How to form an LLC in California: File in Just 24 Hours
The Limited Liability Company (LLC) is a popular business entity. Here are the simple steps to set up an LLC quickly and easily in California. Most of these steps will apply to other states as well, and we can assist in all 50 states.
Table of Contents
- Why Form an LLC (and not a Corporation)?
- Why Form an LLC in California?
- Why Use a Filing Service?
- Why Use SunDoc Filings?
- How Do I Form a California LLC Myself?
- Choose Your Company Name
- Name the LLC Organizer
- Designate your Registered Agent
- Decide Ownership and Management Structure
- Create the All-Important Operating Agreement
- File the Articles of Organization with the Secretary of State
- Obtain Your EIN and Business Bank Account
- Pay California Taxes
- Determine Necessary Licenses and Permits
- File a Statement of Information
Important Preliminary Questions
Why Form an LLC (and Not a Corporation)?
Business owners create legal structures to protect personal assets from liabilities incurred during the course of business. Startups and partnerships like the LLC for the flexibility that its Operating Agreement offers, and it's a useful business structure for small business and sole proprietors as well. For example, a corporation must have regular meetings with its board of directors—complete with recorded minutes—while LLCs do not have the same requirement. There are also distinctive tax structures for both entities.
Why Form an LLC in California?
If your business is in California, it makes sense to form your entity here. We've discussed at length whether it's worth filing out of state (e.g. Delaware or Nevada) and usually the disadvantages outweigh the benefits - see our article on What's the Best State to Incorporate in? Larger companies with national operations may realize advantages, but typically smaller and local enterprises do not.
Why Use a Filing Service for Your Business Paperwork?
Paperwork in business is like any other chore, and many people choose to outsource it for efficiency and convenience. We file papers for thousands of law and accountancy firms; these are people who know precisely what's involved, and because of this they recognize that we can take those chores out of their workday and let them focus on more significant matters. Entrepreneurs and startups also, whom we have a warm welcome for, often find they have no taste for paperwork and prefer to focus on their business.
The cost for a filing service is quite minimal, especially compared with the real costs of missing filing deadlines with government bodies. Once you've created your business entity, you will always have periodic forms to fill out and filings to make. Avoid costly missed deadlines by letting a filing service do the remembering for you.
Why Use SunDoc Filings?
Our focus on people is what make us stand out from other filing services. Our California- and American-based staff has decades of experience, which means our team can instantly fix an error or explain something to newcomers in a few words over the phone. We know how every system works, what it costs and how long it takes, so we deliver on our estimates. Dealing with the same people three times a day at the California Secretary of State's office keeps everything friendly and efficient.
We also are focused on delivering exceptional service to customers. At SunDoc we treat every repeat client as if it's the first time, working to win that person's business again. Customers keep coming back to us, and we'll strive to make sure you do too. As a result, our customer retention is typically greater than any other filing companies, and most of our new clients are referrals. It's true that computers do a lot of the heavy lifting nowadays—and our online system will walk you easily through the various steps—but in the world of paperwork and unexpected hiccups, people still make the key difference.
How Do I Form a California LLC Myself?
You can do the work yourself to form an LLC in California, but you will need to do your homework before filing with the state. We illustrate the 10 Steps to follow to create your new business entity. Make sure you completely understand everything referenced in those steps.
If you want to learn more about any aspect of the process, you can Search SunDoc to see if we have it covered in more depth on another page in this site (after clicking the link, replace the word "search" in the Google search box with the word you're looking for).
If you file yourself, the California Secretary of State website is one you'll become familiar with. The site contains all the instructions and forms you need to form an LLC in California. You'll have to follow some of the links and probably make some bookmarks to refer to, to get a full understanding of what's involved.
You will need to check with California's Franchise Tax Board to establish the tax your LLC will need to pay, both to get started and annually. Visit the IRS online to submit your online application to get your EIN, if applicable. Be sure to check your local and county requirements for permits, licenses, taxes and filing obligations.
