How to Form a Single-Member LLC in California

Forming a single-member limited liability company (SMLLC) in California is very similar to forming a multi-member limited liability company (LLC) in California. In both cases, you'll need to follow California's Revised Uniform Limited Liability Company Act.

In general, you can follow the steps below to start your California SMLLC.

1. Name Your SMLLC

Choosing a name for your business is an exciting first step. But you'll need to keep in mind the rules California has for what you can and can't name your SMLLC. Importantly, your SMLLC's name must include "Limited Liability Company" or an abbreviation of one or more of those words. For example, your business name could include "LLC" or "Ltd. Liability Co."

However, your LLC name can't contain any of the following words:

• "bank"
• "trust"
• "trustee"
• "incorporated"
• "inc."
• "corporation," or
• "corp."

Your LLC also can't use the words "insurer," "insurance company," or any other words suggesting that the LLC issues insurance policies or assumes insurance risks. (Cal. Corp. Code § 17701.08 (2023).)

In addition, your LLC's name can't be misleading to the public. It also must be distinguishable from any domestic or foreign LLC name on record or reserved with the California Secretary of State (SOS). You should make sure your proposed business name is available before filing your articles of organization.

Check to make sure the name you want is available by doing a business name search on the SOS website. You can reserve a business name for 60 days by filing a name reservation request form. File this form online using the SOS's bizfile Online system. As of 2023, the filing fee for a name reservation is $10.

The SOS provides additional, important information regarding business name availability on its name reservations webpage.

2. File Articles of Organization

To form your SMLLC, you'll need to submit articles of organization to the SOS. You can either mail in a completed Form LLC-1 to the SOS or submit your articles online with bizfile Online. As of 2023, the filing fee is $70.

Your articles of organization must include:

• a statement that the SMLLC's purpose is to engage in lawful acts or activities
• the name of the SMLLC
• the street address of the SMLLC's principal office
• a mailing address, if different from the principal office address
• the name and street address of the SMLLC's registered agent
• an indication of whether the SMLLC will be member-managed or manager-managed, and
• whether the SMLLC will have more than one manager (if manager-managed)

(Cal. Corp. Code § 17702.01 (2023).)

Every California SMLLC must have a registered agent. A California SMLLC can't act as its own registered agent. The registered agent can be either an individual California resident or a corporation that has filed the proper certificate (a Registered Corporate Agent for Service of Process Certificate) with the SOS. The registered agent must have a physical street address in California. You can find a listing of companies that'll act as registered agent on the SOS website. (Cal. Corp. Code § 17701.13 (2023).)

All of the paperwork and procedural steps to start a single-member LLC in California can be done online using our online LLC formation application.

3. Prepare an Operating Agreement

California doesn't require an SMLLC to have an operating agreement. However, even though an SMLLC has just one member, an operating agreement is highly recommended. You don't need to file your operating agreement with the state, but you should keep a copy of it at your principal office.

The operating agreement is usually made between the single member and the LLC itself. The agreement typically covers the member's rights, duties, and obligations, as well as the SMLLC's management structure. Having an agreement in place can help with liability protection by separating your business from you personally. It also can be useful with lenders and other businesses when entering into business transactions.

California's LLC Act lays out what an operating agreement can and can't cover. Specifically, California law says that an operating agreement should generally govern the following:

• relations among members and between members and the LLC
• the rights and duties of the LLC's manager
• the LLC's activities and the conduct of those activities, and
• how and when the operating agreement can be amended.

(Cal. Corp. Code § 17701.10 (2023).)

If you'd like help with drafting an operating agreement for your California SMLLC, check out Nolo's Guide to Single-Member LLCs, by David M. Steingold (Nolo).

4. Do You Need an EIN?

You don't need to obtain a federal employer identification number (EIN) for your SMLLC if your SMLLC both:

• is taxed as a corporation rather than as a disregarded entity, and
• doesn't have employees.

If your SMLLC is a disregarded entity with no employees, then you can report your business profits and losses on your personal tax return using your Social Security number or tax identification number.

By default, an SMLLC is taxed as a disregarded entity (same as a sole proprietorship). But—thanks to an LLC's flexible tax structure—you can choose to be taxed as a corporation instead. If you elect to have your SMLLC taxed as a corporation or you have employees, you'll need to get an EIN from the IRS.

Regardless of whether you're required to get one, an EIN is useful to have. Many banks require you to have an EIN to open a business bank account and companies you work with might require an EIN to process payments.

You can get an EIN by completing an online application on the IRS website. There's no filing fee.

5. Register to Pay State Taxes

In some cases, you'll need to register with the appropriate California taxing authority to file and pay your taxes. For example:

• If you'll be selling goods and collecting sales tax, you must register with the California Department of Tax and Fee Administration to obtain a seller's permit.
• If you have employees, you must register with the California Employment Development Department (EDD) to file and pay employer taxes.

In addition, all SMLLCs must pay California's $800 annual tax to the California Franchise Tax Board. If your SMLLC makes more than $250,000 that year, then you'll need to pay an additional fee.

For more information, check out our article on LLC biennial report and tax filing requirements in California.

6. Apply for Business Licenses

Depending on what kind of business you're running and where it's located, you could need to obtain local or state business licenses, permits, and registrations for your SMLLC. For instance, you might need to apply for licenses, permits, and registrations related to:

• your profession or occupation
• specific goods or services you'll sell or provide
• an assumed or fictitious name for your business, and
• health and safety matters.

You can find detailed information about many state and local business licenses via California's CalGold website. You can also learn more in our article about getting a small business license in California.

7. File Your Statement of Information

The State of California requires you to file an initial statement of information within 90 days of filing your articles of organization. You can file the statement online or mail a completed information statement form (Form LLC-12) to the SOS.

To complete the statement, you'll need to provide much of the same information needed for the articles of organization, along with the names and addresses of either your SMLLC's managers or your SMLLC's member, and a few other pieces of information.

Thereafter, additional statements of information are due every two years by the end of the anniversary month of the filing of your SMLLC's articles of organization. More specifically, there's a filing period that runs for the six months prior to the final due date. For example, if you filed your articles of organization on September 15 of an odd-numbered year, you should file statements of information between April 1 and September 30 of each subsequent odd-numbered year.

Getting Help Forming Your SMLLC in California

Many business owners can form their SMLLC on their own. However, you might need help or legal guidance in some situations—for example, if your business owes various employer taxes or if you need to apply for special permits. If you need answers to legal questions, consider speaking with a California business attorney.

You can also find more information on forming and running your SMLLC on the single-member LLC section of our website.