For most business owners, the fastest and easiest way to start a business in California is by creating a California Limited Liability Company. A California LLC is a legal business structure used to protect your personal assets in the event your company is sued. A California LLC offers you and your business two major advantages: personal liability protection and pass-through taxation. You’ll only be taxed at the personal level for your business’s profits. Before starting your California LLC there are some important things you need to know.
Your business name must be unique
When naming your LLC make sure you choose something that isn’t already in use, or too similar to an existing name. If you already have a name in mind, check whether the URL and domain name is available. Even if you are not planning on setting up a website, you may want to buy the URL in order to prevent others from using it.
Some laws regarding business names in California are; that your name must include the phrase “limited liability company,” or one of its abbreviations or words: “LLC, L.L.C., Limited, Ltd., Company or Co. Your name must not include any words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
A Registered Agent is needed for your business
A registered California agent is another requirement for an LLC in California. This person will act as your LLC’s main point of contact with the state. This is a person or business entity responsible for receiving tax forms, legal documents, a notice of lawsuits, and official government correspondence on behalf of your business. An Agent of Service of Process must be a full-time resident of California or a corporation. An individual within the company, including yourself, can also be elected for this position. It is also possible to appoint a trustworthy friend, as long as the person is 18 years or older, has a physical address in California, and is always available during normal business hours to receive service of process in person.
File your Articles of Organisation with the state
You also need to register your business by filing the Articles of Organisation with the Secretary of State. This is a legal document that allows you to officially form your business. You can apply online, by mail, or in-person. All California LLCs are also required to file an Initial Statement of Information (Form LLC-12) with the California Secretary of State within 90 days of forming your LLC.
Create a detailed Operating agreement for your LLC
An operating agreement is another requirement when forming an LLC in California. An Operating Agreement is where the member/members are listed, as well as their percentage of ownership. This document also spells out how profits and losses are distributed, how the LLC is managed, and how taxes are paid. A comprehensive operating agreement ensures that all business owners have a good understanding of how the business works and reduces the risk of future conflict.
Register you LLC for an EIN number
Finally, You will need an EIN to identify your business to the IRS. You use this number when filing and paying taxes or when submitting payroll information and payments for your employees. An EIN number is needed in California if you would like to open a bank account for your company. You can obtain an EIN from the IRS (free of charge) after forming the company. This can be done online or by mail.
Research the permits your LLC requires
Depending on your LLC’s location and the industry it engages in, you may need to obtain certain business licenses and/or permits. To find out your LLC’s requirements, you can contact the city, town, or county where your business is located. They’ll be able to direct you to the proper government agencies.