How to Start an LLC in San Francisco

By Stephanie Kurose, J.D.

How to Start an LLC in San Francisco

By Stephanie Kurose, J.D.

A limited liability company (LLC) is one of the most common types of business structures in the United States. LLCs are essentially a combination of a corporation and a partnership—taking the most favorable characteristics of each. Similar to a corporation, an LLC provides its owners, called members, with personal liability protection so that they are not personally liable for any debts or legal obligations of the LLC (except in very narrow circumstances). Like partnerships, LLCs allow for flexibility in management and have the option of being "pass-through" entities for federal tax purposes. This means that the LLC itself is not subject to income tax; rather, the members claim the LLC's profits and losses on their own personal tax return.

Man in suit smiling with skyscrapers in background

If you are thinking about starting an LLC in San Francisco, there are a few required steps you must take before California formally recognizes your business.

1. Check your desired name's availability.

One of the primary reasons the State of California rejects an LLC registration is that the name is already in use or does not meet the state's requirements. California offers a free preliminary check of the availability of a name by sending in a Name Availability Inquiry Letter to the Secretary of State's office in Sacramento.

2. File articles of organization.

Once you have secured a name for your LLC, the next step is to draft and file articles of organization and to pay any required filing fees. Articles of organization outline the basic details about the business, such as the name of the LLC, the description of the company's business, the mailing address of the principal place of business, the name and contact information for the registered agent, and information about the LLC's members.

California requires that all LLCs file articles of organization with the Secretary of State before being formally recognized as a business. For LLCs forming in California, members must file Articles of Organization (Form LLC-1). For LLCs doing business in California that have their principal place of business out of state, California requires members to file an Application to Register a Foreign Limited Liability Company (Form LLC-5). You can also seek the assistance of an online service provider to start your LLC.

City Registration

In addition to registering your LLC with the state, San Francisco requires all businesses that operate in the city to register with the San Francisco Office of the Treasurer and Tax Collector within 15 days of forming. You can easily register by completing the online application and paying the registration fee.

3. Create an operating agreement.

While not required, it is highly recommended that LLCs create an operating agreement that outlines the ownership and member duties of the business. An operating agreement typically includes information such as how the business is managed, formal voting procedures, fiduciary duties, procedures for adding or removing a member, and procedures in the event of dissolution of the company. You should not file this document with the California Secretary of State but, rather, keep it in a safe, secure location with other important LLC documents.

4. Obtain an employer identification number.

The Internal Revenue Service issues federal employer identification numbers (EINs) to identify businesses for federal tax purposes. An LLC must obtain an EIN to file its business tax returns. Most banks also require EINs to open business bank accounts. You can apply for an EIN online or by mail, fax, or phone.

It is always a good idea to confirm California's requirements to start an LLC. The Secretary of State's website has good information and tips for registering your business successfully.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.