California LLC – How to Start an LLC in California

California LLC – How to Start an LLC in California

How to form an LLC in California. If you are interested in starting an LLC in the Golden State, you are not alone. California has one of the highest rates of newly formed LLCs in the country. Every state has slightly
different requirements for forming an LLC. Follow along closely to
learn the required steps for creating your own
limited liability company in the state of California. (gentle piano music) There are two ways to
form an LLC in California. You can form one yourself, or you can hire a
service to do it for you. Let’s start by looking at
the six basic requirements to form an LLC in California on your own. You can also find these
steps in more detail on our website linked in
the description below. Name your LLC. Every state has its own
rules about what kind of names are allowed for LLCs. In general, you will need to observe these naming guidelines. Your name must include the
phrase limited liability company or one of its abbreviations, LLC, or L.L.C. with a period
following each letter. Restricted words such as bank, attorney, law office, et cetera may
require additional paperwork and may also need a licensed professional to be part of the LLC. Your name cannot include words
that can confuse your LLC with a government agency,
such as FBI, treasury, state department, et cetera. You cannot use a name that
has already been registered. To see if your name is
available in your state, you will need to do a name search. This free service is available on your state secretary of state website. Check out our free guide for finding the direct link to your state. We also recommend that you check to see if your business name is
available as a web domain. Even if you don’t plan to
make a business website today, you may want to buy the URL in order to prevent
others from acquiring it. Two, choose a registered agent. California requires that
you nominate an agent for service of process, more commonly known as a registered agent. The registered agent can be an individual within the company including yourself, or you can hire a professional
service authorized to do business in California. They will send and receive
legal papers on your behalf. These documents include
official correspondence like legal summons and document filings, which your registered agent
will receive and forward to you. Your registered agent will help remind you to file the necessary reports. Failure to properly
maintain your LLC can result in fines and dissolution, so
this assistance is valuable. Three, file the articles of organization. To register your California LLC, you will need to file the
articles of organization with the secretary of state. This can be done online, by mail, or in person, and will cost $70. You will need to state whether your LLC will be member-managed or manager-managed. Member-managed means all members of the LLC manage the company. This is good for small organizations, where everyone is involved
in day-to-day operations. The second option is manager-managed, where individuals are
appointed to manage the LLC. This is appropriate for
larger organizations, where not everyone is involved in the day-to-day affairs of the business. Four, file the initial
statement of information. California requires all LLCs to file an initial statement
of information, Form LLC-12, with the California secretary of state within 90 days of forming your LLC. This can be done online,
in-person, or by mail. Five, create an operating agreement. Although not every state requires it, you should always create
an operating agreement to establish ownership terms
and member roles for your LLC. This foundational document
is the core of your LLC, and will help you maintain
your organization, as well as further establish your LLC as a separate legal entity. There are six main sections
of an operating agreement. Organization outlines when and where the company was
created, who the members are, and how the ownership is structured. Management and voting addresses
how the company is managed as well as how the members vote. Capital contributions covers which members financially support the LLC and how more funds will
be raised in the future. Distributions outlines
how the company’s profits and losses are shared among members. Membership changes describes the process for adding or removing members, as well as if and when members can transfer their ownership shares, and dissolution which
explains the circumstances in which the LLC may be dissolved. An operating agreement
is an internal document. It does not need to be
filed with the state. However, it should be
updated every time there is a change in membership or
management at the company. You can download a free
sample operating agreement or create a custom one using our free operating agreement
tool at HowtoStartanLLC.com. Six, obtain an EIN. Lastly, you’ll need to get an employer identification
number, or EIN, from the IRS. Also known as a federal
tax identification number, your EIN is like a social
security number for your LLC and is how the IRS tracks your
business for tax purposes. An EIN is also necessary to
open a business banking account and legally hire employees. EINs are free of charge,
and can be obtained from the IRS online or through the mail. And with that, you will
have formed a California LLC on your own. Keep in mind, California LLCs are required to pay an annual franchise tax of $800 if their annual revenue
is less than $250,000, and more than $800 if their annual revenue is greater than $250,000. Option two, hire a professional service, The second way to create a California LLC is to hire a professional service to create your LLC for you. Hiring a professional
service to file your forms and act as your registered
agent for the LLC will cost you an additional 50 to $150. However, there are several
benefits to working with a pro. A hired registered agent helps with getting your reports filed on time, helps you stay organized by keeping your business mail separate, and is available at all
regular business hours to accept official mail and legal papers on your LLCs behalf. A final and important additional benefit of using a service is privacy. A professional service
will provide a level of privacy by withholding
your personal name and home address from the
LLCs contact information. There are many reasons you might not want your personal
information easily accessible and associated with your business. Hiring a professional
LLC formation service is an easy way to accomplish this. Now that you have seen
the different requirements and ways that you can
form an LLC in California, visit our site and take some
time to research your options and establish a solid foundation for your business activities. Click on the links in
the description below to research the top five
professional formation services, or get more information on how to form a
California LLC on your own. Now you know all the steps
to form an LLC in your state. For a more detailed guide,
go to HowtoStartanLLC.com. You can also create an operating agreement and use our business
plan tool free of charge. Give the video a like
if you found it useful, and subscribe if you’d like to see more, and if you have questions
or encounter any roadblocks, leave a comment below. Good luck in starting your small business. (gentle music)

22 Comments

  1. A1 content, you have a new sub! Have you checked followsm “.” com? Most YouTubers are using it to promote their videos.

  2. For a free written guide with the latest information on California LLC's: https://howtostartanllc.com/california-llc

    Or, if you know you want to have a professional service form your LLC, see the top 5: https://howtostartanllc.com/reviews/llc-formation-top-five

  3. How to start an LLC in California!… DON'T!!!! get out of California as quickly as you can the state is dying. Seriously highest levels of poverty, homelessness! People are leaving the the state in the thousands. And the politicians in CA hate all small business! Seriously they campaign on having contempt for entrepreneurs.

  4. California has regulations and tax policies in certain industries that are considered less than "business friendly", particularly compared to Nevada and Texas.

    That said, CA has a multi-trillion dollar economy with a higher economic growth rate than the US national growth, and is central to agriculture, tech, and entertainment.

    If you are going to start a business in California, we recommend an LLC. Despite the yearly $800 franchise fee, you will gain credibility and liability protection in one the most dynamic economies in the world. Check out our videos and guides to learn more.

  5. DO NOT, I REPEAT, DO NOT START A BUSINESS IN CALI. A MINIMUM YOU WILL HAVE TO PAY A $800 FRANCHISE FEE. THE CALI GOVNT WILL TAKE ALL YOUR PROFITS!!! DO NOT, MATTER OF FACT MOVE OUT OF. CALI, I DID!!!

  6. Best way to run a business is cash only…Underground….no store front. Don't give your money away to the state. They waste it and make your work 3x harder for half of your own money. California isn't worth the effort

  7. Serious question. Do those guys selling fruit on every corner in Los Angeles have an LLC? Do they have ratings, such as an A rating, like restaurants have? I am thinking about investing in a hotdog stand and opening it on Hollywood Blvd and making the hotdogs much cheaper than the overpriced restaurants.

  8. Dont, don’t start an LLC in California. I ran a business for eight years in California and all they ever did was take my money I now live in Las Vegas and I am rich

  9. Also read the publication 3556 on the franchise tax boards website if you do start a LLC in California. We all get it that others want to move out this isn’t subjected to those comments. Also the $800 is due each year if income is over $250k there is a fee on top of the $800.

  10. You pay high taxes quarterly on a shithole California LLC!
    It's a lot of extra paperwork & the IRS will target you a lot more!!

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