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Selecting the correct entity to form as is an essential part of running a successful small business in California. If you've never done it before or are a little rusty, use this blog as your guide to understanding the benefits of forming as an LLC in the state, along with detailed instructions on how to make your business official!
What are the benefits of starting an LLC in California?
California offers a large workforce, diverse industries, and a robust economy, which makes starting a California LLC a great decision.
Other benefits of starting an LLC in California include:
How to start your LLC in California
There are 6 steps you’ll need to complete to establish your LLC in California.
Step 1: Name Your LLC
The first step to forming an LLC in California is to select a name. Your LLC name must be distinguishable from other businesses.
You'll search the California Business Search records to see if your LLC name is available. After identifying your business name, you have the option to reserve it for a small fee.
Finding a unique brand name and a usable domain to go with it can be a bit of a time-sink. This free tool from Business Name Zone generates name and domain combos for you based on your input – and it only takes a few minutes.
Here are other things you should consider when creating or choosing your LLC name:
Step 2: California Registered Agent
The second step to starting an LLC in California is to meet the registered agent requirement. In California, registered agents are known as an agent for service of process. A California state agent for service of process can be a professional corporation or an individual.
If the registered agent service is a corporation, the corporation must have filed a Registered Corporate Agent for Service of Process Certificate or Form 1505. If the California registered agent for service of process is an individual, the individual must live in California.
Step 3: File Articles of Organization
For the third step, you’ll file Articles of Organization. The information you’ll provide includes the following:
You can file the California LLC Articles of Organization online.
Step 4: Get an EIN
The fourth step to starting an LLC in California is to get an EIN. There are several options to get your EIN, but it’s free no matter which option you choose. You can apply by fax, by postal mail, or apply for an EIN online.
Step 5: File Initial Statement of Information
The penultimate step to starting an LLC in California is to file your initial Statement of Information. The state of California has three requirements for the Statement of Information:
Step 6: Create an Operating Agreement
The final step to creating an LLC in California is to draft an operating agreement. LLCs in California must maintain operating agreements, but LLCs aren’t required to file it with the Secretary of State.
An operating agreement will contain detailed information about your LLC, including:
Some basic information you’ll need includes your LLC name, Articles of Organization information, and registered agent information. You’ll also need to provide the duration of your LLC and more.
Other Considerations
In addition to your responsibilities forming your LLC, you'll also need to generate biennial reports and select your membership structure.
Manager or Member Management
The first consideration you’ll need to make is how you’ll manage your LLC. You have two options, either a manager or member-managed.
If your LLC is member-managed, it will include a single managing member. If a manager manages the LLC, a hired manager who is an employee will manage the LLC.
Biennial Report
The second consideration you’ll make is to complete the Biennial Report in compliance with the Statement of Information requirement.
You’ll complete the Biennial Report every two years after the year of initial registration.
How much does it cost to form an LLC in California?
The costs of forming an LLC in California will vary and depend on whether you use a service or file on your own.
How long does it take to form an LLC in California?
Forming a multi-member LLC in California may take up to a few weeks to complete. You may submit some required forms online to the California Secretary of State, who typically processes electronic documents faster than those received via postal mail. There is also an option to deliver the forms in person to the Secretary of State's office.
LLC fees in California
California will collect a number of fees associated with starting your LLC.
Let Our Experts Help You Start Your LLC in California
Establishing your LLC in California is exciting, but it can also be overwhelming if you're just starting out. That's why so many California owners and entrepreneurs trust 1-800Accountant, America's leading virtual accounting firm for small businesses, for their LLC formation needs.
Whether it's a complimentary business formation, tax advisory, or any of our professional accounting services, we have the solution you need at a price that works for you. Schedule a quick consultation – usually 30 minutes or less – to learn how we can help make your business official in California.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.