Each state has different requirements for forming a limited liability company (LLC). Whether you are starting a business or incorporating a business already in existence, you'll want to understand the California LLC formation requirements.
How to start an LLC in California
Starting a new business comes with a variety of challenges. The following highlights some of the critical steps needed to keep your business compliant when getting a limited liability company (LLC) stated in California. For more information on stating a business, view our webinar “What You Need to Know When Deciding Whether to Register Your Small Business”.
Decide on a name for your LLC
Naming your business is an important step that needs to be considered carefully. There are many business and compliance requirements to weigh when making the final decision on your LLC’s name.
Generally, your name will need to be unique, not the same or too similar to an existing Californian business, and it can’t be misleading. California has very specific regulations regarding that you can refer to here when deciding the name of your LLC.
Determine management structure (member vs. manager)
One of the reasons you may have selected an LLC as your business type is the management structure. LLCs can have one of two management structures: member-managed, or manager-managed. The difference between the two comes down the relationship between management and ownership:
- If an LLC is member-managed, then all members are active in the decision-making processes.
- If an LLC is manager-managed, then a manager is designated to make the decisions on its behalf.
When starting your LLC, it is critical to understand how you plan to manage your business. Read our article LLC members vs. LLC managers for more information on LLC management structure.
If the registered agent is an individual, then they must reside in California and have a physical address (i.e., not a PO box). If you decide to use a professional business as your registered agent, then that agent must be qualified with the California Secretary of State. BizFilings includes this service in all incorporation packages.
Select your registered agent
A registered agent (also often referred to as agent for service of process) is a person or business you appoint to receive and forward to you important legal and tax information. California requires a registered agent to incorporate and the business must maintain a registered agent throughout its existence.
Prepare and file with California
Creating your LLC in California requires two separate filings: Articles of Incorporation, and a Statement of Information. Your Articles of Incorporation form your business in California and the Statement of Information is a periodic filing first required within 90 days of formation. BizFilings handles this step for you, allowing you to concentrate on running your business.
In California you are to maintain your own Operating Agreements and are not to file them with the Secretary of State. Read our article on LLC operating agreements for more information.
Obtain a federal employer identification number
A Federal Employer Identification Number (EIN or Tax ID) is an IRS identification number used for businesses. The most common comparison is to an individual’s Social Security Number. The EIN must be obtained by LLCs to be used when filing taxes. However, it is also often used for other important business activities, such as opening a business bank account, obtaining a loan, or paying invoices. Check out our article on Federal EIN for more information.
Meet your license and permit requirements
You LLC may be required to obtain licenses and permits before it can legally operate in California. There are many factors that go into determining which licenses and permits at the federal, state, and local levels are required for your business. For example, if you plan to hire employees, you may need a payroll tax registration and depending on where they are based that could have implications as well. Read out article “Understanding business licenses” for more information.
What is the cost to form an California LLC?
At BizFilings, we clearly outline our fees and the California state fee. When you view our pricing to form an LLC you plainly see:
- BizFilings’ package prices. BizFilings offers three incorporation service packages from which you can choose.
- State fee for standard turn-around. Our pricing clearly shows the state fee to form an LLC in California with standard turn-around.
- Expedited turn-around. You will see the BizFilings and state fee, if any, for expedited turn-around.
- 48-hour turn-around. California has a 48-hour filing option, which is outlined in our pricing.
- Certified copy. Our pricing also clearly displays the BizFilings and state fee, if any, for issuing a Certified Copy of the Articles of Organization.