Starting Your Business in California – Forming an LLC

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Forming an LLC in California is easy, just follow these 6 simple steps:

When starting a business in California you will need to file articles of incorporation with the CA Secretary of State. 

The articles of the organization are the legal document that officially will create you a California LLC you can apply online in person or by mail or fax.

Follow the 6 steps below to form a California limited liability company today and get your business up running and growing as soon as possible.

You can quick jump to any section of the 6 steps here

  1. Choosing a name for your LLC
  2. Selecting a registered agent for your business
  3. Filing The California LLC Articles of Organization
  4. File the Initial Statement of Information
  5. Creating an operating agreement
  6. How to Obtain an EIN for Your California LLC

Step 1: Naming your New California LLC

Choosing a company name is very often the first and most important step in starting your new business. When she’s in the in for a company you need to ensure that you comply with the California business name and requirements and that your name is also searchable and memorable by your customers.

Here are the naming guidelines for California LLC.

  1. Your name must always include the phrase limited liability company or one of the abbreviations or words such as Limited, LLC, COMPANY, or Co
  2. You cannot include clued words that can confuse your LLC with a government agency for example FBI, treasury, or state department
  3. There are also certain restrictive words that you cannot use for example bank attorney these may require additional paperwork and a licensed individual such as a doctor or a lawyer to be part of your LLC
  4. You can find a complete list of all of the naming rules for the state of California and you can read them here at the California code of regulations

After deciding on the name of your corporation you need to find out if it is available within the state of California you can do so by a different name search on the state of California website follow this link to check if your name is available. Go to the California Secretary of State’s website.

When starting a new business in today’s day and age it is also worthwhile to check out the URL or website address for your business is also available even if you currently do not plan to create a business website you may want to buy the URL to prevent other business owners from acquiring it and lock you out of the space.

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Step 2: Choosing a registered agent in the state of California

It is a requirement to appoint a California agent for service of process for your California LLC this agent is more commonly known and referred to as a registered agent in most other states.

What is an agent of service process? Every California LLC needs a person or business entity that is responsible for receiving for example legal documents, tax forms any notifications of potential lawsuits and corresponds on behalf of your business. Essentially you should be thinking of your registered agent as your business’s point of contact with your state.

Who can legally be an agent of service of process?

To qualify to be an agent of service your agent must be a full-time resident of California or you can elect a corporation as a registered agent service of process if you choose to elect a corporation they must be authorized to conduct business in the state of California. You may also elect yourself or another individual within the company.

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Step 3 Filing The California LLC Articles of Organization

To register your LLC you will be needing to file the articles of the organization with the secretary of state of California. This can be done by applying online by mail or Kennedy be done in person.

Articles of organization for a limited liability company in California is a legal document to officially form your LLC. To provide the name of your LLC, you will have to choose your registered agent and list of services your LLC will offer and pay any state filing fees that are due.

After filing your articles of organization you must also file your initial statement of information this is found on form LLC-12. This form needs to be filed with the California Secretary of State within 90 days of form in your LLC.

When filing LLC Dash 12 you will need to state what are you up LLC is going to be a member-managed or manager member LLC. Recommend learning more about member-managed versus manager-managed LLCs before you file.

Where to file your articles of organization.

You can file your articles of organization online with the state of California at the following link link here for filing online.

You can also file by mail and also in person by using the following form you can download here.

Should you choose to file in person please note that the secretary of state office in Sacramento is subject to an additional $15 counter drop off the provided was priority processing over other applicants submitted by mail the filing counter is located on the third floor of the building

 if you currently own an LLC and I’m looking to expand into the state of California you will need to form a foreign LLC

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STEP 4: File the Initial Statement of Information

All California LLCs are required to file an Initial Statement of Information (Form LLC-12) with the California Secretary of State within 90 days of forming your LLC. This can be done online, in person, or by mail.

  • File the Statement Online: With the California Secretary of State
  • Mailing Address: Secretary of State, Statement of Information Unit, P.O. Box 944230, Sacramento, CA 94244
  • In-Person: California Secretary of State Sacramento Office, 1500 11th Street, Sacramento, CA 95814

Step 5: California business law requires you to create an LLC operating agreement.

Unlike other states, an operating agreement is required when you are forming an LLC in the state of California.

What is an operating agreement for a business? You’re operating agreement for a business is a legal document that outlines the operating procedures and the ownership of the business.

How important is the operating agreement?

You can like an operating agreement for a business to an employment contract for an employee. Think of your operating agreement as the roadmap for your business. This is going to map out who does what when and who has responsibility for various aspects of your new business. 

In the event of any dispute with the members of the LLC, the operating agreement will be referred to as the document to be used to solve any disputes between members.

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Step 6: How to Obtain an EIN for Your California LLC

What is an EIN and do I need one? EIN is an acronym that stands for an employer identification number. You can think of an EIN as the Social Security number for your business. This number is used as a federal identification number for your business. This nine-digit number is given to you by the (IRS) internal revenue service. 

This employer ID number is also used to identify your business entity and keep track of your tax reporting for your business.

Why will I need an EIN?

Businesses will normally require an EIN for three main reasons you will need to open your business bank account for your new company, you will need one for federal and state tax reporting purposes and you will also need one if you wish to hire employees with your company in the future.

Where do I obtain an EIN for my company?

All EIN numbers for the USA are issued free of charge by the Internal Revenue Service; they will be issued to you after the company has been formed. You will need to complete an SS4 form this can be done online or by mail by following either of the links below.

Link here to the IRS apply online request an EIN from the IRS APPLY ONLINE You can also apply for an EIN by Mail or Fax DOWNLOAD FORM

Obtaining your certificate of good standing.

In California, the certificate of good standing also known as a certificate of status will verify that your business in California has been legally formed and is also properly maintained. There are several instances where you may need to include the certificate of good standing as you move forward with your business.

For example, 

  • Business is seeking funds from banks or other lenders they may ask to see your certificate. 
  • If you are planning on expanding outside the state of California you will need your certificate of status to form a foreign LLC in another state. 
  • Your business needs licenses or permits. You will also need the certificate when you are renewing your license each year.

How to Close or Dissolve an LLC in the State of California

There may come a point where you’re not going to wish to conduct business with your LLC or you are moving on to a new business venture and you wish to dissolve or close your current existing business. 

Having formed an LLC and following the legal guidelines and steps you must now and do the same with regards to dissolving it. Essentially there are two broad steps that I needed to dissolve the corporation in the state of California. 

Neglect in closing your LLC or dissolving it probably promptly can leave you open for tax liabilities penalties and even for legal trouble in the future.

They include closing your business tax accounts and filing the correct articles of dissolution with the state of California. 

California State Helpful Links

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