WEBVTT 00:00:00.163 --> 00:00:06.403 To start an LLC in California, you file Articles of Organization, Form LLC-1, with 00:00:06.423 --> 00:00:10.403 the California Secretary of State and pay the $70 filing fee. 00:00:11.249 --> 00:00:14.563 Seventy dollars. That sounds low for California. 00:00:14.563 --> 00:00:19.203 The filing is low. The yearly cost is where California stands out. 00:00:19.383 --> 00:00:25.843 You also pay an $800 tax to the Franchise Tax Board, every year, and you file a 00:00:25.923 --> 00:00:28.563 report called the Statement of Information. 00:00:28.563 --> 00:00:31.443 This is The Business Formation Podcast. 00:00:31.536 --> 00:00:37.763 Today, California, start to finish for 2026: the seven steps, what a first year 00:00:37.843 --> 00:00:42.163 really costs, and the three best ways to get it filed for you. 00:00:42.230 --> 00:00:43.283 Where do we begin? 00:00:44.076 --> 00:00:50.396 With the name. It needs to include LLC, L.L.C., or the words Limited Liability 00:00:50.456 --> 00:00:54.596 Company, and it has to be distinguishable from the names already on record. 00:00:54.596 --> 00:00:56.316 Anything banned? 00:00:56.316 --> 00:01:02.636 Certain words, yes. Bank, trust, corporation, and insurance company are on the list. 00:01:02.716 --> 00:01:05.836 And the name can't mislead the public about what you do. 00:01:05.836 --> 00:01:08.476 Is there any reason to rush a reservation? 00:01:08.476 --> 00:01:12.156 Only if you're not ready to file but you've found a name you love. 00:01:12.244 --> 00:01:14.876 Otherwise, search and file. 00:01:14.876 --> 00:01:16.476 How do I check what's taken? 00:01:16.476 --> 00:01:20.636 Use the free preliminary search on bizfile Online. 00:01:20.743 --> 00:01:24.876 If you need time, you can reserve a name for 60 days for $10. 00:01:25.568 --> 00:01:29.008 Now the agent. I keep hearing a different term in California. 00:01:29.008 --> 00:01:33.488 Right. California says agent for service of process. 00:01:33.755 --> 00:01:38.528 It's the same role as a registered agent: the contact who receives lawsuits and 00:01:38.564 --> 00:01:40.768 official notices for your company. 00:01:40.768 --> 00:01:41.808 Who qualifies? 00:01:41.808 --> 00:01:46.928 A California resident with a California street address, or a registered corporate 00:01:46.995 --> 00:01:50.048 agent. You list the agent on your Articles. 00:01:50.048 --> 00:01:52.528 Can I name my own LLC? 00:01:52.528 --> 00:01:55.408 No. And a P.O. box won't work either. 00:01:55.408 --> 00:01:59.048 Does a commercial agent count as a registered corporate agent? 00:01:59.048 --> 00:02:04.608 That's the category. A registered corporate agent is the business option, instead of 00:02:04.648 --> 00:02:06.008 a California resident. 00:02:06.008 --> 00:02:07.808 What about privacy? 00:02:07.808 --> 00:02:11.728 There isn't any. The agent's name and address are public record. 00:02:11.856 --> 00:02:16.128 That's the reason a lot of owners hire a commercial agent instead of using their 00:02:16.224 --> 00:02:16.687 home. 00:02:17.308 --> 00:02:18.448 And switching later? 00:02:18.448 --> 00:02:21.408 You file an updated Statement of Information. 00:02:21.621 --> 00:02:22.768 We'll get to that. 00:02:23.568 --> 00:02:25.168 Okay. Time to file. 00:02:25.168 --> 00:02:31.488 You submit Form LLC-1 online on bizfile Online and pay $70. 00:02:31.488 --> 00:02:32.608 What's on it? 00:02:32.608 --> 00:02:38.128 It's a short form. The company name, a principal office and a mailing address, your 00:02:38.208 --> 00:02:42.928 agent, whether managers or members will run the company, and a purpose statement. 00:02:43.088 --> 00:02:46.208 That statement is preset, so you can't change it. 00:02:46.208 --> 00:02:48.168 Is there a way to speed it up? 00:02:48.168 --> 00:02:50.608 Online filings are handled first. 