Steps to Take To Open an LLC Company In California
It can be a daunting task to open an LLC company in California, but with the right information and guidance, you can do so in a few simple steps. The following article contains key information and instructions on how to open an LLC company in California, including a detailed overview of the paperwork and requirements.
Choose a Business Name
First, the LLC business name must be unique and distinct from existing California businesses. It must include a phrase such as “Limited Liability Company” or an abbreviation such as “LLC.” California’s Secretary of State does not approve LLC names; companies are responsible for researching and registering their own name with the Secretary of State.
The next step is to prepare the LLC’s organizational documents, which are required by the state of California. These documents include an Articles of Organization and a California Statement of Information. The Articles of Organization are filed with the California Secretary of State and must include the LLC’s name and address, the names and addresses of the organizer, the name and address of the California Registered Agent, the purpose of the LLC, and the statement of the management structure. The Statement of Information also must be filed with the California Secretary of State and must include the LLC’s member/manager’s names and addresses as well as the LLC’s name and address.
California law does not require an LLC to have an Operating Agreement, but it is recommended for an LLC to have one. An Operating Agreement establishes the LLC’s capital contributions for each member, rights and obligations of each member, management duties, financial duties, voting procedures, and dispute resolution procedures. The Operating Agreement is not filed with the California Secretary of State, but it should be kept in a safe and secure place, such as in a written hard copy or a secure electronic file.
An LLC must designate a California Registered Agent. A registered agent’s primary responsibility is to accept documents on behalf of the LLC. An LLC must have someone available to accept documents such as legal papers, notices, service of process, and/or other paperwork. The registered agent must be a California resident or a company authorized to do business in California. A registered agent may also be referred to as a “statutory agent” or “agent for service of process.”
Comply With Other State Requirements
In California, an LLC must comply with the filing of annual reports and paying the minimum franchise tax. The annual report must be filed with the California Secretary of State and the minimum franchise tax must be paid to the California Franchise Tax Board. The annual report must include the LLC’s name and address, the name and address of the California Registered Agent, the LLC’s purpose, and the LLC’s management structure. The minimum franchise tax for an LLC in California is currently $800.
Application for a Taxpayer Identification Number
An LLC must also obtain a California Taxpayer Identification Number before it can begin operations. A Taxpayer Identification Number is used to identify the LLC when filing taxes or making other tax payments with the California Franchise Tax Board. The LLC can apply for a Taxpayer Identification Number online with the California Franchise Tax Board.
Business Licenses and Permits
The LLC must also comply with local regulations for any required business licenses and permits. Local governments may require a LLC to obtain a business license and specific permits to operate. For example, a LLC may need to obtain a license or permit to sell its goods and/or services in the city or county in which it will conduct business. Business licenses and permits can be obtained from the applicable local government.
LLCs are required to file taxes and make payments to the California Franchise Tax Board each year. An LLC must also maintain financial records and document all company transactions with the Internal Revenue Service (IRS). LLCs are also required to file an annual tax return with the IRS to report their income and expenses. In addition, LLCs must also file an income tax return for each owner of the LLC.
Endorsement of LLC
An LLC must also obtain an official endorsement from the California Secretary of State in order to establish operations in California. This endorsement is a legal acknowledgment that the LLC meets all the requirements for formation and that it is legally registered with the California Secretary of State. The endorsement will also list the LLC’s name, address, Organizer, and Registered Agent.
Taxes, Fees, And Filing Requirements
Once the LLC is formed, it must comply with California’s taxes, fees, and filing requirements. This includes filing an annual report and paying the minimum franchise tax with the California Secretary of State as well as filing a tax return with the IRS. The LLC may also be required to pay other taxes, such as income taxes, sales taxes, and business taxes.
Employer Identification Number
The LLC must also obtain an Employer Identification Number (EIN) from the IRS. This number is used to identify the LLC on IRS documents and when filing taxes, filing applications for business credit, and other financial transactions. An EIN can be obtained by submitting an EIN Application to the IRS.
Legal Advice for LLC Owners
It is recommended that a LLC owner seek the advice of a qualified business attorney to help with the formation of the LLC and to ensure the LLC is compliant with the laws and regulations of California. An attorney can provide vital assistance with the Articles of Organization, statement of information, and Operating Agreement, as well as help the LLC owner understand the requirements for taxes, fees, and filing requirements.