Small Business & Property Ownership · Starting a business
Forming and maintaining a California entity
In this guide
- LLCs and corporations are formed through the Secretary of State’s bizfile Online.
- The $800 annual tax applies starting in an LLC’s first year and continues until the LLC is formally cancelled.
- U.S. companies are currently exempt from federal beneficial ownership (BOI) reporting.
Forming the entity
LLCs file Articles of Organization and corporations file Articles of Incorporation with the California Secretary of State, generally through bizfile Online. Each entity names a registered agent with a California address to receive legal papers. Many LLCs also adopt a written operating agreement, and corporations adopt bylaws. These are internal documents that are not filed with the state.
Ongoing requirements
- Statement of Information: filed within 90 days of formation, then every two years for LLCs and every year for corporations.
- Franchise Tax Board: the annual tax or minimum franchise tax, plus the LLC fee when it applies, and annual returns.
- Records: separate bank accounts, bookkeeping, and records of major decisions help show the entity is separate from its owners.
| Gross receipts | Annual LLC fee |
|---|---|
| Under $250,000 | None |
| $250,000 to $499,999 | $900 |
| $500,000 to $999,999 | $2,500 |
| $1,000,000 to $4,999,999 | $6,000 |
| $5,000,000 or more | $11,790 |
When filings or taxes lapse
Missing a Statement of Information can lead to a penalty. Unpaid taxes or missing returns can lead the Franchise Tax Board or Secretary of State to suspend the entity, which limits its ability to do business, enforce contracts, or use the courts until it is revived. An LLC’s annual tax continues each year, even when the business is inactive, until the entity is formally cancelled.
Federal beneficial ownership reporting
FinCEN’s current rule exempts U.S. companies and U.S. persons from Beneficial Ownership Information (BOI) reporting. Foreign companies registered to do business in the U.S. may still have to report.
Figures and time frames
- LLC annual tax: $800, due by the 15th day of the 4th month after filing with the Secretary of State, then each year
- Initial Statement of Information: within 90 days of formation
- Later Statements: every 2 years (LLCs) or 1 year (corporations)
Common questions
Was there once a first-year exemption from the $800 tax?
Yes, for LLCs, LPs and LLPs organized in tax years 2021 through 2023. The Franchise Tax Board notes that the exemption has expired.
Official sources for this guide
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