A limited liability company is a popular entity for owner-operated businesses because it combines personal liability protection with flexible operation and favorable tax treatment. An LLC does not have the annual meeting requirements and double taxation associated with a corporation.
Follow these steps to create an LLC for your California small business.
Select a unique name
Your LLC must not share a name with other companies doing business in California, so you should search the state database of registered businesses to avoid having your application rejected. You may also want to ensure that the website domain for the name you want is available before applying for an LLC.
Appoint a registered agent
Also called an agent for service of process, this person or business accepts official legal documents and service on behalf of your LLC. The registered agent must live in California or be a company registered to do business in the state. You can serve as your own registered agent or have a co-owner take on this role.
Create an operating agreement
A California LLC must have an operating agreement that details the roles, responsibilities and ownership stakes of its members. This document should provide a comprehensive report on the company’s planned operating procedures.
File articles of incorporation
This legal document establishes your California LLC, and you can submit it either online, by mail or in person at your local Secretary of State office. The fee for this document is $70. In the Articles, you must state whether you and the other LLC owners (called members) will run the business or plan to hire managers to administer the day-to-day LLC operations. Within 90 days of creating your LLC, you must submit Form LLC-12 with your Initial Statement of Information.
After establishing an LLC, keep your personal and business funds separate to protect your limited liability. Review California’s requirements to keep your LLC in good standing. Remember to obtain the necessary business licenses in your municipality.