If you’re looking to set up an LLC in California, you’re on the right page…
Now that you’ve settled on your business idea and chosen an LLC as your business type, it’s time to make it all official.
As a business lawyer, I’ve assisted hundreds of clients just like you start their business and I can help you with yours.
Here’s how to set up an LLC in California:
- Select a Name for Your LLC
- Select a Registered Agent
- Have a Business Lawyer Prepare Your Articles of Organization
- Have a Business Lawyer Draft Your LLC Operating Agreement California
- Get an Employer Identification Number (EIN) from the IRS
- Open a Bank Account for the LLC
- Prepare and File Form LLC-12 Statement of Information
- Pay the Annual $800 Fee to the California Franchise Tax Board
- Determine the Tax Status for the LLC
- Apply for Any Necessary Permits and Licenses
If you’re interested in setting up an LLC in California, email me at firstname.lastname@example.org
1. Select a Name for Setting Up an LLC in California
Now that you’ve asked the question of how to form an LLC in California, you can think about naming your LLC as the first step for forming it.
A good idea, to begin with, is to have about three names to choose from for your LLC as a business entity in California just in case a name is taken already.
When you work with me to form a Limited Liability Company in California, I’ll perform the necessary search to make sure the name you want is available. It’s necessary to check with both the California Secretary of State and the United States Patent and Trademark Office before setting up an LLC as a business entity in California.
The importance of having a business name for an LLC depends on what you want to do. If you are just starting out, then it is not necessary to have a business name and you can use your personal name and no one will be able to tell that it is not a real company. However, if you are planning on doing any kind of marketing, then it would be best to have a business name that has some meaning behind it so that people can associate with your company.
The decision to have a business name for an LLC is not always easy. You need to take into consideration the type of services that the company provides, your target market, and the location where it will be operating. This article looks at some factors that influence the decision-making process when choosing a business name for an LLC.
The California secretary is the person who prepares the articles of incorporation and other documents for the formation of a corporation. They are also responsible for filing these documents with the California Secretary of State. The California secretary is not required to be a lawyer, but they do need to have knowledge in law, business, and accounting.
The role of the California secretary varies from company to company, but they are responsible for preparing all necessary legal documents for incorporation and filing them with the state.
Once you know the name you’ve chosen hasn’t been taken by another business, you can choose the name as your own as you form a California llc.
When it comes to expanding your business in California, you will have to pay a fee. This is because the state does not allow foreign LLC to register in the state without paying the fee.
Foreign LLC can be registered in California, but they will be required to pay an annual fee and register as a foreign LLC. This is because the state of California does not recognize a foreign entity as an entity with legal rights and obligations within the state.
California has laws that make it difficult for businesses who want to expand their operations in California by registering as a foreign LLC. This is primarily due to the fact that these businesses are not required to pay taxes in California, which would increase revenue and decrease costs for the state.
Email me at email@example.com to get started with your California llc formation.
2. Get a Registered Agent
Step 2 of forming a California llc is to select a registered agent.
Registered agent service is typically used by LLCs in California to keep track of important documents such as annual reports and filings. This ensures that the company stays in good standing with the state.
In this day and age, it’s not at all uncommon for people to use an online service for their business paperwork. One of the most popular services is the registered agent service. These services are used by LLCs in California because they offer a number of benefits, including reporting capability, appointment scheduling, filing convenience, and cost savings.
The use of registered agent service is on the rise because it offers convenience and cost savings for LLCs in California.
A registered agent must be an adult or a company with a physical address in California that can be available from 9 A.M. to 5 P.M. – Monday through Friday.
The registered agent receives official documents on behalf of the company, including being served if the LLC is ever sued.
It’s important to note that any member of the LLC may be the registered agent as long as he or she meets the requirements above. However, most LLCs choose a professional company.
Choosing a company to act as your registered agent prevents you from having to be available throughout the week and eliminates junk mail at your home or business address.
3. Have Business Lawyer Prepare & File Your Articles of Organization
The third step for how to form a California llc is to hire a business lawyer to draft and file your Articles of Organization.
In the United States, state business entities are required to register with a state government in order to conduct business within that state. This includes registering as a corporation, limited liability company, or limited partnership.
All LLCs must pay taxes in California if they are organized, registered, or conduct business in California, and if they have not elected to be taxed as a corporation. LLCs taxed as corporations must instead comply with California’s corporate tax rules.
The sale of goods by an LLC is the same as any sale of tangible personal property and is subject to sales tax. However, the business entity does not collect sales tax on its own behalf. Instead, it collects and remits taxes on behalf of its members or shareholders who are responsible for paying the tax themselves.
State business entities filings are important because they allow investors to see what type of entity a company is and how it is structured. This information can help investors make decisions about whether or not to invest in a company and what kind of risks they might be taking on.
The law governs the type of state business entities filings licenses required for a company to operate. In some states, an LLC needs to have a business license in order to operate.
All states have their own set of business licenses. The following are the most common types of licenses:
A. Business licenses for sole proprietorships
B. Business licenses for partnerships and limited liability companies (LLCs)
C. Business licenses for corporations
D. Business licenses for non-profit organizations
E. Tax registration certificate
Your articles of organization are required by law and are necessary for helping establish some of the operating policies and members’ responsibilities for the LLC.
The articles of organization must include:
- The name of the LLC
- The statement: “The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the Beverly-Killea Limited Liability Company Act.
- How the LLC will be managed – by members or managers.
- The name and address of the registered agent.
Once the articles of the organization are prepared, they must be filed with the California Secretary of State. The filing fee is $70.
The Secretary of State has up to 14 days to approve or reject your articles of organization. You’ll either get a copy of the document or a notice of rejection.
