How to Set Up an LLC in California

By Michele Vrouvas

While the most seasoned corporate attorney may not be able to predict what type of business structure best fits your company’s goals, he can tell you about the advantages of the limited liability company model. Those advantages include being able to choose the type of taxation and the liability of LLC owners, known as members. Like other states, California LLCs decide for themselves how to divide company profits and losses among members. One distinctive requirement of California limited liability companies is that they form operating agreements that clearly define their management plan.

While the most seasoned corporate attorney may not be able to predict what type of business structure best fits your company’s goals, he can tell you about the advantages of the limited liability company model. Those advantages include being able to choose the type of taxation and the liability of LLC owners, known as members. Like other states, California LLCs decide for themselves how to divide company profits and losses among members. One distinctive requirement of California limited liability companies is that they form operating agreements that clearly define their management plan.

Pre-Registration

Step 1

Decide who among the organizers will run the LLC. Develop an operating agreement that explains how managers will conduct business. Maintain the operating agreement at the same office where the LLC keeps its corporate records.

Ready to start your LLC? Start an LLC Online Now

Step 2

Contact the Department of Consumer Affairs, or access its website, to determine whether the LLC’s services are classified as professional services. LLCs in California are not permitted to perform professional services.

Step 3

Choose a name that does not include restricted words. Prepare a name availability inquiry letter and mail it to the California Secretary of State. Ask for verification that the LLC’s name is not currently in use.

Step 4

Designate a registered agent to receive legal paperwork for the company. If designating an individual, make sure the agent resides and maintains an office in the state. If designating a corporation, make sure the corporation has already filed a certificate pursuant to Corporate Code 1505 that it is authorized to do business in the state and is currently in good standing with the Secretary of State’s office.

Step 5

Request an employer identification number with the IRS. File online at the IRS’s website. Or, request one by phone, fax, or mail.

Filing

Step 1

Complete the Articles of Organization Form LLC-1 online by accessing the fill-in-the-blank form at the secretary of state’s website, or download and print the form. Send it with applicable fees to the Document Filing Support Unit of the Secretary of State. You can also deliver the completed form in person to the secretary of state’s Sacramento office. Include the company name, registered agent and employer identification number. If you are limiting or restricting the LLC’s business, the secretary of state recommends that you explain those restrictions in a separate statement filed with Form LLC-1. Have the document signed by an attorney, member of the entity or a trustee.

Step 2

File a Statement of Information Form LLC-12 within 90 days of submitting the articles of organization. Plan to file Form LLC-12 every two years to update the secretary of state’s records with the names of the LLC’s most current operating officers and addresses of its managers.

Step 3

File an Application to Register Form LLC-5 if the LLC was not created in California. Submit a Certificate of Good Standing that was issued within six months of your filing by the state agency where the company was formed. When completing Form LLC-5, make sure to use the same company name, date and place of formation as stated on the Certificate of Good Standing.

State Taxes and Workers' Compensation Insurance

Step 1

Request a California employer account number if your company will be hiring at least one employee who earns $100 in a three-month period. Register online at the Employment Development Department’s website (see Resources), or call 888-745-3886. You can also visit an employment tax office to request a payroll tax registration form.

Step 2

Find an insurer that offers workers’ compensation insurance. Call the Workers’ Compensation Insurance Rating Bureau (WCIRB) at 888-229-2472 and ask which insurer offers policies in your LLC’s specific industry.

Step 3

File tax forms to pay the state’s required $800 minimum franchise tax. File California Form 100 if your LLC is classified as a corporation, or Form 568 if classified as a partnership. Access the California Franchise Tax Board’s website to find out about payment guidelines for each form, or call the Franchise Tax Board at 800-338-0505.

Ready to start your LLC? Start an LLC Online Now
How to File an LLC in California

References

Resources

Related articles

Formation of an LLC in California

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.

How to Create an LLC in California

Organizing a new business as a limited liability company, or LLC, can be highly beneficial for a new business owner. A California LLC has the protection of limited liability, which prohibits an LLC investor from being held personally responsible for an LLC’s debts in most circumstances. California LLCs also receive the benefit of pass-through taxation, where the LLC does not pay taxes on profits until the profits are “passed on” to individual owners of the LLC. Creating an LLC requires filing a form, called an “articles of organization,” with the California Secretary of State.

California Non Profit Corporation Filing Requirements

The filing requirements for a nonprofit corporation in California starts with filing the appropriate paperwork to form the corporation, and then filing annual paperwork as long as the corporation is in existence. If the nonprofit needs tax-exempt status, it must make the required filings with both the state and federal governments. A nonprofit that acts as a charitable organization is required to file with the attorney general’s office and may have additional filings depending on the nonprofit's yearly gross revenues.

LLCs, Corporations, Patents, Attorney Help

Related articles

How to Set Up an LLC in New Mexico

The set-up process for an LLC in New Mexico depends on where the company was formed. In-state, or domestic, companies ...

How to Form a Limited Liability Company in New York

A limited liability company is a business type consisting of the legal aspects of a corporation and partnership. LLC ...

How to File Articles of Incorporation in California

To register your new corporation with the state of California, you must file the articles of incorporation with the ...

How Do I Dissolve a Corporation in Delaware?

Dissolving a Delaware corporation requires filing the appropriate certificate of dissolution with the Department of ...

Browse by category