Forming a Limited Liability Company in California Written By Sandra McCarthy Founder, A People’s Choice Forming a limited liability company (LLC) in California is a great option for business owners. First, LLCs provide increased flexibility. Plus, LLCs provide their owners major protection. More specifically, an LLC’s owner’s liability for any of the company’s debts or obligations is limited to the capital they have invested. Therefore, the owners do not risk losing personal assets outside the business. In an LLC, the owners can all take part in the day-to-day management of the business unless prohibited by the company’s organizational documents. Additionally, there are several types of taxation for LLCs depending on ownership. For example, when paying income taxes in California, an LLC of one person will be treated like a sole proprietorship. On the other hand, if the LLC is owned by more than one person, it will be taxed as a partnership. Finally, an owner may also choose for their LLC to be taxed as a corporation. Requirements for Forming an LLC in California Company Name First, when forming an LLC in California, you will need to choose a proper name for the company. By law, the name you choose can’t be confusing or misleading to the public. Additionally, the name must end with “LLC”, “Co.”, or “Ltd.”. This way, the public can identify it as a limited liability company. Operating Agreement Next, you should have either a physical or oral operating agreement between the LLC’s partners. Typically, an agreement in writing is preferable in case disputes arise in the future. That said, your operating agreement should specify who will be in charge of the daily management of the company. The owners can share this responsibility, or you can hire a manager! Articles of Organization The LLC must also file articles of organization with the California Secretary of State and pay the filing fee. Similar to the articles of organization for forming a corporation, the articles of organization for an LLC require the following information: the LLC’s name and street address; the name and address of the LLC’s registered agent; the purpose of the LLC. Additionally, the articles can also specify when the business will come to an end if applicable. Otherwise, an LLC can last forever! If you need help with your LLC’s articles of organization, you can find resources on the Secretary of State’s website. Alternatively, you may contact A People’s Choice for help drafting your articles of organization and other required documents for forming a limited liability company in California. Statement of Information Within 90 days of filing the articles of organization, and every two years after that, the LLC must file a statement of information with the California Secretary of State. Like the articles of incorporation, this requires a filing fee. Tax and Licensing Requirements Finally, if you are considering forming a limited liability company in California, be sure to research other local and federal tax and licensing requirements. This is an important step to make sure you are in compliance before starting your business. For example, if you have a foreign LLC formed outside California, you need to register it with the Secretary of State if you wish to conduct business within the state. Get Help Forming a California Limited Liability Company A People’s Choice has been providing self-help legal document services for over 40 years and has established an excellent reputation in the community. When you are ready to start your paperwork, you can provide us with your information through our convenient online system, over the phone, or in person. Although we cannot give legal advice, A People’s Choice can help you prepare all required legal documents to help you with your California LLC – without having to hire a lawyer. Call us today at 1-800-747-2780 for more information. Get help with your California legal documents today! A People’s Choice can save you hundreds of dollars by preparing your legal documents instead of an expensive attorney! GET STARTED! If you need more information about California business entities, do not hesitate to call our office. By Sandra McCarthy|September 6th, 2020|Business|Comments Off on Forming a Limited Liability Company in California