Forming a Limited Liability Company in California
There are several steps to forming a Limited Liability Company in California. A Limited Liability Company (LLC) is a type of entity that limits the owners’ liability to the assets owned by the company. No member of the company is personally liable for debts or obligations owed by the company. Forming an LLC in California entails the following steps:
Selecting the name for your LLC
When selecting the name of the LLC ensure that it is unique and does not bear any similarity with another registered company. We can perform a name search and reservation for you to make sure that the name you are requesting is available. The name you select must end with “LLC” to indicate that the company’s liabilities are limited. Call us at (916) 480-1225 to get started.
Filing Articles of Organization
California law provides that an LLC is formed by filing Articles of Organization (LLC-1) form with the California Secretary of State. Fill the LLC-1 form online, print it, sign it and we can get the document filed for you. The filing fee for and LLC is $70. To obtain a certified copy of the filed document they will change an additional $6.
Appoint a Registered Agent
When forming a Limited Liability Company in California, you are required to appoint an agent for service of process. The agent must be in California and the agent’s duty is to accept the LLC’s legal paperwork if it is facing a lawsuit. The agent can be an individual or corporation. In order for a corporation to be listed as an agent, they must be registered as a 1505 corporation with the California Secretary of State. The agent’s information is public record and will be listed on the website.
Preparation of an Operation Agreement
It is not mandatory to create an operation agreement for your LLC but is advisable to do so. The operation agreement structures the working and financial relationships with your co-owners by determining each person’s percent of ownership, share of profits and losses, duties and succession.
Statement of Information
Every LLC whether local or foreign registered in the state of California is mandated to file a Statement of Information with the Secretary of State. After forming a Limited Liability Company in California, the Statement of Information (Form LLC-12) must be filed within 90 days together with a filing fee of $20. The form includes details such as: LLC’s name and address, LLC’s agent, name and address of any manager and the LLC’s main business activity. Our office can assist you with the filing of the Statement of Information. The Statement of Information will need to be filed every other year after the initial filing.
State Tax Payment
If your LLC is registered or conducts its operations in California, it is legally required to pay taxes to the California Franchise Tax Board (FTB). You pay taxes by filing Form 568 annually to the FTB. Other tax obligations include: an annual minimum franchise tax of $800 and additional fees based on the level of your LLC’s annual income.
Other Tax and Regulatory Requirements
An Internal Revenue Service Employment Identification Number (EIN) is required for an LLC with employees or more than one member. The EIN is obtained by filling Form SS-4 available on the IRS website. You can also apply for the EIN number directly on the IRS’s website.
Business Licenses are also required depending on the nature of your LLC’s business and where it is located in California.
Special State Rules for Professional Services
California law does not allow LLCs to provide professional services such as legal services. Such service providers are only allowed to form limited liability partnerships.
Foreign LLCs Registering in California
All LLC’s that are registered in another state must apply to do business in California. Registration is obtained by filing Form LLC-5 at a fee of $70. The foreign LLC should also appoint an agent of service of process based in California and also provide a certificate of good standing from the agency where it was registered for the first time. The certificate of good standing must be dated within the last 6 months.
If you need assistance in registering your LLC we are here to help! You can click here to have an agent contact you or call us at (916) 480-1225 and we will get the process started.
