If you’re wondering how to form an LLC, or limited liability company, you may be surprised to learn that you do not need to hire an attorney! Instead, enlisting the help of a registered legal document assistant could save you hundreds of dollars. Plus, legal document assistants like A People’s Choice will walk you through the entire process, and even assist with submitting the required paperwork!
To learn more about limited liability companies and how to form an LLC in the state of California, read on for our step-by-step guide:
What is an LLC?
Note that most references to LLCs in the United States refer to domestic limited liability companies. However, foreign LLCs and professionals LLCs are also common.
A limited liability company, or LLC, is a sort of hybrid between a partnership and a corporation. Like corporations, LLCs are run by either one or two “members”, or owners. However, unlike corporations, LLCs are separate legal entities from their members. This distinction is one of the greatest benefits of LLCs, as LLC business owners are most often not legally liable for the company’s debts.
Additionally, LLCs benefit from pass-through taxation, which prevents companies from being taxed twice. Instead, LLC members receive all the business’ profits and report them on their tax returns. As a result, many business owners look into how to form an LLC to take advantage of the tax benefits.
How to Form an LLC in 5 Steps
Step 1: Pick a Business Name
The California Secretary of State’s website provides general guidelines for all corporations, limited partnerships, and limited liability companies reserving business names. More specifically, the law states:
A limited liability company name may be adopted if the name is distinguishable in the records of the California Secretary of State or if the name is not misleading to the public. (Source: California Secretary of State)
The Secretary of State’s office must officially determine that a business name is unique in the state of California. However, LLC members may conduct preliminary research before attempting to reserve a name using the Business Search tool.
Step 2: Choose a Registered Agent
A registered agent is a business or individual who acts as the company’s representative. For example, the registered agent will take care of legal documents, government correspondence, and tax documents. This information will be necessary for completing the Articles of Organization Form LLC-1.
Step 3: Complete the Articles of Organization
When you work with a registered legal document assistant (LDA) such as A People’s Choice, we help you complete and file the necessary documentation with the Secretary of State. First, all LLCs must complete an Articles of Organization, which requires the following information:
- Proposed LLC name;
- Designated office address;
- Registered agent name and address; and
- Number of LLC members
Unfortunately, a large number of legal forms submitted to the Secretary of State’s Office are returned due to incomplete or inaccurate information. However, hiring an LDA ensures you will not have to pay to re-submit your legal documents. Instead, we will work with you until all of your paperwork is complete and accurate.
Step 4: Create an Operating Agreement
In addition to the Articles of Organization, A People’s Choice is here to help you write your LLC’s Operating Agreement. Note that the state of California requires all LLCs to complete this document. However, while not every state mandates Articles of Organization, legal professionals always recommend them. Ultimately, Operating Agreements help prevent conflict between members and add credibility to the company.
Typically, Operating Agreements contain the following information:
- Organization – Identifies the members of the LLC and defines their ownership. Also describes the company’s formation and dissolution process, should the company require one.
- Management – Describes management and how voting will take place, as well as how changes in management may be made.
- Investments – Identifies how much money each member has invested in the company.
- Distributions – Defines how profits and losses are distributed between members.
Operating Agreements are an integral part of protecting yourself and your LLC. However, you do not have to write it alone – A People’s Choice is here to help.
Step 5: File Documents With the State
Although you do not need to officially file your Operating Agreement, you will need to submit your Articles of Organization and potentially additional legal forms to register your LLC. Sometimes, people fail to recognize when their situation requires additional documentation. Luckily, when you work with an LDA, we ensure you have completed and filed all necessary paperwork to avoid any wasted time and money.
Benefits of Working With A People’s Choice
When it comes to forming an LLC, working with A People’s Choice is a no-brainer! First, our services have flat rates, including filing fees, so there are no surprises. In fact, you will save hundreds of dollars by working with a legal document assistant instead of an attorney!
Additionally, A People’s Choice provides a Quick Start Interview that kickstarts your new company by providing us with all the necessary background information up front. Ultimately, we want to help you form your LLC as quickly and easily as possible.
A People’s Choice has been in the legal document preparation business for over 40 years. Plus, we have a great reputation in the community. Contact A People’s Choice to learn more about how we can help you complete and file legal documents in a timely manner. Call us today at 800-747-2780 with any questions.
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