How to Open a Company in California: 2026 Step-by-Step
Table of Contents
- What You’ll Need Before You Open a Company in California
- California LLC Formation Requirements
- How to Get an EIN and Handle State Tax Obligations
- Business License Requirements by City
- Fictitious Business Name Statement California: When and How to File
- Post-Formation Compliance Checklist and Cost Breakdown by Entity Type
- Frequently Asked Questions
Last Updated: September 29, 2026
What You’ll Need Before You Open a Company in California
Opening a company in California starts with three decisions: your business name, your entity type, and your registered agent. Get those right, and the rest of the filing process moves quickly. Get them wrong, and you’ll pay to fix them later.
Before you file anything, gather these items:
- A unique business name that isn’t already taken in state records
- A physical California street address (not a P.O. box)
- A registered agent who can accept legal papers during business hours
- A signed operating agreement or bylaws
- A valid ID and payment method for state filing fees
California LLC Formation Requirements
California LLC formation requirements center on two filings: the Articles of Organization with the Secretary of State, and an operating agreement you keep on file. The Articles create the company. The operating agreement governs how it runs.
Filing Articles of Organization with the Secretary of State
The Articles of Organization is the document that officially creates your Limited Liability Company. You file it with the California Secretary of State, either online or by mail. It lists your company name, address, registered agent, and management structure.
A few practical notes:
- The name must include “LLC” or “Limited Liability Company”
- The registered agent must have a physical California address
- The filing fee is set by the Secretary of State, so check the Secretary of State’s official filing page for the current amount before you submit
Choosing a Registered Agent and Preparing an Operating Agreement
Your registered agent receives service of process, tax notices, and other official mail on your behalf. This person or company must be available at a California street address during normal business hours. Many founders serve as their own agent at first, then switch to a professional service as they grow.
Skipping the operating agreement is the most common mistake new LLC owners make. When two members disagree later, a court applies default rules instead of your terms, and the outcome is often not what either owner wanted.
How to Get an EIN and Handle State Tax Obligations
An Employer Identification Number (EIN) is your company’s federal tax ID. The IRS issues it for free, and the online application at the IRS EIN Assistant takes about 10-15 minutes for a single-member LLC or corporation with a valid Social Security Number or ITIN. You need the EIN to open a business bank account, hire staff, file federal returns, and, in most cases, to register with the state.
California Franchise Tax by Entity Type
The Franchise Tax Board (FTB) administers the state’s franchise tax. The rules differ sharply by entity:
- LLC: Pays an annual minimum franchise tax of $800, due by the 15th day of the 4th month after the close of the tax year (for a calendar-year LLC, that’s April 15). This is owed even if the LLC had zero income in its first year, the minimum applies from the first tax year.
- LLC with gross receipts over $250,000: Owes an additional LLC fee on a sliding scale, ranging from roughly $900 up to about $11,790 at the top tier. The fee is based on California-source gross receipts, not profit.
- S Corporation: Pays the $800 minimum franchise tax plus a 1.5% franchise tax on net income.
- C Corporation: Pays the $800 minimum franchise tax plus an 8.84% corporate income tax on net income.
- Sole proprietorship and general partnership: No state franchise tax, but the owner reports business income on their personal return and pays California personal income tax.
Statement of Information: The Filing Most Founders Miss
Within 90 days of registering your entity, you must file a Statement of Information with the Secretary of State. After that, the cadence depends on entity type:
- LLC: Every two years, during the anniversary month of your registration.
- Corporation: Every year, during the anniversary month of incorporation.
Other State Registrations to Line Up
- Payroll tax accounts: If you’ll have employees, register with the Employment Development Department (EDD) for state withholding, unemployment insurance, and disability insurance.
- Sales tax permit: If you sell taxable goods, register with the California Department of Tax and Fee Administration (CDTFA) for a seller’s permit. Services are generally not taxable, but the line between goods and services is narrower than most founders assume.
- Local business tax: Many cities require a separate business tax registration on top of the state filings.
A common and expensive mistake: assuming the $800 franchise tax only applies once you’re profitable. It applies from your first tax year regardless of income. Budget for it before you file.
Your state tax to-do list, in order:
- Apply for the EIN (free, online)
- Register with the FTB for franchise tax
- File the Statement of Information within 90 days
- Register with EDD if hiring
- Register with CDTFA if selling taxable goods
- Calendar the annual franchise tax and Statement of Information deadlines
Business License Requirements by City
Business license requirements by city vary widely across California. A company operating in Los Angeles needs different permits than one in Glendale, Pasadena, or Burbank. There is no single statewide business license.
- A business tax registration certificate
- A zoning permit confirming your address allows your type of business
- Special permits for regulated activities like food service, alcohol, or childcare
Call your city’s business tax office before you sign a lease. Some addresses are zoned for retail but not for a home-based service business, and finding that out after signing is expensive.
Fictitious Business Name Statement California: When and How to File
A Fictitious Business Name Statement is required when your company does business under a name different from its legal name. If your LLC is “Sunset Ventures LLC” but you market as “Sunset Coffee,” you need to file.