00:02:50.654 --> 00:02:57.088 Beyond that, an expedite is $350 for 24 hours, or $750 for same 00:02:57.168 --> 00:02:57.888 day. 00:02:57.888 --> 00:03:00.208 Good. That's one filing done. 00:03:00.208 --> 00:03:02.768 And I'm glad you're asking these, Maya. 00:03:02.768 --> 00:03:05.488 Happy to. I'm Maya, by the way, here with Dan. 00:03:06.288 --> 00:03:07.888 What about the operating agreement? 00:03:07.941 --> 00:03:09.328 Do I send it in? 00:03:09.328 --> 00:03:11.488 No. You keep it with your records. 00:03:11.588 --> 00:03:14.688 The Secretary of State doesn't take it, and there's no fee. 00:03:14.688 --> 00:03:16.528 Then why bother? 00:03:16.528 --> 00:03:21.808 Because California's LLC Act recognizes oral and implied agreements, even for 00:03:21.868 --> 00:03:25.728 one-member companies. So you want your own terms on paper. 00:03:25.868 --> 00:03:31.088 Who owns what, how profits are divided, who makes the decisions, and what happens if 00:03:31.128 --> 00:03:32.128 someone leaves. 00:03:32.928 --> 00:03:34.848 Next is the federal tax number. 00:03:34.848 --> 00:03:38.448 Apply with the IRS at IRS.gov. 00:03:38.608 --> 00:03:43.088 It's free. Wait until the Secretary of State has filed your Articles. 00:03:43.088 --> 00:03:44.128 How fast? 00:03:44.128 --> 00:03:48.528 If the online application is approved, the number is issued right away. 00:03:48.656 --> 00:03:53.328 Keep the Social Security number or ITIN of the responsible person handy. 00:03:54.048 --> 00:03:56.368 And that ownership report everyone talked about? 00:03:56.368 --> 00:04:00.128 You don't need it. FinCEN no longer asks U.S. 00:04:00.152 --> 00:04:00.928 companies for it. 00:04:01.676 --> 00:04:04.076 Now the report you mentioned at the start. 00:04:04.076 --> 00:04:08.236 The Statement of Information, Form LLC-12. 00:04:08.456 --> 00:04:12.956 The first is due within 90 days of forming, and then every two years. 00:04:13.096 --> 00:04:14.716 The fee is $20. 00:04:14.716 --> 00:04:16.876 How do I know when the next one's due? 00:04:16.876 --> 00:04:21.756 Later filings fall in your formation month or in the five months before it. 00:04:22.076 --> 00:04:26.476 Filing online now requires User Access to be set up on bizfile. 00:04:26.476 --> 00:04:28.076 And if it's late? 00:04:28.076 --> 00:04:33.676 Once the state sends a notice and you still miss it, there's a $250 penalty. 00:04:34.441 --> 00:04:36.041 Then there's the tax. 00:04:36.041 --> 00:04:42.281 California charges every LLC $800 a year, payable to the Franchise Tax Board, even 00:04:42.334 --> 00:04:44.121 if the company earned nothing. 00:04:44.241 --> 00:04:49.241 The first payment is due by the 15th day of the 4th month after you form. 00:04:49.523 --> 00:04:50.881 Even with no income? 00:04:50.881 --> 00:04:55.161 Even with no income. There's one change coming, though. 00:04:55.321 --> 00:05:01.081 A 2026 law cuts the first-year amount to $400 for companies whose first tax year 00:05:01.127 --> 00:05:04.041 starts in 2027 through 2029. 00:05:04.041 --> 00:05:06.041 Anything else I should plan for? 00:05:06.041 --> 00:05:12.521 Once your California income reaches $250,000, there's an extra LLC fee on top. 00:05:13.705 --> 00:05:16.825 So what does year one cost if I do all of it myself? 00:05:16.825 --> 00:05:23.625 $890. That's $70 to file, $20 for the Statement of Information, and the $800 00:05:23.745 --> 00:05:24.425 tax. 00:05:24.425 --> 00:05:25.945 And after that? 00:05:25.945 --> 00:05:31.145 $800 a year, plus $20 every other year when the Statement comes due. 00:05:32.262 --> 00:05:34.502 Can we run the numbers over a few years? 00:05:34.502 --> 00:05:41.462 Sure. Year one is $890. Year two is $800, because there's no Statement 00:05:41.489 --> 00:05:47.462 of Information. Year three is $820, because the second Statement comes due. 00:05:47.462 --> 00:05:48.742 What's the total? 