.

How to Setup your California LLC in Six Quick Steps

1. Name Your California LLC

  • You will need an original name for your LLC.
  • The name should be distinctive and not used by another LLC in California. To find out if another company is using your #1 business name choice, conduct a California business entity name search.
  • The name should not be confusable with the name of another business.
  • The name of your business must end with “Limited Liability Company” or the abbreviations “LLC.” “Limited” and “Company” can be abbreviated to “Ltd.” and “Co.”
  • For example: “Malibu Beach Luxury Rentals LLC” or “Redwood Ziplining and Tree Surgery, Limited Liability Company.”
  • You can search for other company names, including words you aren’t allowed to use in your company name, on the California Business Entity Search & Name page.

2. Provide the Address for Your New California LLC

Your California LLC must have a designated business address. That could be your home address (if you’re running the company from your residence) or where your office is located. You can’t use a PO Box, the address must be a physical street address.

3. Assign a Registered Agent for Your California LLC

Every California LLC must have a "registered agent". That could be you, the managing director, owner or a dedicated registered agent service. The registered agent in California is someone who receives official legal and tax correspondence and has responsibility for filing reports with the California Secretary of State.

At Incfile, all of our packages include a "Registered Agent" service free for the first year and $99 per year thereafter. We also have a dashboard you can login to and easily view any document your registered agent has received on your behalf. Here are a few reasons you might want to appoint Incfile as their registered agent service...

  • The Registered Agent must have a physical street address in the state where you are forming the company. Some people establish companies outside of the state they live in and will need to use a Registered Agent service to provide the address.
  • You always need to have someone on hand to receive important documents for your business during business hours (typically 9 AM to 5 PM Monday to Friday). Therefore, person must always be available to sign for legal correspondence.
  • The Registered Agent’s name and address is part of the public record and available through the California Secretary of State's website. If you would prefer your name and address isn’t published, this is a reason to choose a Registered Agent service.
  • If you change your California business address or move out of state, you don’t need to file additional documentation with the secretary of state for the new address of your Registered Agent. You will need to setup a new registered agent service in the new state.

There are more considerations, but this should help you with your decision to use a Registered Agent service.

4. Provide the Names and Addresses of California LLC Members

The LLC members are the individuals who own and run the business. They typically withdraw profits from the business to pay themselves. California requires you to list the names and addresses of all managers or members when you register the LLC. You can register these addresses as street addresses or P.O. boxes.

5. File the Articles of Organization with the California Secretary of State

Once you've gathered all the information together for your LLC, you’ll need to file formal documents with the California Secretary of State. Incfile can also do this on your behalf.

6. Put your California LLC Operating Agreement Together

An LLC should have an Operating Agreement. This defines how the business runs, how managers and members are chosen, rights and duties of members and several other key areas. Here’s how to create your Operating Agreement. If you’re interested in having your Operating Agreement created for you, Incfile will draft a general Operating Agreement within most of our online business formation packages. It can also be selected as an add-on option in our Silver package. This Operating Agreement will be a basic template that you can make changes to anytime you see fit.

You can find lots more useful information on how to form an LLC here. It answers questions like:

  • Who can form an LLC?
  • Where should you form an LLC?
  • When should you form an LLC?
  • What are the ongoing responsibilities for an LLC?

Useful Resources for Starting Your California LLC

How to Form a California LLC without Breaking the Bank

Incfile provides a cost-effective service to help you create your LLC. We guide you through the process and handle most of the administrative steps, such as filing the articles of organization on your behalf. Our basic package also provides a free registered agent service for the first year. If you're looking for help to start an LLC, our comprehensive services provide outstanding value.

*Note that some types of businesses cannot be formed as LLCs in California so you will need to choose a different business structure if you are one of these types of businesses.

