WITH EMPLOYEES
25,173
U.S. CENSUS CBP 2023
GUIDES · CALIFORNIA · CONSTRUCTION
Start a construction company in California
UPDATED JUL 2026 · DATA RETRIEVED JUL 2026
THE SHORT ANSWER
To start a construction company in California you'll file Articles of Organization on bizfileOnline ($70) and get a free EIN from the IRS. The work itself is gated by the Contractors State License Board: a CSLB license is required once a job reaches $1,000 in labor and materials, and at any price if the job needs a permit or you hire anyone to help. Licensing the company as an LLC costs more than licensing it as a sole owner, because CSLB adds a $100,000 worker bond and $1 million in liability insurance on top of the $25,000 contractor bond. Total state LLC filing: ~$70 and 1–3 business days.
Source: California SOS · CSLB · B&P Code 7048, 7071.6, 7071.6.5, 7071.19 — verified Jul 2026
RETRIEVED JUL 27 2026
U.S. CENSUS BUREAU · CBP + NES
U.S. CENSUS BUREAU · CBP + NES
CONSTRUCTION — CALIFORNIA ESTABLISHMENTS · NAICS 2361 · 2023
CA
STATE OF CALIFORNIA
CONSTRUCTION
CONSTRUCTION
SOLO OPERATORS
SOLO
86,832
NONEMPLOYER 2023 · 77.5% OF TOTAL
STATE FILING FEE
$70
ARTICLES OF ORGANIZATION · LLC-1
PROCESSING TIME
PROCESSING
1–3
BUSINESS DAYS
SOURCE: U.S. CENSUS BUREAU, CBP 2023 + NONEMPLOYER STATISTICS 2023 — RETRIEVED JUL 2026 CENSUS.GOV/CBP /METHODOLOGY/
MARKET SIGNAL
585,957 new business applications in California (last 12 mo) ▲ 11% YoY
Source: U.S. Census Bureau, Business Formation Statistics — retrieved Jul 2026 Embed this chart
California answers the licensing question with a dollar figure smaller than most new contractors expect, and with two conditions that matter more than the figure. The Contractors State License Board requires a license once a job reaches $1,000 in labor and materials, raised from $500 at the start of 2025. A permit requirement cancels that exemption at any price, and so does employing anyone to help, which leaves it covering a solo owner doing unpermitted repairs and little else.
The entity choice then changes what the license costs. Every licensee posts the $25,000 contractor bond. An LLC posts a further $100,000 bond for unpaid wages and benefits and carries at least $1 million in liability insurance, so the same license held by an LLC is secured at $125,000 in bonds rather than $25,000. Both instruments have to be in place when the license is issued and at every renewal, and the LLC has to keep its Secretary of State registration in good standing or the license is suspended. That is the order to work in: form the entity, then license it.
Workers’ compensation has a date on it. Coverage is required from the first employee, and five classifications carry it whether or not they employ anyone, which are C-8 concrete, C-20 warm-air heating and air conditioning, C-22 asbestos abatement, C-39 roofing and D-49 tree service. Every other licensee files an exemption certificate instead, and a licensee who hires has 90 days to get proof of coverage to CSLB. The legislature set 1 January 2026 for extending the requirement to all licensees, then moved that date to 1 January 2028.
The two counts on the plate above split differently here than in the states that lead on solo operators. California carries more residential construction firms with payroll than any other state, with roughly three solo operators for each of them, where Texas runs closer to eight and Florida to six. The market that licenses hardest is also the one where the largest share of construction firms have already crossed into payroll.
File your California LLC in 7 steps
1
STEP 1 OF 7
Choose and search your business name
Your name must include "LLC" or "L.L.C." and be distinguishable from existing California entities. Search current records through the bizfileOnline business search before you commit to logos or domains. The Secretary of State rejects filings that conflict with an active name.
bizfileonline.sos.ca.gov — business search
California bizfileOnline — Business Search (UI as of Jul 2026)
2
STEP 2 OF 7
Designate an agent for service of process
California calls the registered agent an "agent for service of process." It must be a California resident with a street address in the state or a registered corporate agent. You can serve yourself, which puts your address on the public record. A commercial agent lists theirs instead.