Email me at firstname.lastname@example.org to request the articles of the organization while you are setting up a California llc.
You mustn’t try to just do this step yourself because it’s easy to make a mistake or forget to include something important while you form a California llc.
As a small business owner, it is important to have a business account. It will come in handy for paying taxes, setting up a business bank account, and applying for local permits and licenses.
The importance of having a business account is often overlooked by many small businesses. However, the benefits of having one are numerous. For example, it will help you keep track of your finances and taxes.
The importance of having a business bank account can be seen in the tax code as well. The Internal Revenue Service (IRS) can impose penalties on businesses that do not have an active bank account in their name.
The internal revenue service is a vital part of the business bank account. Without it, it would be difficult for an LLC to succeed in international markets.
4. Have a Lawyer Draft Your Operating Agreement
Next, you must prepare an LLC operating agreement. California requires every LLC to have an operating agreement and it is one of the most important documents you’ll ever prepare for your LLC California.
An operating agreement that is tailored to your LLC should be prepared and filed by your business lawyer so that it is accurate and complete.
At the very least, your LLC California operating agreement should include:
- How the LLC is managed
- The method of choosing the managers if it’s manager managed
- The method of choosing officers if it’s a member (officer) managed
- The terms, duties, and salaries of the managers or officers
- How many members the LLC has and percentages of ownership
- Rights and duties of each member
- When and how much each member will contribute to the LLC
- Details about the financial and tax records that should be sent to the members
- How profits and losses are distributed
- How meetings will be held, how long they’ll be, where they’ll be, and who’ll be included
- Voting requirements and interests of each member
- How a member can withdraw from the LLC
- Grounds for termination of an LLC member
- How new members may be added
- Regulations regarding the transfer of membership
- How the LLC will be dissolved
- How the operating agreement may be amended in the future
These are just the standard items every operating agreement should have. This list doesn’t include anything for unique situations – so it’s really something a lawyer should draft for you to make sure the document is perfect for your LLC California.
Email me at email@example.com to skip the hassle of figuring this out on your own and get a complete, custom operating agreement when setting up a California llc.
5. Get an EIN from the IRS
Step 5 to form a California llc is to apply for your LLC’s Federal taxpayer identification number, called the Employer Identification Number (EIN).
You must complete IRS Form SS-4 to request your EIN. If you are a US citizen with a social security number, obtaining an EIN may be easy for you.
If you don’t have a social security number, you can still obtain an EIN, but the process is one that should be done by a business lawyer.
I’ve helped hundreds of individuals obtain their Employer Identification Number, with or without a social security number, so just email me at firstname.lastname@example.org for help.
Read more here about how to get an EIN without SSN.
6. Open a Bank Account for the LLC in California
The next step in knowing how to create an LLC is to open a bank account in the LLC’s name to handle all business transactions.
7. File Statement of Information
The Statement of Information, or Form LLC 12, must be prepared and filed next.
California law requires LLCs to keep their public record updated by filing a Statement of Information with the California Secretary of State.
The statement of information is filed with the Secretary of State California LLC within 90 days of filing the articles of the organization.
The statement of information for LLCs must be submitted on paper.
Further, an annual $800 LLC tax is due by the 15th day of the fourth month after LLC formation and every year thereafter. If the LLC’s income exceeds $250,000, it will owe an additional LLC tax based on the income amount.
The $800 minimum tax prepayment is due by the 15th day of the 4th month after LLC formation. The next tax year, the $800 minimum tax is due on April 15. So if you form a California llc on December 1, and you file taxes on a calendar year basis, the $800 minimum tax is due by March 15. Another $800 payment would be due again on April 15.
The fee to file is $20.
The statement of information should include:
- The name of the LLC
- The LLC identification number
- The LLC’s state
- The address of the principal place of business and mailing address
- The CEO’s name and address if there is one
- The names and addresses of the managers
- The registered agent’s name and address
- The company’s nature of business
8. Pay the Annual $800 Fee to the California Franchise Tax Board
Every LLC in California must pay an $800 franchise tax fee every year it exists to the California Franchise Tax Board.
This fee is due by the 15th day of the fourth month of your LLC’s taxable year and is the LLC California fee.
Additionally, there is a tax schedule if you want to set up a California llc that may want to be aware of so you can estimate your tax burden.
The fee schedule for taxes for your LLC in California is as follows:
- Fee Amount: $0 for Total Income of $0 – 249,999
- Fee Amount: $900 for Total Income of $250,000 – $499,999
- Fee Amount: $2,500 for Total Income of $500,000 – $999,999
- Fee Amount: $6,000 for Total Income of $1,000,000 – $4,999,999
- Fee Amount: $11,790 for Total Income of$5,000,000 or more
9. Determine the Tax Status for the LLC
In most cases, your LLC can be classified as a sole proprietorship, a partnership, a C Corporation, or an S Corporation for tax purposes.
Determining the tax status for your California LLC is the next step in the process of setting up an LLC in California.
If you need help with creating LLC California, please email me at email@example.com and I can advise you based on my experience.
10. Apply for Any Necessary Permits and Licenses
Depending on your city and county in California, you may need a business license to do business. The state of California may also require you to be licensed if you’re going to perform certain services.
Read this: Real Estate LLC California
Setting up an LLC in California is a multi-step process that can be complicated to figure out on your own.
There are also multiple LLC California fees you should be aware of. personal lia
If you need help with any step mentioned above, please don’t hesitate to reach out to me.
I’ve been helping individuals form LLCs and other types of businesses for years now and I can help you too.
Email me at firstname.lastname@example.org to get started with your LLC in California.
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