How to Name Your California Limited Liability Company (LLC)

Choosing the right name for your California LLC is vitally important. It helps you tell your suppliers, customers and employees what your business does. In California, there are several rules and regulations about what you can call your new business. Let’s explore what they are:

California Rules on What You Can Call Your LLC

  • The name needs to be unique and not used by another LLC or business operating in California
  • LLC names must use the English alphabet or regular numerals (0, 1, 2, 3, 4, 5, 6, 7, 8, 9)
  • The name of your California business must end with “Limited Liability Company,” “L.L.C.” or “LLC”
  • “Limited” and “Company” can be abbreviated to “Ltd.” and “Co.”

Rules on Not Confusing Your California Business Name With Another Business Name

  • It should not be possible to confuse the name of your business with the name of another California business.
  • When deciding if names are substantially similar, you cannot claim a different type face, font, accents, subscript / superscript characters, punctuation or words like “the,” “and,” “of” etc. to claim your business name is different.
  • The following words can’t be used to say your business name is different to another business name: Corporation, Company, Incorporated, Incorporation, Limited, Corp, Co, Inc, Ltd, PC, Professional Corporation, Limited Partnership, LP, L.P., Limited Liability Limited Partnership, LLLP or L.L.L.P.
  • For example, you can’t claim that Blue Widget Co., Blue Widget LLC, Blue Widget Incorporated, Blue-Widget-Company or Blue Widget are different to each other.

Words You Can’t Use in Your California Business Name

  • The business name may not include the words "corporation, corp, trustee, bank, trust, incorporated or inc."
  • Your California business name cannot include any words suggesting you are an insurer or assume insurance risks.
  • The business name cannot include “Agency,” “Commission,” “Department,” “Bureau,” “Division,” “Municipal” or “Board.”
  • Although these are the main rules about naming your business in California, there are plenty more. You can find additional rules about naming your California business on the California Secretary of State website.

Rules on Infringing on Service Marks or Trademarks Inside or Outside California

In addition to the rules above, it’s also vital to see if your name might infringe on the trademark or service mark of another business. For example, it might not be a good idea to call yourself “iPhone Repair Services,” since iPhone is a trademark owned by Apple.

The easiest way to see if your proposed business name infringes is to carry out a trademark search. You can do that via the United States Patent and Trademark Office. You should also bear in mind that your business entity name cannot be substantially similar to an existing trademark or service mark.

How to Search for Your California Business Entity Name

You can search the database of the California Secretary of State for your proposed business name to see if it's unique.

You will find the following:

  • Names of corporations, limited liability companies and limited partnerships of record with the California Secretary of State
  • PDF copies of Statements of Information

What Should You Call Your California LLC?

Finding the perfect name can be tough. You want a business name that:

  • Describes what your business does
  • Appeals to your planned audience
  • Makes your business easy to find
  • Is relatively unique
  • Doesn’t limit you to a particular location or type of product or service

Fortunately, we’ve got some good advice on seeking out the perfect business name for your California LLC. Check out our guidance here to get inspired.

You’ve Found the Perfect Name, What Next?

Once you’ve found the right name for your business, it’s time to make it a reality. Check out our guide to starting your California LLC and form your LLC today.

Cities in California to Form Your LLC

As the most populous state in the union, California has no shortage of cities where you can start your LLC. Here’s some of the key information on each city to help you make an informed choice.

Starting an LLC in Los Angeles, CA:

Los Angeles certainly has plenty going for it as a great place to start your LLC — warm beaches, the hub of the entertainment industry and a prominent influence for the fashion industry. Many startups and businesses have chosen L.A. as home base, including Hulu, Demand Media and Snapchat. Here is information helpful to starting your business in L.A.:

  • Area of Los Angeles city: 503 square miles (Metropolitan).
  • Population: 18.7 million in the metropolitan, city, and surrounding areas. It’s the largest city in California and the second largest city in the U.S.
  • Population density: 8,300 people per square mile.
  • Cost of living: 44 percent higher than the national average.
  • Time zone: Pacific time.
  • Sales tax in Los Angeles: 9 percent.
  • Economic outlook: the economic outlook in LA is likely to continue to improve.

