A Limited Liability Company (LLC) is a business structure that offers liability protection like a corporation but with its own taxation policies. LLCs are among the most common business type people utilize as it offers the most benefits compared to the effort it takes to start. If you want to start an LLC in California, there are some special requirements. If an LLC is the way you plan to grow your business, follow these steps.
Start Your LLC and Designate Your Agent
The first step to forming an LLC in California is choosing your business name. This is the name that you will include on your paperwork and must meet California’s business naming requirements. Some requirements include:
- Name must end with “Limited Liability Company” or “LLC” or other abbreviations
- Your name cannot contain words such as bank, trust, incorporated, etc.
- Your name should not contain titles attached to a government entity such as agency, commission, department, etc.
- More information on specific requirements can be found here.
The next step in the process is to appoint a registered agent for your LLC. The registered agent is someone the business owner authorizes to receive legal documents and services on behalf of your LLC. For California, the agent must provide registered agent services, have a California address, and must be on-site during business hours. This person could be the someone deeply involved in the business operations or simply a trusted friend of the owner.
Articles of Organization
LLCs in California must file Articles of Organization. This document will officially establish your LLC by laying out the address, purpose, and the registered agent’s information. Once you file your Articles of Organization, you will receive a certificate from the state. This certificate will confirm that your LLC formally exists and allows you to obtain your Employer Identification Number (EIN). Following your Articles of Organization, you must create an operating agreement which outlines how your LLC will conduct its business. Finally, you will need to file a statement of information. You must file this document with the California Secretary of State within 90 days of forming your LLC.
LLC Tax Requirements
Before you officially start work under your LLC, you will need to obtain an Employer Identification Number (EIN). The IRS assigns this nine-digit number to identify your LLC for taxing purposes. The EIN will help with filing taxes, opening any bank accounts for your LLC, and hiring employees. To conduct business in California, the state requires LLCs pay a $800 franchise tax fee. You must pay this annual fee whether your LLC earns income or not. Additionally, if your LLC makes more than $250,000, you’ll have to pay an additional fee. Many business owners hire accountants to help them manage their LLC’s taxes.
ProSe Legal Service Can Help Start an LLC
Our team of LDAs at ProSe Legal Service understand that starting a business can be an exciting and overwhelming step in your career. Unfortunately, there can be a lot of risk involved in investing in your business. Luckily, a ProSe Legal Service LDA can help make the process less intimidating! Our team of LDAs can help you start on your way to your very own business.
today or call (909) 224-4361 to schedule your next appointment with our team of professional LDAs!
