Limited liability companies, or LLCs, provide business owners with some distinct advantages of the corporate form of organization while retaining a few key advantages of the partnership model. California limited liability companies follow similar formation requirements to LLCs in other states, relying on the Secretary of State as the main point of contact throughout the process.
Fit your business needs with the right LLC package
Select and reserve a name for your LLC. Choose a name that is unique and not too similar to other businesses registered with the state, and include the "LLC" designation at the end of the name. Mail an official name availability inquiry letter to the Secretary of State's office to check the availability of your chosen name. If the name is available, mail a name reservation request form to reserve the name for 60 days. As of 2010, California does not have an online name lookup or reservation tool, but you can download and print both forms (see References).
Build your initial team of members, and appoint a registered representative. LLC members act nearly identically to partners in a private partnership, or to sole proprietors in the case of single-member LLCs. A registered agent can be any person, inside or outside of the organization, who will act as a point of contact between the company and the state for legal matters.
Draft your articles of organization and file them with the California Secretary of State. Use the ready-made template on the Secretary of State's website to fill in the required information (see Resources). Include the proposed business name, purpose and address, as well as contact information for your registered agent.
Draft an operating agreement. California is one of the few states that requires an operating agreement by law, although it does not have to be submitted to a state agency. According to California Corporations Code Section 17050, “the members shall have entered into an operating agreement” around the time the articles of organization are filed. Use the operating agreement to set rules for how members share responsibilities, duties and profits, and to stipulate provisions for adding and eliminating members, as well as dissolving the business.
File a statement of information with the Secretary of State. The statement of information is not a requirement in most states, but California requires new LLCs to fill out a pre-made form that is nearly identical to the articles of organization (see Resources). The major difference with the statement is that it includes the names of the CEO and all top-level managers, in addition to the information found in the articles.