Just remember we're here for any step you want to outsource: Call us toll-free at 888-595-2747, or go straight to the Get Started page to Form an LLC in California.
10 Steps to Form an LLC in California
1. Choose Your Company Name
Before you file, make sure your company's name is available in California. SunDoc Filings can check whether your desired company name is available and quickly reserve your business name with the California Secretary of State when you prepare your LLC online with us. Give us three names in order of preference, and we'll check them for you (we'll file with the first name that's available for your LLC). There are no guarantees the state will accept the proposed name, but typically after our name availability check, it does. We can also help you reserve a name with the state if you intend to file at a future date.
You probably already have a sense of the type of name you would like to operate your business under. If not, there are tools online to help you do the wordsmithing to come up with one based on your business. You'll need to check carefully with the state to confirm the name is available, and you'll probably want to check domain name availability so that your business's web address is memorable and short.
Did you know your company can have two names? Your LLC's name is the identity it uses in government and legal filings. But you can file a "Doing Business As" (DBA), also known as a Fictitious Business Name, if you want to operate under a more consumer-friendly brand name, or one that fits the online name that you choose. The DBA is not an entity, merely a designation of public record. It's filed at the county level, separate from the LLC formation. The fictitious name is often used when a company expands into another state (filing as a "foreign" entity rather than a domestic one) and wants a local-sounding brand name.
2. Name Your LLC Organizer
Someone must be named as the "LLC Organizer" on your Articles of Organization form. Anyone can be this, and often an attorney involved with the business formation becomes the organizer. SunDoc can act in this role if we form the LLC for you. This is not a big issue, but the State requires the application form to be signed by a real person.
3. Designate Your Registered Agent
You must also designate a registered agent on the Articles of Organization form. This can be a person or a firm, but it should be someone with stable contact information in case of legal communications. This agent is required specifically to receive notices for business registration renewals and annual reports, and for all matters where your company must be contacted. Obviously, the registered agent is an important choice to make.
See our article on Registered Agent Service for information on registered agents and why you need one.
4. Decide Ownership and Management Structure.
Your California LLC can by managed by one manager, multiple managers, or all the LLC's members, and you include this information in the Articles of Organization form. See our guides that explain the Member-Managed LLC and the Manager-Managed LLC to help you make a good decision about the best structure for your company.
Carefully considering your choices before making this decision is a good use of time, especially if more than one person is involved. Consider, for example, that a startup of young visionaries may seem like a group of friends today, but this may change over time and within the realities of business. The initial brainstorming on the couch may well create the intellectual property (IP), that often can become the most valuable asset of a business. Five or ten years from now, when your company is well known and worth money, someone may sue you with a claim on IP.
The same IP protections are necessary from employees, contractors and partners, and commonly there are non-disclosure and non-compete agreements to create these safeguards. You may be a bootstrap today on a shoestring, but you want to create your business structure for success in the future. Get it right today, for a secure tomorrow.
You create a business entity to provide protection from personal liability, but how you structure and run the company will have a bearing on how well the courts will regard you in the event of a lawsuit. A court may set aside the liability protection that a company believes it has, and expose the members to personal liability. This is known as a court acting to pierce the corporate veil (applying equally to an LLC as to a corporation).
Make sure not to commingle business and personal monies, and ensure that members fulfill roles correctly, writing out receipts and creating paper trails for company assets used (borrowing a vehicle, etc). These things matter even for a single-member LLC. Paperwork and accountability are the bedrock of keeping liability protection strong. The LLC Operating Agreement, next up, is the place where you will set down the roles and responsibilities of the company's operation.
5. Create an Operating Agreement.
In California, your LLC must have an Operating Agreement. This is the key document for your LLC, providing an outline of the financial and functional aspects of the business, including its rules, regulations, and provisions. The Operating Agreement governs the internal operations of the business, tailored to fit the specific needs of the business's owner or owners.
