Starting an LLC in California: A Step-by-Step Guide

1. Choose a Business Name

Uniqueness: Your LLC's name must be distinguishable from existing businesses registered in California. Conduct a name search using the California Secretary of State's Business Search tool to ensure availability.

Compliance: The name should include "Limited Liability Company," "LLC," or "L.L.C." Avoid restricted words like "bank," "trust," or "insurance" unless authorized.

Reservation (Optional): To reserve a name for up to 60 days, file a Name Reservation Request Form with a $10 fee.

2. Appoint a Registered Agent

Designate an individual or entity to receive legal documents on behalf of your LLC. The agent must be a California resident or a registered California corporation with a physical address in the state.

3. File Articles of Organization

Submit Form LLC-1 (Articles of Organization) to the California Secretary of State. This can be done online, by mail, or in person. The filing fee is $70.

4. Create an Operating Agreement

Although not filed with the state, California requires LLCs to have an operating agreement outlining management structure and operating procedures.

5. Obtain an Employer Identification Number (EIN)

Apply for an EIN from the IRS, necessary for tax purposes and to open a business bank account. This can be done online at no cost.

6. File the Initial Statement of Information

Within 90 days of filing the Articles of Organization, submit Form LLC-12 (Statement of Information) with a $20 fee. This can be filed online or by mail.

7. Fulfill Tax Obligations

Annual Franchise Tax: California LLCs must pay an annual minimum franchise tax of $800. The first payment is due by the 15th day of the 4th month after your LLC is formed.

Estimated Fee: If your LLC’s income exceeds $250,000, additional fees apply, calculated based on total income. These are due by the 15th day of the 6th month of the current tax year.

8. Obtain Necessary Business Licenses and Permits

Depending on your business type and location, acquire the appropriate local and state licenses or permits. Check with local city or county offices for specific requirements.

9. Maintain Compliance

Biennial Statement of Information: After the initial filing, submit Form LLC-12 every two years during the filing period, which is the calendar month when the original Articles of Organization were filed and the prior five months.

Record Keeping: Maintain accurate records of financial statements, meeting minutes, and other pertinent documents.

Additional Considerations

Professional Assistance: Consulting with a legal or tax professional can provide personalized guidance tailored to your business needs.

Compliance Updates: Regularly review California’s business regulations to ensure ongoing compliance.

Conclusion

By following these steps, you can establish a compliant and operational LLC in California, positioning your business for success.