3
STEP 3 OF 7
File the Articles of Organization (Form LLC-1)
File Form LLC-1 online at bizfileOnline. First-time filers need a free bizfileOnline account before "Register a Business" is available; the site's own landing page walks new users through that Account Access Guide. From there, the state fee is $70 by card. Online filings are typically reviewed in 1–3 business days, and the state emails a free filed copy back. Paid expedite exists for urgent cases: $350 for 24-hour, $750 for same-day processing.
bizfileonline.sos.ca.gov — bizfileOnline
California bizfileOnline — home, Business Entities panel; registering an entity requires an account (UI as of Jul 2026)
4
STEP 4 OF 7
Get a free EIN from the IRS
Apply for an Employer Identification Number on the IRS website once the LLC is approved. It is free and takes about ten minutes online; you need it for banking, hiring, and taxes. Ignore any site that charges for an EIN.
irs.gov — EIN Assistant
IRS — "Get an employer identification number," EIN Assistant entry (UI as of Jul 2026)
5
STEP 5 OF 7
Adopt an operating agreement
California law expects every LLC to maintain an operating agreement. It is not filed with the state; you keep it with your records. A single-member LLC can use a short standard agreement; multi-member LLCs should put splits and exit terms in writing.
6
STEP 6 OF 7
Check licenses and local permits
California has no single statewide business license. Most cities require a local business license or business tax certificate before you operate, and some industries carry their own state registrations. For construction specifically: California licenses contractors through the Contractors State License Board, and the license has to be in place before the contract is signed. The threshold is $1,000 in labor and materials combined, raised from $500 on 1 January 2025, and two conditions cancel it at any price. Work that needs a building permit of any kind requires a license, and so does work where you employ anyone to help. Licensing an LLC costs more than licensing a sole owner. CSLB takes the $25,000 contractor bond from every licensee, then a further $100,000 bond from an LLC for unpaid wages and benefits, plus liability insurance of at least $1 million for five or fewer people listed on the license.
7
STEP 7 OF 7
File the Statement of Information and budget the franchise tax
File the Statement of Information (Form LLC-12, $20) within 90 days of formation and every two years after. Separately, the Franchise Tax Board collects a minimum $800 annual franchise tax from every California LLC. Open a dedicated business bank account with your filed articles and EIN.
File it yourself, or have it done
Same state fee either way. The difference is your time, and whose address goes on the public record.
DIY
WITH NORTHWEST
State fee
$70
$70
Service fee
$0
$39
Your time
~4 hrs
~10 min
Registered agent (1 yr)
you, publicly listed
included, private
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Common questions
Do I need a CSLB license for small remodeling jobs in California?
Only under $1,000 in labor and materials combined, which is the minor work exemption California raised from $500 at the start of 2025. Two things cancel it whatever the job costs. A license is required if the work needs a building permit of any kind, and it is required if you employ anyone to help. Advertising carries its own duty: a person who is not licensed has to say so in the advertisement.
What does CSLB require from a construction LLC that it does not require from a sole owner?
Two extra instruments. Every licensee posts the $25,000 contractor bond, and an LLC posts a further $100,000 bond covering unpaid wages, benefits and contributions owed to its workers. An LLC also carries liability insurance of at least $1 million for five or fewer people listed on the license, with another $100,000 for each person past five, capped at $5 million. Both are conditions of issuing and renewing the license, not one-time paperwork.
Can I be my own agent for service of process in California?
Yes. Any California resident with a street address in the state can serve, including yourself. The agent's name and address go on the public record, and someone must be available there during business hours to accept legal documents. Those are the reasons owners hire a commercial agent.
Why does a California LLC cost more than the $70 filing fee?
The $70 creates the LLC, but two recurring charges follow. The Statement of Information costs $20 within 90 days and then every two years, and the Franchise Tax Board collects a minimum $800 franchise tax every year the LLC exists. Budget for the $800; it is the real cost of a California LLC.
Are the official-looking compliance notices in the mail legitimate?
Usually not. Third-party companies mail new California LLCs invoices that imitate state forms and charge many times the real fee. The Secretary of State publishes a customer alert about them. The state's own charges are $70 to form and $20 for the Statement of Information; pay those at bizfileOnline.
Source: BusinessFormation.us analysis of U.S. Census Bureau County Business Patterns 2023 and Nonemployer Statistics 2023 (establishment counts, NAICS 2361), and Business Formation Statistics (monthly applications); retrieved Jul 2026. businessformation.us/start/construction-company/california/