How to Start a Business and Form Your LLC in California

Follow the steps below or contact us today to form your California LLC or Corporation.

California Business Facts and Environment

CA Business Facts

California is the largest and wealthiest state in the United States. Major industries include technology (Silicon Valley), entertainment (Hollywood), agriculture/farming as well as millions of small businesses.

Major Companies

Major companies include Google, Apple, and dozens more you would recognize.

Startup Environment

California, while a hotbed for startups and top corporations, currently ranks #31 on Forbes Best States for Business list and is known for being more difficult to operate in as well as taxing businesses higher than most other states.

Steps to Form Your California LLC or Corporation

Step 1: Select a Business Structure

There are 3 top options: a DBA, a Corporation or an LLC. Click here for help choosing your business structure and to learn about business entity types.

DBA

“Doing Business As” or “Fictitious Business Name” or “Trade Name” – often used as an operating name to simplify the legal name or differentiate from other businesses with similar names. DBAs are also used to manage multiple businesses under one LLC or Corporation.
Example: California Dreamin’ LLC could register a DBA like California Auto Spa for a car wash business and California Dreamin’ Classic Autos for a custom auto shop, without having to form two separate LLCs or Corporations.

Corporation

“Corporation” or “Corp” – a separate entity that provides liability protection to its owners. This business structure includes shareholders, directors, and officers. Corporations are more complex than DBAs, but it’s the ideal business structure for profit-earning companies. Some professions are required to form a “Professional Corporation” or PC (doctors, lawyers, architects, etc.).

LLC

“Limited Liability Company” – a separate entity that provides liability protection to its owners, and is also easier to manage and taxed less than a Corporation. Because of these features, the LLC has taken first place in popularity over both DBA and Corporation business structures.

Step 2: Choose Your Business Name

Picking a business name is easier said than done – many legal and business problems can arise from picking the wrong name (you can always change it later but the less times you have to do that, the better). In Step 3 we’ll show you how to search for the name in California, but we highly recommend you do the following before searching California state databases:

• Make sure you’ve covered the basics: unique, easy to understand/pronounce (practice saying it out loud: “Thanks for calling XYZ”) and can survive over time (“DVD World” is not timely). Here are some of our tips on business identity including logo and trademarks.
• Search the web for your proposed name. Search Google, Bing and DuckDuckGo as a “first sweep” for any potential conflicts, especially in your state or local jurisdiction.
  NOTE: If you intend to operate nationally or even internationally it will be even more important that your name be unique. This should cover many cases where a company name is being used but not officially trademarked (see next tip).
• Do a trademark search with the US Patent and Trademark Office (USPTO). This will be a very good indicator if you’re name will have any conflicts. There’s an art to trademark searches (trademark specialists will charge you handsomely to do a thorough search) but in our experience if you can use google at a fairly advanced level you can reasonably clear a name yourself.
  
  TIP: search misspellings, plurals, variations of spelling, sound-alikes and other versions of your chosen name to be sure it’s not already registered.
  
  
• Make sure your company name choice is available by searching the California Secretary of State’s business entity database.
  NOTE: Make sure to search variations of spelling, plurals and misspellings as the state may reject a name that is too similar (then you have to start all over again, wasting valuable time).

Restrictions on California Business Name & Business Purpose

California business names must adhere to the following restrictions

• Your company name must include the correct corporate identifier: Corporations: “Corporation”, “Incorporated” or an abbreviation.
• May not contain the word “bank,” “trust,” “trustee,” and shall not contain the words “insurer” or “insurance company” or any other words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks.
• The following business purposes require the formation of a “Professional Corporation” or “PC”:

• Accounting
• Acupuncture
• Architecture
• Chiropractic
• Clinical social work
• Dentistry
• Law
• Marriage, family, and child counseling
• Medicine
• Speech-language pathology and audiology
• Nursing
• Optometry
• Osteopathy
• Pharmacy
• Physical therapy
• Physician assistants
• Podiatry
• Psychology
• Shorthand court reporters

Step 3: Register the Business

Each state has its own requirements for registering a business. Now that you’ve chosen a business structure and picked your business name, here are the requirements to register your business in California.

How to Form an LLC in California

• File Form LLC-1 (Articles of Organization) with the California Secretary of State LLC Division.
• Once the articles are filed and approved you will then need to properly organize the LLC (yes, even “1 person LLC’s”) by holding an “Organizational Meeting” which takes contributions from the members, issues Member Certificates, adopts the company Operating Agreement and more.

How to Incorporate in California

• File form ARTS-GS (Articles of Incorporation) with the California Secretary of State Corporation Division.
• Hold an “Organizational Meeting” to determine the percentage of ownership for each shareholder as well as resolve to do tasks like open a company bank account, pay back pre-incorporation expenses, elect S-Corporation status and more.
• Corporations can elect S-Corporation status with the IRS by filing IRS Form 2553. Click here to learn more about S-Corporations.

NOTE: When registering a new company The Secretary of State can take several weeks to file the paperwork (California is one of the slower states in the US). You can expedite the process by hand delivering the documents directly to them or one of their field offices and paying an additional fee.

TIP: Check our order form to see how long California is currently taking to process regular and expedited orders.

How to File a DBA in California

DBAs are filed with the county. You’ll want to contact your local County Recorder to find out exactly what forms to submit and what they’re submission process is. You can find the local county recorder’s office by searching “YOURCOUNTY county recorder”.

