A limited liability company (LLC), among other benefits, offers liability protection and tax benefits.
These eight steps will get your California LLC started if you have decided that an LLC is the best business structure for you.
Before you can register an LLC, you will need to choose a name for your articles.
California's naming requirements must be met. These are the most important requirements you should keep in mind.
California law requires that you appoint an agent registered for your LLC.
A registered agent is an individual or entity that can receive service of process, official legal documents and notices for your LLC. This person or entity will receive legal documents, tax forms, and notice of lawsuits on behalf of the LLC.
You can be a registered agent or an entity offering a registered agent service. These criteria must be met:
Articles of Organization are a document that establishes your LLC and provides basic information. California's Articles of Organization are filed using Form LLC-1.
To properly register California LLC, prepare Articles of Organization. Although it may sound daunting, it is actually quite easy. All you have to do is fill out an online form and submit it. It can also be sent by mail.
The following information is necessary to prepare your articles:
The secretary of state will review your filing once you have filed your Articles. The LLC is legal if the articles are approved. California allows you to submit your application by regular mail, online or in person.
After the LLC's documents have been filed and approved, the state will issue a certificate confirming that the LLC is officially established. Online filing is the fastest way to get your certificate.
This certificate will enable the LLC to get an Employer Identification Number, business licenses and a business bank account.
An operating agreement describes the business model of your LLC.
California law requires that an LLC have an operating agreement. However, it does not have to be filed. It should be easily accessible. It is useful for many reasons, including the resolution of disputes over financial agreements or other potential litigation. The courts will make decisions based on state law and not necessarily in the best interests of the LLC or its members if there is no agreement.
The following are examples of operating agreements that can be included in an operating agreement:
All California LLCs must file a Statement Of Information with the California Secretary of State within 90 days after forming the LLC.
The following information is included in a Statement of Information:
To identify your LLC for tax purposes, the Internal Revenue Service assigns a nine-digit Employer ID Number (EIN). Your EIN can be obtained online or by mail through the IRS.
An EIN serves the following purposes:
An LLC must pay a $800 franchise fee to do business in California. This fee is payable regardless of whether the business earns any income. It is due each year.
An additional annual fee will be required if your LLC's annual gross revenue exceeds $250,000
For LLCs that were formed in California between 2021 and 2022 or 2023, there is an exemption. The new legislation exempts an LLC from California's $800 annual minimum franchise tax. The LLC must pay $800 for the second taxable fiscal year.
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