Basics of starting an LLC in California

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Forming an LLC can provide you and your business with a variety of benefits. Before jumping into starting your own LLC in California, there are a few fundamentals you will need to know. If you would like step by step information on how to set up an LLC in California, you can visit this site.

Filing an Article of Organisation to form your LLC

To create your LLC you will have to file an Article of Organisation with the California Secretary of State, and this will cost you a $70 filing fee. In addition, the LLC must file a statement of information, within 90 days of filing the Articles of Organisation, and this will cost $20. 

Most businesses will also need to pay an $800 franchise tax. This tax must be paid annually. There is an additional fee if your LLC is being taxed as either a sole proprietorship or a partnership and has income from California operations that are equal to or greater than $250,000. The amount of this fee varies depending upon the amount of income. 

Every two years after filing the initial Statement of Information, the LLC must pay a fee of $20 and file either a Statement of Information or a Statement of No Change.

Hiring a Registered California Agent

Your LLC is required to have a registered agent in California. A Registered Agent is a person or company who agrees to receive legal mail (called “service of process”) on behalf of your LLC in preparation for the possibility your business is sued. The Registered Agent’s address must be a street address. And it must be located in California. To hire a registered agent costs about $50 to $500 per year. You can however also have a member of your LLC or a trustworthy friend step in as your registered agent. This person must be 18 years of age, be a resident in California, and be available in person during business hours.

Choosing a name for you LLC

Your desired LLC name needs to be different from any other business names. Do some research to make sure your California LLC name is available. You also want to be sure the name fits your state’s requirements. In most states in the US, including California, your name must end with a proper designator such as; LLC; L.L.C.; Ltd. Liability Co.; Limited Liability Co.; Ltd. Liability Company; Limited Liability Company.

We recommend that you check to see if your business name is available as a web domain. Even if you don’t plan to start a business website, you may want to buy the URL in order to prevent others from buying it.

Setting up an Operating Agreement for your LLC

Your LLC should also have an Operating Agreement. It’s very important that new LLC’s write an Operating Agreement, especially if there is more than one member. This document states out how profits and losses are distributed, how the LLC is managed, and how taxes are paid.

Obtaining an EIN for your Business

In order for your business to open a bank account; for Federal and State tax purposes; and to hire employees for the company, you need to register for an Employee identification number. An EIN can be obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.

Doing business Licence research for your LLC

 After you have formed your LLC, you’ll want to do business license research to make sure you have all the necessary permits and licenses your business needs to operate legally in your industry and location.

As you can see, once you have the basics out of the way, forming an LLC in California is a fairly simple process. Feel free to browse our other articles if you feel like you are uncertain about anything.

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