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How Do I Set Up an LLC In California?

to-sign-a-contract-3-1221952-mHow Do I Set Up an LLC in California?

A small business owner may be drawn to the idea of establishing an LLC for a variety of reasons. This is a kind of company with an owner who can receive various tax benefits as compared to a corporation and who are protected from personal liability. A limited liability company is flexible and allows for pass-through income taxation. An LLC is relatively easy to set up, especially with the guidance of a business attorney. A business attorney is skilled at drawing up contracts, making sure all transactions are legal and can negotiate terms on a client’s behalf.

Choose a Name

The first step in forming an LLC in California is selecting a name that is different from other businesses. State law requires the name to include the words “LLC” or “limited liability company” in the title. It is smart to register the name as a trademark to prevent others from using the same name or benefiting from the goodwill the LLC builds with its customers. A business attorney will complete the process, so the company’s name, logo, and other rights are protected.

Draft Articles of Organization

To create a California LLC, it is necessary to file articles of organization with the Secretary of State. These documents must include the company’s name, purpose, location, registered agent and their location, as well as information regarding how the business will be managed. A business lawyer can assist in filing all required documents.

Prepare an Operating Agreement

One of the most important steps of LLC formation is preparing an operating agreement. Although there are no set guidelines for this contract, a business lawyer will know the important topics to include. For example, it is wise to explain how profits and losses will be allotted and how meetings will be conducted.

Assign a Registered Agent

The state of California mandates each LLC must have an agent of service. It is best to have a business lawyer fill the position. The duties of an agent include accepting legal documents if your business is sued. The registered agent must reside in California.

File a Statement of Information

Within 90 days of filing the articles of organization, a newly established LLC must file a statement of information. This should include the company’s name, file number, address, and other information. Working with a business attorney is wise, especially since this document must be refiled every two years.

Obtain Local Licenses and Comply with any Regulatory Requirements

It is essential to obtain required local licenses and registrations. There are informational returns that will also need to be filed annually and semi-annually. A business attorney can help ensure your company remains in compliance with applicable laws, so your company is not penalized.

In most situations, you will also need an Employer Identification Number (EIN) from the IRS and register with the California Employment Development Department in the quarter your company first hires employees. Having an EIN allows an owner to open a bank account for the business so that personal accounts can be separated from the business’s finances. Your company may also be required to obtain a permit, license, or account with the California Board of Equalization.

Summary

These are some of the most common requirements for setting up an LLC in California. Although it is not typically a complicated process, mistakes or oversights can be costly. Therefore, it is helpful to have the assistance of an experienced business lawyer to assist you. Contact us today for a free evaluation.

By | 2015-02-09T11:32:40+00:00 February 9th, 2015|Business Formation, Business Law, Corporate Compliance, LLCs|Comments Off on How Do I Set Up an LLC In California?