Most Popular Industries in LA

The ten biggest industries in LA, in descending order of revenue are:

  1. Wholesale trade
  2. Manufacturing
  3. Retail trade
  4. Professional, scientific and technical services
  5. Health care and social assistance
  6. Real estate and rental and leasing
  7. Accommodation and food services
  8. Administrative, Support, Waste Management, Remediation Services
  9. Arts, Entertainment and Recreation
  10. Other services (except public administration)

Starting an LLC in San Francisco, CA

As a central hub of technology, innovation and culture, San Francisco is the city to start up a tech-based LLC, if you can afford the high cost of living. Despite San Francisco being the most expensive city in the United States to live, it has opportunities other cities might not have because so many entrepreneurs choose it as their home base. These opportunities include access to investors, unparalleled networking opportunities and shared housing opportunities for entrepreneurs. Here are some stats on what it's like to live and start a business in San Francisco:

  • Area of San Francisco city: 231 square miles (famously called "7x7" for being roughly 7 miles by 7 miles).
  • Population: 8.7 million in the metropolitan, city, and surrounding areas. It’s the fourth largest city in California and the 13th largest city in the U.S.
  • Population density: 18,400 people per square mile.
  • Cost of living: 78 percent higher than the national average with housing 222 percent higher.
  • Time zone: Pacific time.
  • Sales tax in San Francisco: 8.75 percent.
  • Economic outlook: the economic outlook in San Francisco is slowing slightly.

Most Popular Industries in San Francisco

San Francisco has a number of big industries including:

  • ​Finance
  • World commerce
  • Tourism
  • Technology

Starting an LLC in San Jose, CA

As the largest city in the Bay Area, San Jose is home to many tech startups and businesses across a range of sectors. But watch out, San Jose also made the list of most expensive cities in the world to buy housing.

  • Area of San Jose city: 2,694 square miles (Metropolitan).
  • Population: 8.7 million in the metropolitan, city, and surrounding areas. It’s the third largest city in California and the 10th largest city in the U.S.
  • Population density: 5,700 people per square mile.
  • Cost of living: 48 percent higher than the national average.
  • Time zone: Pacific time.
  • Sales tax in San Jose: 9 percent.
  • Economic outlook: The economic outlook in San Jose is cooling off slightly.

Most Popular Industries in San Jose

As home to “Silicon Valley,” San Jose is a national leader in the tech industry. It is also well represented in:

  • ​Professional services
  • Trade
  • Transportation
  • Utilities
  • Healthcare

Starting an LLC in San Diego, CA

Another popular choice for California startups, San Diego is worth a look. It might not be a metropolis like it's sister San Francisco and brother L.A., but San Diego has it's perks. Namely, 70-degree, year-round weather and a laid-back beach vibe.

  • Area of San Diego city: 372 square miles
  • Population: 3 million
  • Population density: 4,000 people per square mile
  • Cost of living: 46 percent higher than the national average
  • Time zone: Pacific time
  • Sales tax in San Diego: 8 percent

Most Popular Industries in San Diego

San Diego’s biggest industries include:

  • ​Manufacturing
  • Military and defense
  • Shipbuilding
  • Industrial machinery
  • International trade

Registered Agents and Your California LLC

Every LLC — whether it’s registered in the state of California or elsewhere — needs to have a “Registered Agent.” A registered agent is a person or business you choose who can accept legal notices for your Limited Liability Company (LLC) on your behalf. If you choose a person to be your registered agent, they must reside in California. If you choose a business as your registered agent, they must be able to conduct business in California.

What Type of Legal Notices Might a California Registered Agent Receive?

A registered agent may receive, on behalf of your LLC:

  • Correspondence from the California Secretary of State
  • Service of process notices (e.g. if your LLC is sued or required to appear in court)
  • Official state and federal government correspondence and notifications
  • Tax forms and requests to complete permits, company filings and reports

If you don’t have a physical presence in the state where you’re registered, you do need an agent to accept important documents on behalf of your business. Please note that a secretary of state does need the address of your registered agent and it needs to be a street address, not a PO Box.

