How to Start an LLC in San Francisco

by Jim Thomas
Is this the new home for your LLC?

Is this the new home for your LLC?

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If you're launching a business in San Francisco -- or elsewhere in California -- and want to establish it as a limited liability company, it's not particularly difficult to do so. But you'll need to jump through a number of regulatory hurdles required by state, county and perhaps city agencies. The statute authorizing LLCs in California was passed in 1996. In 1997, the Internal Revenue Service began to allow LLCs the option of filing taxes as a partnership or as a corporation. California law allows for single-member LLCs and grants perpetual existence for an LLC. All of these factors make it more attractive for entrepreneurs to opt for an LLC when starting a business in the state.

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Articles of Organization

The first order of business in forming an LLC is to file your articles of organization and operating agreement adopted by the members of your company with the California Secretary of State's office in Sacramento. Your filing, accompanied by a fee, brings your LLC into legal existence.

Limited Liability Operating Agreement

You can file this required document either before or after the articles of organization. It should include the rights and duties of the members of the LLC, the capital structure and investments of the members, information about supplying financial information to the members and an explanation of how profits will be distributed.

Statement of Information

Another requirement is to file a Statement of Information with the Secretary of State's office. It includes the names and addresses of the LLC's managers, the nature of the LLC's business activity, a name and address for the company's agent for service of process and the address of the LLC's main business office.

Franchise Fee

If your LLC is taxed as a partnership and not as a corporation, you must pay an annual franchise fee that approached four figures as of 2012. The fee is paid to the California Franchise Tax Board and is due no later than the 15th day of the fourth month after your LLC's taxable year begins.

Fictitious Business Name Statement

If you use your exact legal name or the exact name of your LLC to conduct business, you don't need to file a Fictitious Business Name Statement. But if your name is John Jones, you want to name your business John Jones Real Estate, and your LLC is named John Jones Real Estate Ltd., you'll have to pony up, pay the applicable fee and file the statement with the county clerk's office in San Francisco. You also must publish the statement in an approved daily or weekly newspaper once per week for four consecutive weeks. Check the county and state databases to make sure no one else is using the business name you desire.

Business Licenses and Permits

Depending upon the type of business you are starting, the state, county or the city of San Francisco might require a contribution to its coffers in the form of fees for business licenses or permits, For example, some types of businesses that require San Francisco city licenses or permits include dog kennels, billiard halls, movie theaters, photography studios, museums and motorized rickshaw operators.