• Obtain and file the correct forms with the count to register your DBA.
  NOTE: some counties let you search the name and register online. Others require the form to be notarized.
• Publish a notice in an approved newspaper. The county can instruct you on approved newspapers. Publication must be once a week for four consecutive weeks. After the 4th publication, the newspaper company should send you a Proof of Publication, (as a signed affidavit indicating dates of publication in their newspaper).
• File Proof of Publication with the County Clerk’s Office within 30 days after the 4th publication.
  NOTE: Some newspaper companies may provide this service for you, but filing the proof is still your responsibility.

Optional Considerations when registering a California business

• Hire a professional Registered Agent. Many people list their home or business address on the Articles of Organization. This can cause issues because it becomes public record (you’ll get lots of junk mail). A professional Registered Agent will provide their address and forward any important documents to you, this is also convenient if you have to move (you don’t have to file forms or pay fees, just update your address with your agent).

Learn more about Business Formation Services
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Contact our friendly support team if you have any questions

Step 4: Obtain Your Federal Employer ID Number (FEIN)

Your EIN is like your Social Security Number for your company. It’s required for Corporations and LLCs and is optional for DBAs unless you have employees (then it’s required). If you are a DBA and don’t obtain an EIN you will be forced to use your Social Security Number on many documents so obtaining the EIN is recommended to prevent identity theft.

To obtain an EIN you can apply online with the IRS or via IRS Form SS-4.

TIP: We will obtain your EIN for you if we form your company.

Step 5: Open Business Bank & Credit Accounts

You’ll need to keep business and personal finances separate by opening a business bank and credit accounts. Learn more about how to build your business credit profile. Corporations and LLCs are required to operate these types of accounts, but they position your company for favorable loans and lines of credit. Call your preferred bank and ask how to open a business bank account. Typically you’ll need the following documents:

• Filed paperwork
• EIN
• Company resolution signed by the owners, members, officers, directors, etc. that authorizes your company to open an account.

Click here to view a list of our recommended banks in our Vendor Network.

TIP: Our business formation service includes a free banking solution.

Step 6: Set Up an Accounting System

Set up your Accounting and Record-keeping system and learn about the taxes your new company is responsible for paying.

Company documents generally are required to be kept for 3 years, including a list of all owners and addresses, copies of all formation documents, financial statements, annual reports, amendments, or changes to the company. All Tax and Corporate Filings should be kept for at least 3 years. View our “Accounting & Financial Management” section for help with setting up an accounting system and purchasing accounting software.

Review our list of Accountants, Accounting Software, and Bookkeepers in our Vendor Network.

Step 7: Obtain Licenses & Permits

Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).

Click here to explore our Business License Compliance Package.

Step 8: Hire Employees (if applicable)

If you intend to hire yourself or others as a full or part-time employee of your company, then you may have to register with the appropriate State Agencies or obtain Workers Compensation Insurance or Unemployment Insurance (or both). View our “Employees & Payroll” section for help with hiring employees and processing payroll.

Review our list of recommended Payroll Providers in our Vendor Network.

Step 9: Obtain Business Insurance

There are many types of insurance for businesses but they are usually packaged as “General Business Insurance” or a “Business Owner’s Policy”. This can cover everything from product liability to company vehicles. A decent policy can run as little as $300/year and offers a great extra level of protection.

Click here to view our list of insurance providers in our Vendor Network.

Step 10: Organize & Systemize

Prepare the business as if someone needed to take it over and run it for you. This means having a method to process orders, pay bills, pay employees, pay taxes, maintain your permits, etc. Basically, try to make the operational aspect of the business as automated and efficient as possible so you can concentrate on growing your business. View our “Manage Your Company” section for help with systemizing and automating your business.

Step 11: Branding & Marketing

Now that your company is set up for success, you need to get the word out. Create a marketing plan for your products and services that targets your ideal customer. View our “Marketing & Sales” section for help for more information.

Visit our preferred vendors for Logo/Business Identity and Marketing.

Step 12: Annual & Ongoing Requirements

DBA: Your Fictitious Business Name should be valid for 5 years (unless you change the company name or other information listed on the FBN) at which point you’ll need to renew it with the county.

LLC: Washington corporations are required to file a Periodic Report with the Washington Secretary of State biennially on or before April 1, in addition to general taxation. Information on your business’ taxes can be found here. Depending on the nature of your business, you may also need to periodically renew operating permits.

Corporation: Your business must keep corporate records at its principal place of business. Once every two years by April 1, an officer of your corporation must file an annual report. LLCs and Corporations will pay a filing cost of $300.

Click here to view our MyCompanyWorks Premium™ service which can automate most or your ongoing compliance tasks.

Important California Contacts

California Secretary of State

California State Taxation Departments

California State Treasurer’s Office

Department of Consumer Affairs Licensing

California State Labor and Employment Departments

Labor and Workforce Development Agency

California Startup Resources

1. California Small Business Administration

Small Business Administration (SBA) California State District Office

• US Small Business Administration

2. SCORE Mentors

SCORE California

SCORE is made up of active and retired business people who volunteer their time to support startup businesses. From coaching to funding resources, finding a local SCORE mentor can save precious time and money.

• California Business Programs
• California Small Business Development Center (SBDC) Network
• California Job Link Employer Portal
• Tax Information For California Businesses

3. California State Legal Statutes:

• California Business Corporation Act
• California State Limited Liability Companies – the specific act that applies to California State LLCs.
• California State Businesses and Professions – includes regulations on topics such as business and professions codes.

4. California State Chambers of Commerce

5. California Angel Investors

• A list of California Angel Investors

6. California Business News

• California Business Journal
• Los Angeles Daily Business News
• NFIB California Business News

7. California State Small Business Development Center

• California Small Business Development Center Network

8. California Green Business Network

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