Starting an LLC in California is not as intimidating as it sounds. The laws are simple to follow, they make it easy for you to understand the process, and they are in place to protect you and your business. A Limited Liability Company makes your life so much easier when and if your business is ever sued. You’ll be responsible for the debts, but not in a personal manner. Your personal assets are protected, and the law makes it possible to feel a little more comfortable with what you have to do to protect your business. The laws surrounding the formation of an LLC are pretty straight-forward. You have to file certain paperwork, follow a few basic steps, and understand that all the forms you file must contain truthful and factual information only. Once you’re ready to form your LLC online in California, you can do that with ease by finding all the necessary paperwork online at the California Secretary of State’s website.
How to Form Your LLC
The law in California requires you start with a name. You must choose a business name that’s not already registered in the state. This is only a challenge if you have been in business for some time at this point and your name is already registered by another business in the state. Laws in California don’t allow you to choose the same name, and you must include “LLC” following your business name. The Secretary of State’s website provides a name database for all registered LLCs in the state so you can check. If it’s not taken and even if you have to change your name, you have to reserve the name you want.
This requires a $10 fee to reserve your business name for 60 days. The form is called the Name Reservation Request, and it’s found on the Secretary of State’s website. You can’t file this form online, but you can do it in person or through the mail.
Once your name is reserved, it’s time to choose a registered agent. This is law in California. You must have a person or business with a legal California street address able to perform your legal duties for you in case you are ever sued in business. This person should be an attorney or a law firm, but that’s not a state requirement. It can be anyone you want so long as they reside or do business in California. Once this person is chosen, you file your Articles of Organization. The form is on the SOS website. Include the following information on the form:
- LLC name
- LLC address
- Purpose of the LLC
- Management information
- Name and address of registered agent
This is another form that cannot be filed online. It can be filed in person or mailed, so long as you include a $70 fee. If you wish to expedite the paperwork and get rolling sooner, you can deliver your paperwork in person and pay a small fee to process the paperwork faster with any SOS office.
You have 90 days following the filing of your Articles of Organization to file Form LLC-12. This is the State of Information, and California law requires you file this information. It must be filed every two years following your registration, too. It must include the following:
- California Secretary of State filing number
- Registered name and agent address
- Principal office street address
- Names and addresses of all managers and ECOs
- Email address
- Business type
Tax and Business Obligations
Now that you’re registered as an LLC, you have to meet certain tax and business requirements. You need to keep up with all the appropriate business licenses required where you live for your type of business. You need to obtain an EIN from the IRS if you have more than one member, and you need to pay your state taxes. All businesses pay state taxes to the California Franchise Tax Board of at least $8000 per year, but the amount rises depending on how much money your business profits each year.
The only other law that is important to understand when you decide to file for LLC registration in California is you cannot become an LLC if you offer professional services. If you need a professional state license to operate, you cannot become an LLC.