A registered agent might also be known as a “Corporate Agent,” "Resident Agent," “Agent for Service of Process” or "Statutory Agent."

Acting As Your Own Registered Agent

If you permanently reside in the state of California, you can choose to be your own registered agent, however you may decide not to be, for several reasons:

  • You should always have someone on hand to receive important documents for your business. If you’re not always available, consider using a third-party service like Incfile.
  • The registered agent’s name and address is part of the public record and available through the California Secretary of State's website. If you would prefer your name and address isn’t published, you might choose a registered agent service.
  • If you change your business address, you don’t need to file additional documentation with the secretary of state for the new address of your registered agent.

If You Don’t Have a Registered Agent for Your California LLC

There can be significant issues if you fail to provide a registered agent, these include:

  • Not having the information you need — if your business is sued and you don’t know about it, you could lose to a default judgement in your absence.
  • Failing to meet filing deadlines — California LLCs need to file certain documents with the secretary of state. This could mean you face fines and penalties.
  • Losing your status as an LLC — a registered agent “proves” to the state that your business exists. Without it, you could lose your business entity protections and your LLC may be dissolved.

Incfile Will Provide a Registered Agent for California on Behalf of Your LLC

Here at Incfile, we have an expert registered agent service. We provide the first year of this service completely for free if you choose to form your LLC with us. After the first year, it’s only $99 for subsequent years — a small price for your peace of mind. Here’s what our service provides:

  • An always available registered agent service that can receive correspondence, documents, and legal proceedings on your behalf
  • A digital dashboard where you can access, store, and retrieve any information we’ve received for your business
  • Email notification whenever we receive documents for your business
  • Automatic forwarding of all correspondence, documentation, and information directly to you

California LLC Form, Filing and Permit Requirements

When you’re forming your LLC in California, there are certain forms, requirements and legalities you will need to get in place. Below is a rundown of what you’ll need to do, together with details on each form required for your California LLC. Some of these forms you’ll only need to submit once, while others must be filed on an annual or biannual basis. It's important to set reminders in your calendar to filed the forms annually or biannually if you're filing yourself — if you file with a service such as Incfile, we'll take care of form renewals for you.

Operating Agreement for Your California LLC

Although setting up an LLC is very easy, managing one can be more complex. One way to make sure all the founders, owners, members or managers have a common understanding is by creating an Operating Agreement. An operating agreement defines how your business works and typically includes areas like:

  • Legal Standing: Stating the legal standing of your LLC, declaring the LLC was formed in California and including dates, formation details and other important legal information.

  • Ownership: Stating how ownership of the LLC is split between its members. This can influence how the business is run, voting rights and several other areas.

  • Ownership Percentages: How much each member has invested and the percentage of ownership of each California LLC member.

  • Management Type: Stating whether your LLC will be managed by its members (owners) or managers (people the owners appoint).

  • Management Relationships: Defining the relationship between the members and the managers of your California LLC.

  • Roles, Rights and Responsibilities: What each of your members is expected to do as an owner of your California LLC.

  • Decisions and Voting Powers: How high-level decisions will be presented, discussed and acted on, including the voting rights of each LLC member.

  • LLC Rules: Defining the policies, rules and procedures the LLC will follow for adding, removing, amending and making other changes to members and managers. This includes moving ownership between members.

  • Profit and Loss Allocation: How profits and losses will be split and allocated between California LLC members.

