California saw 553,931 new business applications filed in 2025, according to the U.S. Census Bureau’s Business Formation Statistics program, up 7.1 percent from 517,133 in 2024. Through the first seven months of 2026, applications reached 389,563, a 14.7 percent increase over the same period the year before. These figures come from IRS Employer Identification Number (EIN) applications, not from actual completed LLC filings with the California Secretary of State, and the difference between those two datasets matters more than most coverage of this topic acknowledges.
How Many Businesses Are Formed in California Each Year?
Based on the most recent complete calendar year, California businesses filed 553,931 applications for an EIN in 2025. That figure covers every entity type captured in the Census Bureau’s core Business Applications (BA) series (sole proprietorships, partnerships, corporations, and LLCs alike), so it is best read as a measure of overall business formation activity in the state rather than a count of new LLCs specifically. Businesses formed as general partnerships often put a partnership agreement in place to set out each owner’s share and responsibilities.
Year | Total Business Applications (California) | Change vs. Prior Year |
2023 | 558,612 | — |
2024 | 517,133 | -7.4% |
2025 | 553,931 | +7.1% |
2026 (Jan–Jul, YTD) | 389,563 | +14.7% vs. same period 2025 |
Source: U.S. Census Bureau, Business Formation Statistics, retrieved via FRED — Business Applications: Total for All NAICS in California (BABATOTALNSACA).
Business Applications vs. Actual LLC Filings: Why the Numbers Don’t Match
This is the point where most coverage of business formation statistics goes wrong. The Census Bureau’s business application count and California’s actual LLC filing count are two different datasets measured by two different agencies for two different purposes, and they are not interchangeable.
The Census figure comes from IRS Form SS-4, the application every new EIN requestor files with the federal government, regardless of what state they operate in, what legal structure they choose, or whether they ever actually launch. It says nothing about entity type on its own; the Census Bureau’s “Business Applications from Corporations” subset only isolates filers who identified as a corporation or personal service corporation on that form, and it does not isolate LLCs as a category at all.
The actual count of new LLCs is a state-level filing with the California Secretary of State, Business Entities division: an Articles of Organization (Form LLC-1), filed and paid for directly with the state, at a $70 fee. That is the only record that confirms a California LLC legally exists. Unlike the Census data, the Secretary of State does not publish a simple, recurring, publicly downloadable “new LLCs formed this year” statistic the way the Census Bureau does. The closest official public figures come from a 2022 California Legislative Analyst’s Office budget report, which cited combined new filings (corporations, LLCs, and limited partnerships together) of 289,879 in 2018, 343,877 in 2020, and 396,290 through November 2021, a period of consistent growth under the existing fee structure. No comparably simple, more recent SOS-published total is publicly available at the time of writing, which is itself a useful data point: the EIN-based Census series is the more current, more granular, and more frequently updated proxy available to the public, but it is a proxy, not a direct LLC count.
California Business Application Trends, Year by Year
2023
California recorded 558,612 total business applications in 2023, including 226,309 high-propensity applications, those the Census Bureau’s model flags as most likely to become employer businesses.
2024
Applications fell to 517,133, a 7.4 percent decline from 2023. High-propensity applications also dropped, to 209,075.
2025
Applications rebounded to 553,931, up 7.1 percent year over year. High-propensity applications rose to 215,288, up 3.0 percent from 2024.
2026 Year-to-Date
Through July 2026, California logged 389,563 applications, a 14.7 percent increase over the same seven months of 2025, suggesting 2026 is on pace to exceed 2025’s full-year total if the trend holds.
How Many of These Applications Are Likely to Become Real Employers?
Not every business application turns into an operating business with a payroll. The Census Bureau’s High-Propensity Business Applications (HBA) series isolates the subset of filings most likely to convert into employer businesses, based on characteristics like corporate structure, an indicated hiring date, or an industry classification associated with high formation rates. In 2025, high-propensity applications made up roughly 39 percent of all California business applications (215,288 of 553,931), meaning a majority of applications come from sole proprietors, gig workers, and other filers without an immediate plan to hire staff, many of whom operate under a fictitious business name rather than a formal entity.
