Do you want to form a limited liability company (LLC) in the state of California? LLCs are an incredibly popular business entity type these days, and there are a few different ways to form one.
You can form an LLC on your own using the DIY method, but that can be quite a bit of hassle, especially if you’ve never done it before. You can hire an attorney to form your LLC, but this option can cost thousands of dollars that many startups don’t have.
This leaves the third option, which is to hire an LLC website. There are many reliable LLC services available online, but for California, there are five that stand out from the pack. Let’s discuss which online business formation service is the right choice for you.
What Is a California LLC?
First off, let’s quickly outline what an LLC is. LLCs are formal legal entities that are typically taxed similarly to sole proprietorships and general partnerships, in that the owners include any company profits or losses into their personal returns — the LLC itself does not owe income taxes. An LLC may also elect to be taxed like a corporation, although this is not a very common option.
There are similarities to corporations too, especially when it comes to financial responsibilities. In an LLC, the owners or members are not usually personally accountable for the financial status of the business. This means that if someone sues your LLC, your personal assets are not at risk.
We have good news and bad news regarding the affordability of LLCs in California. The good news is that California charges a very reasonable $70 filing fee to form your LLC, which is cheaper than many other states. However, the negative side of the coin is the fact that California charges an annual franchise tax with a minimum $800 fee, which is much higher than nearly every other state’s maintenance fees.
One other interesting note about the LLC in California is that this state does not allow entrepreneurs to form series LLCs, they do allow you to expand an existing series LLC into their state. The series LLC is a group of LLCs that fall under the umbrella of one parent LLC.
The big advantage of series LLCs is that each LLC in the series is shielded from the liability of each other LLC, and you only need to form one entity instead of several separate LLCs or a corporation with subsidiaries. For more information on expanding a series LLC into California, check out the California Franchise Tax Board website.
The 5 Best Services for Forming a California LLC
ZenBusiness is our top overall pick for nationwide LLC formation service, and they’re an excellent pick for California entrepreneurs as well. We love the way ZenBusiness offers so much bang for your buck.
They offer LLC formations starting at just $39, and that price point includes a full year of registered agent service. In addition, they receive spectacular feedback from their clients, with about 2,000 reviews available online, and nearly universal acclaim from their customers.
We also appreciate the fact that ZenBusiness is a public benefit corporation, which indicates to us that they’re focused on more than simply maximizing their profits. They have a partnership with Kiva.org to help lift people out of poverty through financial lending, and ZenBusiness also loans money to help women- and minority-owned businesses get off the ground.
It’s tough to top what ZenBusiness has to offer, no matter what state you’re starting a business in.
SunDoc Filings isn’t one of our overall top options for LLC service in most states, but California is an exception. SunDoc Filings is located in Sacramento, and they hand-deliver documents to the Secretary of State’s office three times daily.
As you might expect, this gives them a significant advantage in this state, as they’re able to form LLCs faster than any competitor that we’re aware of.
Beyond this, SunDoc Filings has some additional advantages, like their excellent customer feedback. We found around 2,500 reviews of their services online, and nearly every one of those reviews was positive. Their clients frequently praise the efficiency of their formation services, and appreciate the ease of use SunDoc Filings provides.
One area where we’re not too thrilled with SunDoc Filings is pricing, as you’ll need to spend at least $99 to have them prepare and file your formation documents (they also offer a $79 option, but this package requires you to draft your own articles of organization, which largely defeats the purpose of hiring them).
While they don’t provide registered agent service for free with LLC formation plans like some of their top competitors do, SunDoc Filings does include a business license summary. Most LLCs need at least one license or permit to be able to operate in compliance with government regulations, so SunDoc Filings will find out which licenses you may need to acquire.
SunDoc Filings doesn’t provide much overall value in other states, but for California business formations, they’re a great option.
Are you interested in receiving the best customer support available in this industry? If so, give Northwest Registered Agent a look. Northwest provides all of its clients with support from their Corporate Guides. These highly trained representatives walk you through each step of the formation process, and you can contact your Guide at any time to ask questions or get advice.
Northwest’s pricing starts at $79, and that rate includes 12 months of their premium registered agent service. While their competitors typically only scan the government documents they’re legally required to scan, Northwest scans all documents they receive on your behalf.
They provide excellent overall value, and they also receive strong reviews from their customers, albeit in a smaller volume of feedback than ZenBusiness or SunDoc Filings have to offer. If you’re looking for more of a premium service, Northwest has a higher price point than ZenBusiness or IncFile, but in our experience, it’s usually worth the cost.
Who doesn’t like getting things for free? IncFile is one of the only companies we’ve ever heard of that actually offers to form your California LLC at absolutely no charge, as long as you pay your own state fee. This is obviously a tremendous bargain, and it gets even better when you realize that IncFile is far from a barebones service.
With IncFile, that free formation package we just discussed actually comes with a free year of registered agent service, just like you’ll get from ZenBusiness or Northwest Registered Agent. In addition, they have the best customer feedback reputation in this guide, as they have thousands upon thousands of reviews available online, and nearly all of them are perfect five-star scores.
The only real drawback of IncFile is that their customer support team can sometimes take a bit to get back to you. Still, it’s awfully hard to complain about a company that offers to form your LLC for free, while still throwing in a full year of registered agent.
LegalZoom is the biggest name in the LLC formation service industry. They’ve been a prominent player in this market for years, and they advertise more than most of their competitors combined. They also serve a very high volume of customers, so there’s no denying that LegalZoom is a popular service.
However, they’re far from our favorite pick. Their pricing is acceptable but uninspiring. Their LLC formation packages are threadbare and lacking value compared to many of their competitors. Their customer reviews are a mixed bag, with plenty of negative reviews balancing out the positive feedback.
If you prioritize using the company with the largest volume of customers or the biggest brand power, LegalZoom is certainly worth a look. For the rest of you, we recommend one of the other services in this guide.
There are several great companies that we recommend for LLC formations in the state of California. ZenBusiness has the most well-rounded service available, while SunDoc Filings has an efficiency advantage that’s tough to top. Northwest Registered Agent has the best customer support, IncFile will form your California LLC for free, and LegalZoom has the experience edge.
We hope this guide helped you hone in on which company is the right choice to form your California limited liability company!
Frequently Asked Questions
Where Can I Get More Information About Forming LLCs in California?
We invite you to take a look at our comprehensive guide to forming a limited liability company in California. This article walks you through the LLC formation process in this state step by step, ensuring that you don’t miss any crucial elements.
How Can I Search California’s Business Name Database?
One of the most important steps in forming a California LLC is choosing a business name. Once you come up with ideas for your name, you should do a preliminary search through the state’s business search database to make sure your desired name is available. However, it’s important to note that this tool is unofficial.
Once you’ve verified that your name is available using the business search database, you’ll need to mail a Name Availability Inquiry Letter to make this process official. For more information on conducting a business name search in California, check out our full article on the topic.
Where Can I Get Information on Licensing for My California LLC?
To find out which permits and licenses are applicable to your business, head on over to the state’s “CalGold” permit and license website, where you can find extensive information about licensing requirements in this state.
How Quickly Can California Form My LLC?
The California Secretary of State has a handy page on their website where they display current turnaround times for LLC formations in real time. At the time of this writing, online filings were taking around three business days, while in-person filings took five business days, took six business days.
Do you need your business formed in a hurry? California has a few options, but they’re very expensive. They will form your LLC in 24 hours for $350, four hours for $500, or same day for $750. We will note that to qualify for the four-hour service, your documents must be precleared and approved by the state.