You are not required by federal or California state law to have an Operating Agreement for your LLC, but we recommend one for several reasons. An Operating Agreement:

  • Strengthens your legal standing as an LLC and adds credibility

  • Clearly states how your business will operate, so there’s no confusion

  • Reduces misunderstandings and disagreements between LLC members

  • Allows you to create your own rules for your LLC, rather than being subject to the default California state rules for an LLC

  • Reduces the need for every member of an LLC to approve and sign off on every decision

Your Operating Agreement only needs to be created once and updated if significant changes are needed. The good news is, Incfile provides an Operating Agreement with most packages and it can also be individually added to our basic Silver package. Our Operating Agreement provided will be a general template that covers the top 20 most common provisions for any new business. As your business evolves, you can make changes anytime as you see fit as this is an internal company document for LLC members and not filed with the state or IRS.

Business Licenses for Your California LLC

Depending on the type of business you’re running, you will need to obtain various business licenses and permits:

A business permit or license from your city

Various cities in California have slightly different rules and fees for permits and licenses. Check with your local city administration to see what their rules are. You will need a separate permit or license for each city your California LLC operates in.

Additional business permits and licenses

Depending on the type of business you are running, you may need to get additional permits and licenses from the city, county or state of California. You can get a complete list of the licenses you will need to obtain from the CalGold website, based on your type of business and industry. The frequency of how often you need to file permits varies depending on the permit type.

If you’d rather have someone do the research for you, Incfile offers a Business License Research service for $99 additional fee to your online formation package of choice. With his add-on, a licensing specialist will determine all of the permits and licenses required for your specific industry and city-, state- or county-level jurisdictions.

Certificate of Good Standing for your California LLC

You may need a Certificate of Good Standing (also known as a Certificate of Existence) from the California Secretary of State. This certificate proves the credibility of your LLC and might be needed if you’re seeking credit, working with a vendor or need to open a business bank account.

This certificate proves the following:

  • Your business exists
  • It can carry out business in California
  • It complies with all the necessary California business requirements
  • It has paid its taxes
  • It has filed all necessary documents and paid relevant state fees

You can find details of how to get your Certificate of Good Standing here. You can get your Certificate of Good Standing as needed. If you are a newly formed business entity, you don’t generally need a Certificate of Good Standing. However, you may need it as validation of being in good graces with the state after your business has been in existence for a period of time.

Articles of Incorporation / Organization for Your California LLC

The Articles of Incorporation are the formal documents filed with the California secretary of state to create your LLC. They are a “charter” and state certain information about your business. Once they are filed with the secretary of state, they legally create your business as an LLC in California. Here’s what’s typically included in the Articles of Organization:

  • Your business name and address
  • The type of business you’re conducting
  • Details of your registered agent
  • Names of any managers or members of the LLC at the time of filing

Here at Incfile we automatically create and file your Articles of Organization on your behalf when you form your business with us. There is a fee levied by the secretary of state of California to cover your filing.

You only need to file your articles once.

Statement of Information for Your California LLC

You will also need to file a Statement of Information within 90 days of forming your LLC and then file an additional statement every two years. However, you won’t need to mark these dates on your calendar, because we’ll take the guesswork out and provide reminders for you. If you file with us, we’ll send you a courtesy email reminder as the 90-day and two-year due dates near. Additionally, we can assist you with filing your Statement of Information, or you can file it yourself directly with the state.

The statement contains basic information about your business including:

  • Business name and your California Secretary of State reference number
  • The name and address of the registered agent
  • The address of the main business office
  • The mailing address of the LLC
  • The names and addresses of members, managers and the CEO
  • An email address for contact
  • The type of business you operate

There is a filing fee of $20 and you can file your California Statement of Information directly with state, or Incfile can assist with filing it for you. You need to file your California Statement of Information every two years.

Franchise Tax Report for your California LLC

You must file a franchise tax report with the Franchise Tax Board in California. You will need to file the first one within three months of incorporating and thereafter on a yearly basis. There is a minimum fee of $800 associated with filing this report. You need to file and pay this fee every year.

Note that if you start your business in the last 15 days of the year (on or after 16 December), you will not be charged a fee for that year.

As you can see, there are several forms and permits you need to conduct business, both initially and that you’re required to submit on an annual or biannual basis.

