How to Form an LLC in California

This guide will help you set up an LLC in California. It includes step-by-step instructions for obtaining tax IDs and filing documents.

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Overview

Because they are affordable to set up, offer flexibility for the owners, and are simple to manage, LLCs are the most preferred business structure. Your LLC legalizes your business and limits your liability. It also allows you to have tax flexibility. As you go through this process, the following steps will guide you.

Step-by-Step Instructions for a California LLC

  1. Check Name Availability

    Your LLC’s legal name may not be in conflict with any registered name. You can search for the name you want to check availability.

    Name Search: California Secretary of State – Business Programs Division

    Name Search

    Name Reservation: Optional
    Suffix: A limited liability company’s name must include the words limited liability or the abbreviation L.L.C. LLC. Limited can be abbreviated to Ltd. and company as Co.

    CCC §17701.08

  2. Register an Agent

    Before you can file to officially create your California LLC, it is necessary to determine who your California registered agent will be. Register agents are the legal representative of a business that receives notices about lawsuits and other legal notices.

    Every LLC must have a registered agent as required by state law. When you file California articles or organizations with the California Secretary Of State – Business Programs Division, the registered agent will be designated.

  3. California Certificate of Formation

    To create a limited liability company, file the articles of organization

    Agency: California Secretary of State – Business Programs Division
    Form:
    Form LLC-1 – Articles of Organization of a Limited Liability Company
    Instructions:
    Filing Tips
    Filing Method You can mail, in person, or online.
    Agency Fee: $70 via mail/online, $85 in person
    Turnaround: Current State Processing Times or Pay for Preclearance and Expedited Services
    Law:
    California Corporations Code Title 2.6: Limited Liability Businesses
  4. Start a Report

    Agency: California Secretary of State – Business Programs Division
    Form:
    Form LLC-12 – Statement of Information for Limited Liability Company
    Filing Method You can mail, in person, or online.
    Agency Fee: $20
    Turnaround: Online processing time of 1 business day. View current processing times.
    Due: Within 90 days after incorporation or qualification.
    Law: California Corp. Code SS 17702.09
    Original Ink Not necessary
    Notarize: Not necessary
    Penalties: $250 penalty fee
    Notes:
    • We recommend that you file online.
    • Signatures by an original are not required.

      Establish Company Records

      Your LLC must maintain accurate and complete records. Your LLC’s first records will be your filed articles of organization. Other official records that your LLC may produce include:

    • Minutes of meetings
    • Operating Agreement
    • EIN verification letter
    • All amendments and filings to the LLC during its lifetime
  5. Make the Operating Agreement

    An Operating Agreement is the governing document of the LLC. This document outlines the rules and procedures for the LLC’s operation, such as holding an annual meeting. The agreement will be reviewed and approved at your organization’s meeting.

  6. Organize the Organizational Meeting

    The organizational meeting is the first meeting of members of an LLC. To conduct this meeting, you will need to have your operating agreement and the filed articles of the organization. Keep a record of the meeting and keep it in your company records book.

  7. Register for a Federal Employer Identification Number.

    An EIN is required for any LLC that has more than one member, or intends to hire employees. A bank account opening requires an EIN.

    Agency: Internal Revenue Service (IRS).
    Form:
    IRS Form S-4
    Filing Method You can send mail, phone, fax or online.
    IRS fee $0
    Turnaround: Online or over the phone, immediately. 4 business days via fax. 4-5 weeks via mail
    Notes: Only certain hours are available for the IRS website. Before closing your session, print your EIN. For more information, please refer to IRS Pub 1635 Understanding Your EIN.
  8. Get California State Tax Identification Numbers/Accounts

    If you plan to have employees, you will need to apply California Employer Identification number.

    Send your submission to:
    State of California – Employment Development Department

    http://www.edd.ca.go

    Filing method
     
    Fee:
    $0

    If your LLC collects sales taxes on the items you sell, you can apply for a seller’s permit.

    Send your submission to:
    California State Board of Equalization

    http://www.boe.ca.gov

    Filing method

    Online at eReg
    Fee:
    $0

    Franchise and income taxes are applicable to California LLCs. This includes a $800 minimum franchise fee. While you don’t need to register with Franchise Tax Board (or start paying taxes),

    Guidance:

    FTB Pub 106: Guide for California Corporations Starting a Business in California
    More information:
    California State – Franchise Tax Board

    https://www.ftb.ca.gov

  9. Consider Electing C-Corp Taxation or S-Corp Fiscal

    Your LLC will automatically be subject to pass-through taxation. However, the majority of LLCs maintain this tax classification. Some LLCs can choose to elect S-Corp and C-Corp tax treatment.

    • S-Corp is a tax-saving tool that can be used by owner-employees earning more than $75,000 annually.
    • Double taxation is a problem for C-Corps: members pay taxes on distributions, and the corporation pays taxes. You may be eligible for C-Corp tax treatment if your profits exceed $250,000 or you offer employee benefits.
  10. Get Business Licenses and Permits

    You must have the appropriate licenses and permits to run your business legally. Finding the right licenses and permits for your state and federal business is easy.

    California Business License

    NOT REQUIRED

    California does not require general business license licensure at the state level.

    California’s city-level licensing system allows businesses to license themselves.

  11. You must continue to file for your LLC

    You are required to file both federal and state tax returns.

    To maintain good standing with the secretary-of-state, many states require that business entities file an annual report. The table below shows the requirements for California LLCs to file an annual report.

    Domestic California Corporation Annual Report Requirements

    Agency: California Secretary of State – Business Programs Division
    Form:
    SI-550: Statement Of Information – Stock
    Filing Method Online, mail, or in-person
    Agency Fee: $25
    Turnaround: Online orders are processed within a business day.
    Due: Each year, on the last day in the anniversary month. You can file up to five months before.
    Law:
    California Corp. Code SS 1502
    Penalties: $250 penalty fee
    Notes:
    • We recommend that you file online.
    • Each publicly traded corporation must also file a Corporate Disclosure Statement (Form Si-PT) every year, within 150 days of the end its fiscal year.
    • Signatures by an original are not required.
Note: To form an LLC in your state, you can do the filing paperwork yourself or hire an LLC formation service. The average state filing fee to form an LLC in the U.S. is around $100, but this varies by state.
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