Forming a business in California involves several key steps. Follow this guide to ensure you complete all legal requirements properly.
Step 1: Choose Your Business Structure #
- LLC: Simple structure with personal liability protection
- Corporation (C-Corp or S-Corp): For raising investment capital
- Sole Proprietorship: Simplest but no liability protection
- Partnership: For multiple owners
💡 Tip: Most small businesses choose LLCs for their flexibility and protection
Step 2: Select and Reserve Your Business Name #
- Check name availability on the California Secretary of State website
- File a Name Reservation Request ($10 fee) if needed
- Register your Fictitious Business Name (DBA) with your county if using a trade name
Step 3: File Formation Documents #
- LLCs: File Articles of Organization ($70 fee)
- Corporations: File Articles of Incorporation ($100 fee)
- File online or by mail with the Secretary of State
Step 4: Create Your Operating Agreement #
- Required for LLCs (though not filed with the state)
- Should outline:
- Ownership structure
- Management roles
- Profit distribution
- Dissolution terms
Step 5: Obtain Required Licenses and Permits #
- California Business License
- Local city/county business licenses
- Industry-specific permits (health, construction, etc.)
- Seller’s Permit if selling taxable goods
Step 6: Handle Tax Requirements #
- Get an EIN from the IRS (free)
- Register with the California Franchise Tax Board
- Understand ongoing tax obligations:
- $800 minimum franchise tax for LLCs/Corps
- Annual statement of information ($20)
Step 7: Comply with Employment Laws (If Hiring) #
- Register with EDD for payroll taxes
- Obtain workers’ compensation insurance
- Display required labor law posters
Next Steps After Formation #
- Open a business bank account
- Set up accounting systems
- Obtain business insurance
- File your first annual report
⚠️ Important: Consider consulting a business attorney or CPA to ensure full compliance with all California regulations.
Contact us for professional assistance with your California business formation.