​California Taxes and Fees for Your LLC

Here’s a breakdown of the likely taxes and fees you’ll incur when you start and run an LLC in California:

California LLC Fees

  1. California LLC Formation and Filing Fee: When you first from your LLC in California, you will need to pay a fee of $70 to file your Articles of Incorporation. However, counter service and courier walk-in fees can also apply in order to process your order more quickly.
  2. California Statement of Information Fee: You will need to pay an initial fee of $20 and then a further $20 every two years when you file your Statement of Information.
  3. California Permits and Licenses: You will need to pay licensing and permit fees on a regular basis depending on the type of business you are operating and where you are located. These do vary from city to city and industry to industry.

California LLC Taxes

  1. California State Business / Franchise Tax: The state or franchise tax you pay will depend on a couple of factors:
    • If you pay regular state and federal income tax (i.e. you are not taxed as a corporation), you will pay a minimum of $800 a year (this fee is waived for the first year for corporations, but not for LLCs). This fee may increase depending on your LLC’s profits, ranging from an additional $0 to $11,790 a year. If you need additional information about California tax rates or a tax calculator, you can find this information on the State of California Franchise Tax Board website.
    • If you are an LLC choosing to be taxed as an S Corp, you will need to pay a 1.5 percent franchise tax on your income, with a minimum tax of $800. Check out Incfile's S Corp Tax Calculator for additional help understanding tax payments.
  2. California State Income Tax: Income from your California LLC “flows through” to your income tax return, so you will be levied state and federal income tax on your earnings. You can find your California state tax income bracket online. Note that you will be able to deduct your business expenses from your income when working out how much California state tax you owe.
  3. California State Sales Tax: If you’re selling products or services in California you may need to pay the state sales tax of between 7.25 to 9.75 percent.

Federal Taxes

  1. ​Self-Employment Tax: You will need to pay self-employment tax (also known as FICA, Social Security, Medicare tax) on your earnings. This is at a rate of 15.3 percent. You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Note that if you are an LLC electing to be treated as an S Corp, you can reduce your self-employment tax.
  2. Federal Income Tax: You will also need to pay regular federal income tax when you file your tax return every year. You can see the federal tax bands here. Note that you will be able to apply your standard deduction, personal exemption and business expenses to this tax.

Ready to Start your California LLC?

Incfile provides a cost-effective service to help you create your California LLC. We guide you through the process and handle most of the administrative steps, such as filing the articles of organization on your behalf. Our basic package also provides a free registered agent service for the first year.

Understand Your Ongoing LLC Filing Requirements

Each state requires different forms such as your business annual reports and state franchise tax reports to be filed at different times. It’s important to understand when each form needs to be filed and when you need to refile the form. Complying by the form filing requirements keeps your business in good standing with the state. Failure to file these reports can lead to the company being revoked or administrative business dissolution. Incfile includes lifetime company alerts with courtesy email reminders to inform clients of an upcoming filing requirement with all of our state filing packages.

California’s Ongoing File Requirements:

STATEMENT OF INFORMATION

Frequency: Biennially
Due Date: During six-month period ending on last day of anniversary month of incorporation or qualification.
Filing Fee: $20
Important: The initial Statement of Information filing is due within 90 days of the entity formation date.

CALIFORNIA FRANCHISE TAX

Frequency: Annually
Franchise Tax Fee: $800 (minimum)

Protect Your Business Name with a Trademark

A trademark is an essential asset for your business because it protects the brand name and identity that you worked so hard to create. When you secure a federal trademark for your business brand, it gives you exclusive rights to use your business name, logo or slogan once the trademark is approved. Federal Trademark Protection also prevents other businesses from using your brand name and brand identity. Incfile is happy to help with conducting a trademark name search on your business name. Our partnered attorneys will do the research to make sure the mark isn't already taken, ensure the filing is properly prepared and submitted to the government office, and provide sound legal advice throughout the entire process.