File a new statement when:
- You change the business name or address
- The ownership changes
- The registration expires
Post-Formation Compliance Checklist and Cost Breakdown by Entity Type
Compliance doesn’t end when your filing is approved. The first 30 days after formation are where most founders either lock in a clean operating posture or create problems they’ll pay to fix later. This section covers both the immediate post-formation steps and the real cost of each entity type.
The First 30 Days After Formation
Once the Secretary of State approves your filing, work through these in order:
- File your Statement of Information, due within 90 days, but file it in the first 30 so it’s off your plate. The state does not remind you.
- Apply for your EIN if you haven’t already, you’ll need it for the next steps.
- Open a business bank account in the exact legal name on your formation documents. Commingling personal and business funds is the fastest way to lose the liability protection you paid for.
- File your Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN). This is a federal requirement that most state-focused guides skip entirely. New companies generally have 90 days from formation to file; check FinCEN’s BOI page for current deadlines and exemptions, since the rules have been actively litigated and revised.
- Register for local business tax with your city’s finance or tax office. This is separate from state registration and easy to overlook.
- Adopt your operating agreement or bylaws and sign it. For an LLC, this is the document that governs member rights. For a corporation, adopt bylaws and hold your initial board meeting to issue shares and appoint officers.
- Obtain any required licenses or permits for your specific activity, food, alcohol, contracting, childcare, and professional services all have their own boards.
- Set up your compliance calendar with the annual franchise tax date, Statement of Information cadence, and any local renewal dates.
The first 30 days are the highest-leverage window in your company’s life. Miss the BOI report or the Statement of Information and you’re dealing with penalties before you’ve made your first dollar.
Cost Breakdown by Entity Type
Setup and ongoing costs vary widely. The figures below reflect current state filing fees and the standard annual obligations; confirm current amounts before you file, since fees change.
| Entity Type | Formation Cost (State) | Annual State Cost | Liability Protection | Best For |
|---|---|---|---|---|
| Sole Proprietorship | $0 (no state filing) | $0 state; personal income tax | None | Solo testers, side projects |
| General Partnership | $0 (no state filing) | $0 state; personal income tax | None | Two or more co-owners testing an idea |
| LLC | ~$70 Articles of Organization filing fee | $800 minimum franchise tax + Statement of Information fee every 2 years | Yes | Most small businesses |
| S Corporation | ~$100 Articles of Incorporation filing fee | $800 minimum franchise tax + 1.5% on net income + annual Statement of Information | Yes | Profitable small businesses wanting pass-through taxation |
| C Corporation | ~$100 Articles of Incorporation filing fee | $800 minimum franchise tax + 8.84% on net income + annual Statement of Information | Yes | Funded startups planning to raise capital |
A few things the table doesn’t capture:
- Registered agent service: $0 if you serve as your own agent, typically a few hundred dollars a year for a professional service.
- Local business tax: Varies by city, from under $100 to several hundred dollars annually.
- Fictitious Business Name filing: County clerk fee plus newspaper publication cost, if you operate under a trade name.
- Professional fees: An attorney or formation service adds cost but can prevent an entity-choice mistake that costs far more to unwind.
Digital-First vs. Paper Filing: Which Is Right for You?
Online filing through the Secretary of State’s portal is faster and gives you instant confirmation. Paper filing still works, and some founders prefer it for complex cases or when they need a stamped copy. Online is the right default for most people.
Frequently Asked Questions
How do I own my small business name?
In California, you own a business name by registering it with the Secretary of State if it is your legal entity name, or by filing a Fictitious Business Name Statement with the county clerk if you operate under a name different from your legal name. For a sole proprietorship or general partnership, a fictitious business name filing is required. Once approved, you must publish the statement in a local newspaper and file a proof of publication. This gives you exclusive use of the name within your county, though statewide protection may require a trademark.
What do I need to start my own business in California?
To start a business in California, you need to choose a legal structure (such as a Limited Liability Company or corporation), file the appropriate formation documents with the Secretary of State, obtain an Employer Identification Number from the IRS, and secure any required local business licenses and permits. You will also need a registered agent for service of process, a physical address, and a compliant operating agreement or bylaws. Depending on your industry, additional state licenses or zoning permits may apply. Consulting a business attorney can help you avoid costly mistakes.
How fast can you get a business license in California?
The timeline for a business license in California varies by city and county. Some municipalities issue licenses online within a few business days, while others may take several weeks if zoning reviews or inspections are required. State-level licenses from agencies like the Department of Consumer Affairs can take longer. To speed up the process, file your formation documents first, then apply for local licenses. Working with a legal professional can help you submit complete applications and avoid delays.
What are the ongoing tax and reporting requirements for California businesses?
California businesses must file annual tax returns with the Franchise Tax Board and submit a Statement of Information with the Secretary of State every one or two years, depending on the entity type. LLCs pay an annual minimum franchise tax, and corporations pay a franchise tax based on income. You may also need to file quarterly estimated taxes and comply with local business tax requirements. Failure to meet these obligations can result in penalties, so mark your calendar and consider professional guidance.