California LLC Set Up Requirements

by Joseph Scrofano

A limited liability company is a special business entity that has similar advantages to corporations, sole proprietorships and partnerships. California, like all states, has a law that governs the formation, operation and dissolution of LLCs. To form an LLC, its owners -- or “members" -- must meet certain set up requirements with the California Secretary of State.

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Name

California law mandates that all LLC contain “limited liability company” or the abbreviation “LLC” at the end of its name. LLCs in California cannot have the same name as an already existing California LLC. In addition, a new LLC may not have a deceptively similar name to any other LLC registered in California. Several ways exist to check whether another business has already taken a desired name, including doing a simple internet search, checking the federal trademark database and searching the California Secretary of State’s online database.

Articles of Incorporation

LLC members must file Articles of Incorporation with the California Secretary of State. The California Secretary of State has a simple fill-in-the-blank standard form for this step. LLC members need to fill in the company name, the LLC’s purpose, the name and address of the initial agent, and whether the LLC will be member-managed or manager-managed. The initial agent is the person who has the authority to accept service -- for example, a complaint for a lawsuit against the company -- for the LLC. In a member-managed LLC, the owners are also the managers and directors of the company. In a manager-managed LLC, the members hire separate individuals to manage the company. As of 2010, the filing fee for Articles of Incorporation is $70.

Operating Agreement

As part of the initial set up requirements, LLC members must also draft and sign an operating agreement. The operating agreement usually describes how members will conduct meetings, their voting rights and responsibilities, what capital contributions each member will invest and how the members will share profits and losses. While California law requires that the members have an operating agreement, it does not require the agreement to be filed it with the Secretary of State.

Statement of Information

LLC members must file a Statement of Information with the California Secretary of State within 90 days after filing the Articles of Incorporation. As of 2010, the filing fee for this document is $20. This standard form requires the LLC members to list all their names and addresses, the address where the company operates and the name and address of its registered agent. The members must file the Statement of Information form every two years.

Warning

Please contact a qualified attorney licensed to practice in California to find out if forming an LLC in California may meet your business goals and needs. This article should not be construed as legal advice. It is for educational purposes only.