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The Limited Liability Company (LLC) is a smart entity choice for many start-up businesses.  The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in California without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting for the business owner’s personal assets.

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration and management flexibility.

Forming an LLC in California can be both affordable and is simple enough for most people to start on their own.  That said, it’s not a bad idea to have a legal professional like While the filing is pretty straightforward, it’s nice to have some support if you have questions, alerts when the annual report is due, forms like operating agreements, banking resolutions and more.  There are companies like IncFile or ZenBusiness and others that do all of this for as little as $49.

To form a Limited Liability Company in California, file the Articles of Organization with the California Secretary of State.  The LLC filing fee is $70.

A business that provides professional services in California may not file as an LLC.  If your business is required to be licensed, certified or registered with the state (See Step 6 in our Guide to Starting a Business in California), before starting the LLC application, contact the appropriate licensing authority to determine whether your services are considered professional.

Approval for the LLC typically takes 3-4 weeks, however by filing in-person at Sacramento office (1500 11th Street) and paying an additional $15, processing time is typically reduced to only 1-2 days.

If you have questions, contact the California Secretary of State.

916-653-3794
http://www.sos.ca.gov/

 

HOW TO FILE THE ARTICLES OF ORGANIZATION AND FORM A CALIFORNIA LLC

The steps for filing online or by mail are largely the same.  The screenshots show filing online.

To get started either register with the California Secretary of State or download the Articles of Organization (Form LLC-1).

File a California LLC

 

 

Step 1: Limited Liability Company Purpose Statement and Name

Purpose Statement – No action necessary.  Keep the statement “The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the California Revised Uniform Limited Liability Company Act.”

Limited Liability Company Name – Enter the name of the LLC.  Be sure to not include any identifiers (LLC, L.C., etc) in this box.

The name of the LLC also has to not likely to mislead the public and be unique to other registered entities in the state of California.  Check on available LLC names.

LLC Identifier – The legal name of the LLC must include one of the following at the end of the business name:

  • Limited Liability Company
  • Limited Liability Co.
  • Liability Company
  • Liability Co.
  • LLC
  • L.C.

Name Reservation – If you have already reserved a name, check the box and enter the Name Reservation Number so it can be applied to this LLC filing.

California LLC Name Registration

Step 2: Business Address

In this section, enter the street address, city and zip cost of the initial designated office.  This address can be the physical address of the LLC or it can be the address where the business records are kept.  You may not use a PO Box for the designated office.

CA LLC Business Address Registration

 

Step 3: Service of Process

To have an LLC in California, a Registered Agent must be identified.  The Registered Agent is either a California resident (Individual) or a registered agent company (California Registered Corporate Agent). The Registered Agent must have a physical address in the state to act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc on behalf of the LLC.  To see a list of approved Registered Agents, visit https://businessfilings.sos.ca.gov/frmlist1505s.asp

Even though any individual can be the Registered Agent (business owner, member, friend, etc), their name and address become public record and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when they are doing business from home.  Hiring a company to be the Registered Agent will reduce the number of unwanted phone calls and mailings.

California LLC Registered Agent

Step 4: Management

This section asks if the LLC is managed by one manager, more than one manager or all limited liability company member(s).  Every LLC will have at least one member.

There are three choices:

  • One Manager – This is when the members of the LLC hire somebody to run the company,  similar to the position of CEO for a corporation.  This is commonly referred to as a Manager-Managed LLC.
  • More than One Manager – Also a Manager-Managed LLC, but with multiple managers.
  • All LLC Members – The members themselves are the “managers” and have an active involvement in the day-to-day operations of the business.  This is commonly referred to as a Member-Managed LLC.

Most LLCs are member-managed and if so would select all liability company member(s).

CA LLC Management Structure

Step 5: Organizer

Enter the name of the person who is filing the LLC paperwork and the central point of contact.  This could be a member or someone helping with the entity formation.

California LLC Organizer

 

Step 6: File Date

If you want the LLC to start on today’s date choose “No, I do NOT want a Future File Date” otherwise select “Yes, I would like a Future File Date” and enter a date less than 90 days in the future to start.

Some will delay the LLC start date if they aren’t ready to go but want the filing out of the way or if they are close to the end of a calendar year and want to save on some fees.  At the end of each year, a California LLC will pay at a minimum the $800 franchise tax and file annual tax returns.

CA LLC Effective Date

 

Step 7: Review

Review the Articles of Organization to ensure all of the information is correct.

 

Step 8: Pay and File

Pay and file the Articles of Organization.

If filing online, enter your credit card information.

If mailing, send the form and a check for $70 to:
Secretary of State, Business Entity Filings
P.O. Box 944228
Sacramento, CA 94244-2280

If delivering in person, the cost is $85 and can be paid with a check, money order or credit card.  The office is located:
Secretary of State
1500 11th Street
Sacramento, CA 95814

That concludes the basics of forming an LLC in California.  Remember even though you can do it yourself, there is more to an LLC than just the filing.  If you have questions, work with an attorney or a specialized entity formation company such as IncFile or ZenBusiness to make sure everything is done correctly.

 

Wrapping Up

Something to keep in mind when filing a California LLC is that each year the LLC has to pay an $800 franchise tax to the California Franchise Tax Board.  If you are filing towards the end of a calendar year and can wait, you might consider delaying the filing until January.

An Operating Agreement is required for all LLCs in California.  An Operating Agreement is a legal document outlining the roles and responsibilities for the members of the LLC.  In California, the agreement can be oral or written.  If written, they must be kept with the company’s records.  Read more about LLC Operating Agreements.

After the LLC is officially filed, be sure to register for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS).  The EIN is basically a social security number for a business and will be needed before opening a business bank account.  There is no cost to apply and it takes about 5 minutes to get.  See how to apply for an EIN.

Last, before starting a business in California, you may still need to apply for business licenses, sales tax permits, self-employment taxes and more in California.  See the Guide to Starting a Business in California for more information.

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