Your Guide to Creating a California LLC

You’ve decided to start a limited liability company, or LLC, in California. What comes next? Creating a business carries many benefits, but you have to follow the proper procedures to reap the greatest rewards. Fortunately, this guide makes it easy to get started. 

Name Your New Company

In California, the rules state that for an LLC, the business title needs to include the acronym “LLC” or the full phrase “Limited Liability Company” at the end. For instance, you’d have to lengthen a name like “Awesome Group” to “Awesome Group LLC.” If you decide to write out the full title, you’re allowed to use per-word abbreviations, such as “Co.” and “Ltd.”

Your Name Should Be Unique

You can’t take another company’s name, so before getting started, check out the state’s business search databaseto ensure that what you want is available. You should also take a look at the state’s Name Availability webpages and guidelines for more information on why certain names might be denied for being too similar to others or because they’re misleading to the general public.

Some Words are Forbidden

The state might deny a proposed name for many reasons. Some key things to avoid include

  • Language that makes it seem like you sell insurance, such as “insurance company” or “insurer,”
  • Financial language, such as “trustee,” “trust,” and “bank,” and
  • Inaccurate business structure terms, like “corporation,” “incorporated,” or similar abbreviations.

Reserving a Name

Do you think that you’ve found the perfect business name and want to keep someone else from grabbing it? For $10, you can file a Name Reservation Request to put a hold on the title for 60 days.

Appoint a Registered Agent

Your LLC’s registered agent is a designated third party that will accept any legal papers if your company gets served with a lawsuit. This sole person or corporate entity has to be legally distinct from your LLC, but associates are acceptable.

Registered agents should live in-state (business address) if they’re individuals. If your agent is a company, then it needs to have received approval to accept legal service by filing the appropriate paperwork and getting added to the statewide list of valid corporate agents.

File an Articles of Organization Form

Form LLC-1 lets you create your LLC by submitting its articles of organization, which specifies

  • How you’ll govern your enterprise,
  • The name and address of the enterprise,
  • The name and address of your registered agent, and
  • The LLC’s purpose.

Form LLC-1 carries a $70 filing fee. This is also a good time to come up with your operating agreement, which is a plan of the rules that you want your company’s finances and operations to stick to. Even though you can form an LLC without an operating agreement in California and most other states, having one helps you ensure that everything runs smoothly.

File a Statement of Information, and Follow the Applicable Regulations

The $20 Statement of Information, or LLC-12, includes critical information about your business, registered agent, operating practices and contact info. You should have already prepared most of this information for your LLC-1 filing. Since you’ll need to file a Statement of Information every one or two years depending on when you registered, it’s good to get into the habit now.

At this point, you’ve essentially created your LLC. If you truly want it to succeed, however, then you might find it beneficial to do the regulatory legwork early on. For instance, you may need to obtain

  • State and municipal business licenses for your type of commercial activity,
  • An EIN, or Employer Identification Number, from the IRS,
  • Registrations from the appropriate tax boards so that you can do things like hiring employees or charging sales taxes, or
  • Permission to operate as a foreign LLC in California.

Forming an LLC in California doesn’t have to be a challenge. Stay tuned for more great tips, and let us know whether this guide improved your filing experience.

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