Source: U.S. Census Bureau, Business Formation Statistics, via FRED. Data as of September 2026.
| Year | Total Applications | High-Propensity Applications | High-Propensity Share |
|---|---|---|---|
| 2023 | 558,612 | 226,309 | 40.5% |
| 2024 | 517,133 | 209,075 | 40.4% |
| 2025 | 553,931 | 215,288 | 38.9% |
What It Actually Costs to Form an LLC in California
Separate from the federal EIN application, forming an LLC in California requires two distinct state-level costs:
- $70 filing fee for Articles of Organization (Form LLC-1) with the Secretary of State.
- $800 minimum annual franchise tax, owed to the Franchise Tax Board starting in the LLC’s first year. A temporary first-year exemption under Assembly Bill 85 applied only to LLCs formed between January 1, 2021, and December 31, 2023, and it has expired; every LLC formed since January 1, 2024, owes the full $800 in year one.
These state-level costs apply regardless of how the business’s EIN application was classified at the federal level, which is another reason the two datasets shouldn’t be conflated: an EIN application costs nothing and takes minutes online, while an actual California LLC carries a real, recurring state cost structure. Beyond these two costs, a new LLC must also file a Statement of Information within 90 days of registering. For the full filing sequence, see this step-by-step guide to forming an LLC in California.
Why California’s Business Formation Numbers Matter
California’s application volume reflects the scale of its economy: the state consistently ranks among the highest-volume states for new business applications in the country. The 2025 rebound, and the sharper 2026 year-to-date increase, both follow a 2024 dip, which is worth noting for anyone using a single year’s figure to draw conclusions about long-term momentum. Year-over-year swings of 7 to 15 percent are within the normal range for this dataset and shouldn’t be read as a definitive trend without at least two to three years of comparison.
Methodology Note: How This Data Is Collected (and Why It Refreshes)
The Census Bureau publishes Business Formation Statistics monthly, with the next release scheduled roughly one month after each reference month closes, and figures are revised during an annual update each February that recalculates seasonal adjustments and reclassifies industry codes going back five years. That means the specific totals in this article, sourced from the data available as of September 2026, will shift over time: 2026’s full-year total isn’t final until early 2027, and even the 2025 figures used here are subject to the next annual revision. Anyone citing these numbers later should pull the current release from census.gov/econ/bfs or FRED rather than treating this snapshot as permanent.
Start Your California LLC the Right Way
Understanding the paperwork gap between filing for an EIN and actually forming your LLC with the state is exactly where mistakes happen. We The People Glendale prepares LLC formation documents, Articles of Organization, and related business filings for clients across Glendale, Burbank, and Pasadena, so your paperwork is accurate and submitted correctly the first time. We are not attorneys and do not provide legal advice, but we do make sure your business formation documents are prepared correctly before they go to the Secretary of State. Call (818) 546-1787 or schedule a free consultation to get started.
Frequently Asked Questions
How many new businesses are formed in California each year?
In 2025, California recorded 553,931 total business applications with the IRS, according to Census Bureau Business Formation Statistics. This includes all entity types, not LLCs alone.
Is the Census Bureau's business application count the same as the number of new LLCs?
No. The Census figure counts EIN applications filed with the IRS across all business structures. The actual number of new California LLCs is tracked separately by the California Secretary of State through Articles of Organization filings, and the state does not publish a simple, regularly updated public total the way the Census Bureau does.
How often is this data updated?
Monthly, with a full annual revision each February that can change prior years’ figures. Numbers in this article reflect data available as of September 2026 and will need to be refreshed at each future review.
How much does it cost to form an LLC in California?
$70 to file Articles of Organization with the Secretary of State, plus an $800 minimum annual franchise tax to the Franchise Tax Board starting in the LLC’s first year.