Benefits of Incfile's Trademark service include:

  • Legal counsel from an experienced trademark attorney
  • A thorough search of existing trademarks
  • A registered trademark with the USPTO
  • Handling all correspondence with the USPTO until the name is approved.

Finances & Accounting for Your California LLC

Once you form your LLC in California, there are important next steps to ensure your business finances and accounting are organized for tax season and peace of mind, and that your personal and business finances are kept separate to ensure safety of your personal assets. With the right accounting steps, your business will run smoothly and be set up for increased profits and success.

Choose a Bank for Your California LLC

The right business checking account for your business should have minimum fees, so that your money goes into the business or your own checking account instead of spending on hidden, tricky bank fees. According to NerdWallet — who looked at the 10 biggest banks in the U.S. and some additional online banks — these are the best four free business checking accounts for your LLC:

Best Free Business Checking Accounts
U.S Bank Silver Business Allows 150 transactions a month for free. Has 3.000 bank branches in addition to online banking.
Capital One Spark Business Online banking with no monthly limit on transactions.
Well Fargo Business Choise Make 10 debit transactions a month and the $14 monthly free is waived. Offers a total of 200 free monthly transactions and no charge for the first $7.500 in cash deposits each month.
Bank of Internet Federal Bank Basic Business Online-only bank that offers 200 free transactions a month and unlimited fee reimbursement for ATMs in the US.

Separate Business & Personal Expenses

Once your form your LLC, it’s important to keep your business and personal assets separate to protect your personal assets from liability. It also makes tax season a whole lot easier when you have one clear account with all your business expenses, instead of all expenses mixed up within two accounts that need to be sorted. Once you choose a business checking account for your California LLC, make sure you receive a business checking card or apply for a business credit card that you can use for all business expenses. You can also use a tool like Expensify to track and tag business expenses from your mobile phone.

Set Up Accounting Software

Choosing the right accounting software will allow you to track your accounts receivable — the money that is flowing in and out of your business. Accounting software will allow you to track bills, invoices, expenses and customers. This is also another important step in simplifying your year-end tax burden. With a clear, separate business checking account and card and an organized accounting software system, you’ll (barely) dread tax season as a business owner.

Here are some favorite accounting software options for LLC business owners:

QuickBooks: This is a top option for a lot of business owners and starts out at only $10 a month. You can automatically important banking transactions, track your customers and vendors and related bills and expenses, and integrate with a lot of other online finance tools. If you hire an accountant or tax support, they will all likely support QuickBooks. You can even use an online version in addition to a desktop version of their software. The drawback is that the learning curve for QuickBooks can sometimes be a bit steep.

Xero: Xero is online accounting software that is a great option for those who find QuickBooks to be too complicated and difficult to understand. Their plans start out at $20 per month.

FreshBooks: Freshbooks is online accounting software that allows you to also track your time, expenses, collaborate on projects and view accounting reports. One drawback is that it doesn’t currently have a way to track invoices that your business needs to pay. But, accounts start out at $15 per month.

Bench: Bench not only allows you to track your accounts receivable, but they include the help of a real-life bookkeeper to run your accounting every month. For a Bench account starting out at $125 a month, this is quite the deal instead of hiring your own bookkeeper.

Determine How You’ll Accept Credit Cards

If you use QuickBooks or Freshbooks, you’ll be able to accept credit cards to pay for invoices. If you have a brick and mortar location for your small business, you want to look into offering payments through a service such as Shopify or Square.

Look Into Business Funding Options

In case your business runs out of cash flow, you want to have a backup option so your business doesn’t go under. You can raise capital from investors, ask friends or family for loans, get a business credit card, take an online business loan, or look into government financing using the SBA & BusinessUSA’s financing tools. Also, it’s important to remember that you can also bootstrap your business — which means, only using the funds you have in your bank account and not expanding until you get more business income.

Business Operations & Marketing for Your California LLC

Build a Business Website

Having a great online presence for your business is the number one way people will find you. You need to start with buying a domain name using a service such as NameCheap. Then you need to choose a service to host your website such as Sniper Monkey. Finally, design your website using a tool such as SquareSpace or WordPress. Make sure your website includes important business information such as how to contact you and business hours.