00:05:48.742 --> 00:05:55.543 $2,510 in state costs over three years, for a company that never earns a dollar. 00:05:56.225 --> 00:05:58.183 That's a lot for an idle company. 00:05:58.183 --> 00:06:00.103 It's the reason to think about timing. 00:06:00.290 --> 00:06:07.063 If your first tax year starts in 2027, 2028, or 2029, the first-year tax 00:06:07.143 --> 00:06:13.543 is $400 instead of $800. That's a $400 difference on day one. 00:06:13.543 --> 00:06:15.783 So the formation date can matter. 00:06:15.783 --> 00:06:20.023 It can. Do check which tax year your company starts in. 00:06:21.542 --> 00:06:23.862 And the services? Add that up for me. 00:06:23.862 --> 00:06:30.262 Mainstay is $199 each year, so $597 over three 00:06:30.355 --> 00:06:35.462 years, with the formation, the agent and the Statement of Information included. 00:06:35.682 --> 00:06:42.502 The other two are $199 in year one, then $99 in years two and 00:06:42.569 --> 00:06:46.582 three. That's $397. 00:06:46.582 --> 00:06:48.582 So $200 apart. 00:06:48.582 --> 00:06:52.582 Yes, before you count who files the Statement of Information. 00:06:52.696 --> 00:06:57.622 Either way, the state's $70 and the $800 tax are the same. 00:06:59.264 --> 00:07:01.904 Let's say I'd rather hand off the paperwork. 00:07:01.964 --> 00:07:02.944 Who should I look at? 00:07:02.944 --> 00:07:06.784 The three best ways to file in California, in order. 00:07:06.931 --> 00:07:13.424 First, our pick, Mainstay Filing, at $199 a year plus the state 00:07:13.524 --> 00:07:20.303 fee. With the $70 state fee, checkout comes to $269. 00:07:20.303 --> 00:07:22.704 What's inside the $199? 00:07:22.704 --> 00:07:29.184 Your formation filing, your EIN application, and your agent for service of process 00:07:29.237 --> 00:07:34.144 every year. It renews at the same $199. 00:07:34.171 --> 00:07:39.264 In California it also covers the Statement of Information, prepared and filed 00:07:39.308 --> 00:07:40.624 whenever it's due. 00:07:40.624 --> 00:07:42.543 What does it leave out? 00:07:42.543 --> 00:07:49.104 The $800 tax. You pay the Franchise Tax Board yourself, with any service. 00:07:49.104 --> 00:07:51.104 Number two? 00:07:51.104 --> 00:07:57.904 CA Registered Agent.org. It prepares and files your Articles for $199 00:07:58.000 --> 00:08:03.344 plus the state fee, and the first year of its registered agent service is free. 00:08:03.491 --> 00:08:06.943 After that, it's $99 a year. 00:08:06.943 --> 00:08:07.424 And three? 00:08:07.424 --> 00:08:11.104 California Registered Agent.ai. 00:08:11.264 --> 00:08:17.904 The same offer: $199 plus the state fee, a free first year of agent 00:08:17.974 --> 00:08:20.864 service, then $99 a year. 00:08:20.864 --> 00:08:24.464 Then why isn't one of the $99 services first? 00:08:24.464 --> 00:08:27.264 It depends on the Statement of Information. 00:08:27.424 --> 00:08:33.344 If you'd file it yourself every two years, numbers two and three cost less from year 00:08:33.444 --> 00:08:36.624 two, at $99 for the agent alone. 00:08:36.784 --> 00:08:41.904 And if you want the agent and the Statement handled at one steady price, that's 00:08:41.984 --> 00:08:47.184 Mainstay. The $800 tax is the same with all three. 00:08:47.488 --> 00:08:49.008 Can you give us the short version? 00:08:49.008 --> 00:08:55.888 Pick a name with LLC in it, name an agent for service of process, file Form LLC-1 00:08:56.002 --> 00:09:02.928 online for $70, write an operating agreement, get your free EIN, file 00:09:02.968 --> 00:09:08.768 the $20 Statement of Information within 90 days and every two years, and pay the 00:09:08.821 --> 00:09:10.849 $800 tax every year. 00:09:10.849 --> 00:09:15.729 The links to all three services and the official sources are in the show notes. 00:09:15.820 --> 00:09:20.049 Thanks for listening to The Business Formation Podcast, and good luck with your new 00:09:20.107 --> 00:09:21.649 California LLC.