[0:00] The short answer Dan: To start an LLC in California, you file Articles of Organization, Form LLC-1, with the California Secretary of State and pay the $70 filing fee. Maya: Seventy dollars. That sounds low for California. Dan: The filing is low. The yearly cost is where California stands out. You also pay an $800 tax to the Franchise Tax Board, every year, and you file a report called the Statement of Information. Maya: This is The Business Formation Podcast. Today, California, start to finish for 2026: the seven steps, what a first year really costs, and the three best ways to get it filed for you. Where do we begin? [0:43] Step 1: Choose a name Dan: With the name. It needs to include LLC, L.L.C., or the words Limited Liability Company, and it has to be distinguishable from the names already on record. Maya: Anything banned? Dan: Certain words, yes. Bank, trust, corporation, and insurance company are on the list. And the name can't mislead the public about what you do. Maya: Is there any reason to rush a reservation? Dan: Only if you're not ready to file but you've found a name you love. Otherwise, search and file. Maya: How do I check what's taken? Dan: Use the free preliminary search on bizfile Online. If you need time, you can reserve a name for 60 days for $10. [1:25] Step 2: Name an agent for service of process Maya: Now the agent. I keep hearing a different term in California. Dan: Right. California says agent for service of process. It's the same role as a registered agent: the contact who receives lawsuits and official notices for your company. Maya: Who qualifies? Dan: A California resident with a California street address, or a registered corporate agent. You list the agent on your Articles. Maya: Can I name my own LLC? Dan: No. And a P.O. box won't work either. Maya: Does a commercial agent count as a registered corporate agent? Dan: That's the category. A registered corporate agent is the business option, instead of a California resident. Maya: What about privacy? Dan: There isn't any. The agent's name and address are public record. That's the reason a lot of owners hire a commercial agent instead of using their home. Maya: And switching later? Dan: You file an updated Statement of Information. We'll get to that. [2:23] Step 3: File Articles of Organization Maya: Okay. Time to file. Dan: You submit Form LLC-1 online on bizfile Online and pay $70. Maya: What's on it? Dan: It's a short form. The company name, a principal office and a mailing address, your agent, whether managers or members will run the company, and a purpose statement. That statement is preset, so you can't change it. Maya: Is there a way to speed it up? Dan: Online filings are handled first. Beyond that, an expedite is $350 for 24 hours, or $750 for same day. Maya: Good. That's one filing done. Dan: And I'm glad you're asking these, Maya. Maya: Happy to. I'm Maya, by the way, here with Dan. [3:05] Step 4: Write an operating agreement Maya: What about the operating agreement? Do I send it in? Dan: No. You keep it with your records. The Secretary of State doesn't take it, and there's no fee. Maya: Then why bother? Dan: Because California's LLC Act recognizes oral and implied agreements, even for one-member companies. So you want your own terms on paper. Who owns what, how profits are divided, who makes the decisions, and what happens if someone leaves. [3:32] Step 5: Get a free EIN Maya: Next is the federal tax number. Dan: Apply with the IRS at IRS.gov. It's free. Wait until the Secretary of State has filed your Articles. Maya: How fast? Dan: If the online application is approved, the number is issued right away. Keep the Social Security number or ITIN of the responsible person handy. Maya: And that ownership report everyone talked about? Dan: You don't need it. FinCEN no longer asks U.S. companies for it. [4:01] Step 6: File a Statement of Information Maya: Now the report you mentioned at the start. Dan: The Statement of Information, Form LLC-12. The first is due within 90 days of forming, and then every two years. The fee is $20. Maya: How do I know when the next one's due? Dan: Later filings fall in your formation month or in the five months before it. Filing online now requires User Access to be set up on bizfile. Maya: And if it's late? Dan: Once the state sends a notice and you still miss it, there's a $250 penalty. [4:34] Step 7: Pay the $800 yearly tax Maya: Then there's the tax. Dan: California charges every LLC $800 a year, payable to the Franchise Tax Board, even if the company earned nothing. The first payment is due by the 15th day of the 4th month after you form. Maya: Even with no income? Dan: Even with no income. There's one change coming, though. A 2026 law cuts the first-year amount to $400 for companies whose first tax year starts in 2027 through 2029. Maya: Anything else I should plan for? Dan: Once your California income reaches $250,000, there's an extra LLC fee on top. [5:13] What it costs Maya: So what does year one cost if I do all of it myself? Dan: $890. That's $70 to file, $20 for the Statement of Information, and the $800 tax. Maya: And after that? Dan: $800 a year, plus $20 every other year when the Statement comes due. [5:31] A three-year budget Maya: Can we run the numbers over a few years? Dan: Sure. Year one is $890. Year two is $800, because there's no Statement of Information. Year three is $820, because the second Statement comes due. Maya: What's the total? Dan: $2,510 in state costs over three years, for a company that never earns a dollar. Maya: That's a lot for an idle company. Dan: It's the reason to think about timing. If your first tax year starts in 2027, 2028, or 2029, the first-year tax is $400 instead of $800. That's a $400 difference on day one. Maya: So the formation date can matter. Dan: It can. Do check which tax year your company starts in. [6:21] What the services cost over three years Maya: And the services? Add that up for me. Dan: Mainstay is $199 each year, so $597 over three years, with the formation, the agent and the Statement of Information included. The other two are $199 in year one, then $99 in years two and three. That's $397. Maya: So $200 apart. Dan: Yes, before you count who files the Statement of Information. Either way, the state's $70 and the $800 tax are the same. [6:58] The 3 best ways to file in California Maya: Let's say I'd rather hand off the paperwork. Who should I look at? Dan: The three best ways to file in California, in order. First, our pick, Mainstay Filing, at $199 a year plus the state fee. With the $70 state fee, checkout comes to $269. Maya: What's inside the $199? Dan: Your formation filing, your EIN application, and your agent for service of process every year. It renews at the same $199. In California it also covers the Statement of Information, prepared and filed whenever it's due. Maya: What does it leave out? Dan: The $800 tax. You pay the Franchise Tax Board yourself, with any service. Maya: Number two? Dan: CA Registered Agent.org. It prepares and files your Articles for $199 plus the state fee, and the first year of its registered agent service is free. After that, it's $99 a year. Maya: And three? Dan: California Registered Agent.ai. The same offer: $199 plus the state fee, a free first year of agent service, then $99 a year. Maya: Then why isn't one of the $99 services first? Dan: It depends on the Statement of Information. If you'd file it yourself every two years, numbers two and three cost less from year two, at $99 for the agent alone. And if you want the agent and the Statement handled at one steady price, that's Mainstay. The $800 tax is the same with all three. [8:47] Recap Maya: Can you give us the short version? Dan: Pick a name with LLC in it, name an agent for service of process, file Form LLC-1 online for $70, write an operating agreement, get your free EIN, file the $20 Statement of Information within 90 days and every two years, and pay the $800 tax every year. Maya: The links to all three services and the official sources are in the show notes. Thanks for listening to The Business Formation Podcast, and good luck with your new California LLC.