Choose a Virtual Phone System

Your business needs a phone number so that your customers, employees and and vendors can reach you. A great option is to look into a tool such as Grasshopper, which allows you to get a business phone that actually forwards to your cell phone, so you never miss an important call.

Design a Business Logo

A logo will reflect your business branding everywhere your customers interact with you — on your website, on your invoices, in your email signature, on business cards and more. Instead of trying to design a logo yourself, try a logo making service such as 99 Designs or buy some really high-quality pre-made logos you can customize on CreativeMarket.

Get Business Cards Created

Once you have a logo, create nice looking business cards that you can hand out when you’re out networking or even running errands. You never know when a conversation about your business will come up, and you want to be able to give someone a place to research your business and contact you. A great tool to create inexpensive business cards is Vistaprint.

Choose the Best Business Tools to Run Your California LLC

In addition to accounting software, there is a number of online business software options that will lift a number of menial tasks and burdens off your full business-owner plate. Below are important business functions for your LLC and what we think are the best business tools for your California LLC.

  • Project Management: Asana, Basecamp, Trello
  • Productivity: Todoist, Evernote
  • Collaboration: Google Docs, Dropbox, Box
  • Social Media Management: Hootsuite, Buffer, Sprout Social
  • Communication: Skype, Grasshopper, Slack, Yammer
  • Email Marketing: MailChimp, CampaignMonitor
  • Marketing Automation: HubSpot, Hatchbuck
  • Customer Relationship Management (CRM): SalesForce, Insightly, Zoho
  • Customer Support: ZenDesk, GetSatisfaction, SurveyMonkey
  • Human Resources: Gusto, Back Ops
  • Legal: DocuSign
  • Ecommerce: Shopify, Recurly, Vendio, Square
  • Website Development: Sniper Monkey, SquareSpace, WordPress, Jira
  • Analytics: Google Analytics, SumAll
  • SEO: SemRush, KWFinder, AHREFS
  • Hiring: Bullhorn Reach, Plum, ZipRecruiter

Get a "Start a Business Checklist" to Follow

If you want to track your progress in getting your new business set up properly, we have a great virtual Start a Business Checklist that includes everything you need to do to launch your business. It even features downloadable PDFs you can access to download and print.

Only $49 + State Free To Launch Your Business

Clear Pricing. No Contracts. No Surprise.

What are the fees and requirements to form a business in California?

Filing Time and Price

The state charges this amount to file a new business entity. This fee goes directly to the Secretary of State.

State Fee State Filing Time Expedited Filing Time
$100 22 Business Days 10-12 Business Days

Compliance Requirements

This report is mandatory and must be filed within the specified time frame in order for the entity to remain in good standing with the state. Failure to file this report can lead to the company being revoked or administratively dissolved.

Statement of Information

Frequency: Biennially

Due Date: During six-month period ending on last day of anniversary month of incorporation or qualification.

Filing Fee: $20

Important:The initial Statement of Information filing is due within 90 days of the entity formation date.

 

California Franchise Tax

Frequency: Annually

Franchise Tax Fee: $800 (minimum)
$800 payment for the LLC Franchise Tax is due by 15th day of the 4th month after your LLC is filed. The month your LLC is filed counts as Month 1, regardless if you file on the 1st of the month, the last of the month, or any day of the month, really. This means that if you were to file your LLC on March 22nd, then you must pay the $800 fee no later than June 15th (in this example, March is Month 1, April is Month 2, May is Month 3, and June is Month 4). Then, every year after your first payment $800 LLC Franchise Tax will be due by April 15th. You pay the $800 LLC Franchise Tax using Form 3522 called the LLC Tax Voucher.
(We do not assist in the filing of the Franchise Tax Report)

Learn more about starting a business in California

Additional resources, guides, and articles for better decision making.

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