5 Simple Steps to Get Started
According to the IRS, each state may use different regulations around forming an LLC, and you should check with your state if you’re interested in starting a Limited Liability Company. To simplify the process of forming an LLC in the state of California, we’ve put together a step-by-step guide to detail each step of the process and answer any questions you may have.
Name your California
Your first consideration when choosing a name for your LLC is that it be unique from any other business in the state of California. You can quickly and easily check your company’s potential name options at the California Secretary of State business name database. For a $10 fee by mail or in person at the California State office, you can also reserve a company name for 60 days. To do so, you’ll need to submit the Statement of Reservation of Name form.
In order to comply with California state law, your company’s name must end with the words “Limited Liability Company” or the abbreviation “LLC.”
Appoint a Registered Agent in California
The state of California requires that any LLC have a registered agent for service of process. This means your LLC must have an entity that agrees to physically accept any legal papers on the company’s behalf should it be sued.
The registered agent does not have to be an individual person and can be any resident of the state of California or a business entity authorized to do business in California so long as the agent has a physical street address within the state.
File the California Articles of Organization
To officially create your LLC in the state of California, you’ll need to file Articles of Organization, Form LLC-1, with the office of the Secretary of State. This can be done online at the California Secretary of State webpage with a $70 fee. To complete this form you will need to know the following:
1. The final name and address of your LLC
2. The name and address associated with the company’s registered agent
3. Whether the LLC will be member-managed or manager-managed
4. The name, address, and signature of the person filing paperwork
Create an Operating Agreement
You may want to consider preparing an operating agreement to outline the ownership and operating procedures for your LLC.
Though not required by the state, an operating agreement will set the guidelines for running your company. This does not need to be filed with the state, but it can go a long way to ensuring your company’s success.
Foreign LLCs and Business Licenses
If yours is a foreign LLC, also referred to as an out-of-state LLC, wanting to do business in the state of California, you’ll need to follow all the aforementioned steps.
The main difference is that the form required to make your LLC legal to operate is referred to as a Statement of Foreign Entity Authority.
You can file paperwork at the California Secretary of State by postal mail or by dropped off in person for an additional fee. The filing fee is $70. Once all the other requirements are met, your foreign LLC will be fully operational
The location of and specific type of business you are creating can potentially require additional federal, state-authorized, and/or local business licenses. You can obtain federal licenses and perform a California license and permit search to try to procure all the appropriate licensing for your business.
Since business licenses and permits are issued at all levels of government and for many reasons, you should do careful research to find out what licenses and permits you need. You can also hire a professional service to do it for you.
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