A PRIME Corporate Services Guide Forming an LLC in The Golden State
California is the place to be if you are looking to form a new LLC. This state is full of opportunity, filled with creative geniuses, beautiful terrains, and year-round warm weather. California contains the fifth largest economy in the world, centered around major metropolitan hubs such as Los Angeles and San Francisco. Interested in learning more? Read on to see why you should base your LLC in California.
(Want to learn the secrets of creating a successful business in California? Read on! Or skip ahead and reach out to one of our PRIME advisors for a free consultation.)
Forming an LLC in California: Six Simple Steps
There are many government-based informational resources on how to form an LLC in California. Since there is so much information available, we have narrowed the path to forming an LLC down to six simple steps:
- Choose the name for your California LLC
- Designate the LLC’s registered agent
- File paperwork with the Articles of Organization
- Create an operating agreement
- Register for an EIN
- Complete ongoing legal obligations for the LLC
Step 1: Choose the Name for your California LLC
Choosing the name for your LLC is one of the most important steps, as it helps you brand the desired image for your business. In the state of California, there are three requirements to consider when coming up with a name.
- The name must differ from other businesses filed with the California Secretary of State
- Your company name must contain the full word or abbreviation for LLC
- The name can not contain words related to the insurance industry such as trustee or corp.
Once you consider these factors, it is time to create a name! Make sure to be creative and create a title which corresponds with the values and goals of your LLC. A Name Reservation Request form can be filed for a $10-20 fee.
*Note—although the business name is important, it’s ok if you choose a name now and later decide that you want to expand to new markets or do business under another name. A DBA allows you to legally operate your business under multiple names. You can check out this article for more information about DBAs, or schedule a consultation with a PRIME advisor for more information.
Step 2: Designate the LLC’s Registered Agent
The formation of an LLC in the United States requires that a registered agent be designated to file legal documents and serve as the business’s representative. The Chamber of Commerce provides a comprehensive list of private service companies which can serve in the place of a registered agent.
If you have questions, you can schedule a consultation with a PRIME advisor for more information.
Step 3: File Paperwork with the Articles of Organization
California’s Secretary of State requires new LLC’s to file an Articles of Organization. The three modes of filing are via mail, online, or can be hand delivered to the Secretary of State Filing fees for the Articles of Organization are $70. (You can find a complete rundown of the costs associated with starting an LLC in California here.)
There are two categories of filing: Local and foreign. Foregin LLCs are those formed in a different state, who are planning on doing business in California. In addition to filing an Articles of Organization form, foregin LLCs must make sure they comply with steps two and three as well as file an application to Register a Foreign Limited Liability Company.
Step 4: Create an Operating Agreement
Despite not being legally required, it is recommended that potential LLCs file an operating agreement when coming into existence.
The three recommended factors in an operating agreement include:
- Defining the roles and responsibilities of those running the LLC
- Detailing how the LLC will operate
- Describing the LLC’s business structure
This agreement is useful in case of future legal disputes or difficulties. Having trouble where to start? Operating agreement templates can be found online.
Step 5: Register for an EIN
All LLCs require an Employer Identification Number (EIN) as appointed by the IRS. EIN’s can be used to open accounts and file/pay taxes.
There are multiple options to obtain a California EIN.
- Call the IRS and register via phone
- Apply through a SS-4 Form and fax to 859-669-5760
- Mail the SS-4 Form to the IRS
- Apply through the IRS website
Step 6: Complete Ongoing Legal Obligations for the LLC
Once you take the steps to form your business, there are ongoing actions needed to fulfill long-term LLC requirements.
These requirements include:
- Paying yearly taxes
- File biennial reports
- Obtain business licenses
- Register with California taxing authority
If you have more questions or want more information, our PRIME advisors recommend browsing the state of California handbook titled, “Starting a New Business in California.” This will help you ensure you have all your bases covered. We also have extra resources such as our blog or one of the free consultations we offer.
Starting a Business in California: FAQs
Where do I go to obtain a permit for my LLC?
CalGold (California Government: On–Line to Desktops) is a site which contains all of the necessary information about licenses and permits for the state.
What are the filing fees for LLCs in California?
The total for filing fees in California is $90. To file an Articles of Organization with the Secretary of State, there is a $70 fee. In correspondence with this form, there is a $20 fee to file a Statement of Information form, an LLC-12. You can find a complete rundown of the costs associated with starting an LLC in California here.
Where do I register my California LLC?
A Statement of Information form can be sent to llcbizfile.sos.ca.gov/SI or a Form LLC-12 can be filed with the Secretary of State.