Step-by-step guide to California business registration

To officially register your new business in California, file formation articles with the Secretary of State (SOS). To file this document, you need to determine your business structure, business name, registered agent, and a few other fundamental details.

Step 1. Choose a business structure

First, choose a legal structure for your business. Each structure offers various perks that may be more or less beneficial depending on your unique needs. There are four main business structures.

• Corporation: Fully separates the business entity from its owners, offering liability protection. Filing as a corporation allows your business to generate additional income by selling stocks or bonds. However, corporations generally have a more rigid management and must pay business taxes.
• Limited liability company (LLC): Also distinguishes between individual and entity, protecting your personal assets. LLCs offer a more flexible management structure and allows you to choose whether you want to file taxes as a business or "pass-through" to your individual income tax.
• Doing business as (dba): If you plan to run your company under a name different from your business name, you'll need to register a "doing business as" (DBA) name. Also known as an assumed or trade name, a DBA is a name different from your LLC's officially registered business name. Not all states require a DBA name, so check with your state.
• Nonprofit: Nonprofit organizations are dedicated to a good cause or causes rather than existing to make money for its organizers. Any income generated by a nonprofit cannot be distributed to its members, directors, or officers, and nonprofits are usually tax-exempt.

Step 2: Choose a registered agent

California law requires most business structures to designate an agent for service of process, also called a registered agent, who'll receive legal documents on their behalf. Your registered agent can be an individual who resides in California or a business entity that's received a 1505 service of process certificate.

While your business can't be its own registered agent, a member of your organization can. That said, you may prefer to hire a registered agent service, such as LegalZoom's, to perform this role for you. Not only does your registered agent need to be available during regular business hours to receive important legal documents, but also their address becomes available to the public.

Step 3: File formation paperwork

Now that you have chosen a name and registered agent, it's time to officially register your business with the state. Find formation documents for your business structure on the CA Secretary of State website. Select the form that applies to you and complete your application either online through the Bizfile portal or by filling out a paper form, which you can download from the SOS website. 

Mail paper forms to the following address:

Secretary of State

Business Programs Division

Business Entities

1500 11th St., Sacramento, CA 95814

The filing fee is $100 whether you register online or with a paper form. If you file by mail, include a check or money order payable to the Secretary of State with your application. 

What are the costs of starting a business in California and registering it there?

Common costs—such as registration fees and filing fees—will all vary depending on the location, nature, and structure of your business. 

Basic startup costs for a California LLC

• Articles of organization: $70
• Registered agent service: anywhere from $100 to $499 annually
• Statement of information: $20
• Franchise tax (typically due April 15, depending on what month your registered with the SOS): $800
• Total: $990 (not including licenses, permits, and insurance)

Basic startup costs for a California corporation

• Articles of incorporation: $100
• Registered agent service: anywhere from $100 to $300 annually
• Statement of information: $35
• Franchise tax (typically due March 15 for an S corp; April 15 for a C corp): $800 minimum
• Total: $1,035 (not including licenses, permits, and insurance)

Basic startup costs for a California nonprofit

• Articles of incorporation: $30
• Registered agent service: Anywhere from $100 to $300 annually
• Franchise tax: Apply for tax exemption
• Total: $130 (not including licenses, permits, and insurance)

Sole proprietorships and general partnerships don't file articles with the Secretary of State. If you plan to form your sole proprietorship under a different name from your legal last name, you'll also need to pay the county filing fee for a fictitious business name statement. 

California’s permits and licenses: What you need to know

Most California business entities need to apply for California permits and licenses to legally operate in the Golden State. Licenses are permits are industry-specific and unless you work with an outside service, you'll need to obtain them from the relevant institutions.

For example, the Department of Consumer Affairs issues licenses for many consumer-facing industries, such as dentists, teachers, and real estate agents. Similarly, the Department of Alcoholic Beverage Control issues alcoholic beverage licenses. Check CalGold's search tool for specific permit information based on the city or county where you plan to run your business.

The Department of Industrial Relations (DIR) also offers a helpful list of state licenses and permits based on your business activities. It's very important to obtain and renew these licenses to avoid fines or shutdowns.