Formation of an LLC in California

by Lauren Miller
California's Secretary of State's office in Sacramento regulates businesses such as LLCs.

California's Secretary of State's office in Sacramento regulates businesses such as LLCs.

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Forming a limited liability company (LLC) in California requires business owners to submit filings to the state and pay fees. In California, as in other states, an LLC protects business owners from being held personally liable for company debts and other obligations of the business. The California Secretary of State oversees and enforces LLC regulations.

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Choosing a Name

You can make sure that the name you choose for your business is legally available by checking the California Secretary of State’s “Business Search” database. However, the state cautions that its database is not intended as a name availability search. You must mail a name availability inquiry letter to the secretary of state’s office for a thorough name search. The name search does not include searches of federally trademarked names. The U.S. Patent and Trademark Office has an online trademark search. You can reserve a name with the state for 60 days before filing paperwork to form a business. The fee for filing a name reservation request is $10 as of 2010.

Name Requirements

The name you choose must not be too similar to an existing domestic or foreign LLC operating in the state. The name must not mislead the public such as implying that the business is associated with a government entity (See References 2, p. 15). It must also include the words “Limited Liability Company,” “LLC” or “L.L.C” at the end of the name. You can abbreviate “Limited” and “Company” to “Ltd.” and “Co.” The name cannot include the words “trust,” “trustee,” “bank,” “insurer, “insurance company,” “incorporated,” “inc.,” “corporations” or “corp.”

Articles of Organization

Business owners must file a document called the Articles of Organization (Form LLC-1) in order to form a LLC in California. It is a simple form that can be downloaded from the state’s website (see References). Information required on the form includes the company name and the name and address of the initial agent for service process. The initial agent is the person who receives state documents on behalf of the company. In some states, this person is also known as the registered agent. The initial agent must reside in California. The filing fee for the form is $70 as of 2010. Form LLC-1 can be mailed or submitted in person.

Operating Agreement

California requires LLCs to create an operating agreement. While there are no specific requirements regarding the content of the agreement, it typically includes information on the how the LLC will be managed. The operating agreement is not filed with the state. However, state law requires that the LLC keep a copy of the agreement at the place of business.

Restrictions

LLCs cannot render certain professional services according to state law. These types of services include those that certain types require certification, licensing or registration. Examples of these types of services include nursing, social work, medicine, acupuncture, dentistry and more. A full list of these services is available in the California Corporations Code Sections 13400-13410 (see References).

Statement of Information

Within 90 days of filing Form LLC-1, an LLC must submit another form called the Statement of Information (Form LLC-12). The form includes the name of the LLC, the company’s file number issued by the state, the address of the company’s principal office, the name and residential address of the manager or managers, the name of the agent for service process and a brief description of the business. This form must be filed every two years. The filing fee is $20 as of 2010.