The Operating Agreement is the legal engine that drives your business. It spells out the company's governance structure, the way it manages its working capital, and how it pays out its profits. All the essential aspects of your business, including money, liability, and fiduciary constraints, are determined by the agreement.
The LLC's Operating Agreement may be the most important area to discuss with an attorney if you have questions. The operating agreement should spell out the management and ownership structure that we discussed in No. 4 above. This agreement is enormously flexible, and if any part of the startup process may benefit from legal advice, this could be it. This is where you will establish any investments into the company, what disbursements will be made and to whom, and in compensation for what actions.
Take a look at our Free LLC Operating Agreement to download. This will get you familiar with what's under the hood of your company and allow you to think about what details to specify. Think about the structural concerns mentioned in No. 4 in conjunction with the LLC Operating Agreement.
6. File the Articles of Organization.
To create an LLC, California requires you to file the form called the Articles of Organization. The moment the state accepts your Articles of Organization is the moment your company is created.
As stated in the previous points, in the Articles you'll provide the name and address of your company, your LLC organizer and your registered agent, and your chosen method of management.
If you want to save time or would rather have a filing service handle your paperwork, SunDoc can file the Articles of Organization for you. Remember that you'll need to file reports with the state periodically, and it's very important not to forget this obligation. Your LLC could lose its good standing with California if it forgets to file a form. This is why many businesses simply start with a filing company from the beginning and outsource the repeat tasks annually.
What Next? Important Steps After Formation
7. Obtain an EIN and Open a Business Bank Account.
Congratulations! If you have completed the above steps, you now have a registered California LLC. If your LLC has more than one member, you will need to get an Employer Identification Number, commonly called an EIN, from the IRS, even if you don't have employees. You can apply for the EIN yourself directly from the IRS, or SunDoc would be glad to get that for you.
Most banks require an EIN to open a business account. If you've been paying business expenses out of a personal account, this is a good time to set up your company's fiscal management: Reimburse all individual payments and document the reimbursements, ideally with receipts. From here on, be sure to keep personal and business expenses and incomes separate if you want to keep your liability protections strong. You may also want to consult an accountant for advice on how to optimize your business finances.
8. Pay California State Taxes.
Your LLC may have to pay fees and taxes annually to the State of California (or other states), and this may start as soon as your first year of operation. If you sell goods in California, you may be required to collect sales tax.
9. Determine Necessary Licenses and Permits.
In California, you must get a business license or permit from the city or county where your business is located. We can help. You might be surprised to discover what is required, and operating without the proper licenses or permits can result in expensive fines.
SunDoc Filings provides a complete Business License Compliance Package, beginning with a free evaluation of the licenses and permits required of your business in your location.
10. File a Statement of Information.
The Statement of Information is a simple form used to keep the State up to date on information about your company. Within 90 days after you form an LLC in California, you must file your first Statement of Information with the State, and then you will need to file an updated report every two years or when you make changes to your company.
Be sure that you file the Statement before the deadline. Filing late can cost you up to 10 times more than the regular filing fee! SunDoc can file your Statement of Information and other routine filings for you so that you can be assured your filings will be done on time.
IMPORTANT NOTICE: You should always consult a lawyer or an accountant if you have legal or financial questions. Nothing in this page should be construed as legal, accounting, or tax advice, or as advice relating to your insurance needs, or relating to employee matters.
Frequently Asked Questions
Do I need a lawyer to form an LLC?
No, you don't have to have a lawyer to form an LLC. However, it may be useful to have an attorney review your Operating Agreement to make sure it is written in a way that best protects your interests. That's especially true if you have an LLC with more than one member.
SunDoc can help you prepare your documents and file them with the California Secretary of State. We have an online system that walks you through all the steps required to form your LLC, to make it easy and to ensure that you don't overlook any of the steps.
Can an LLC have a single member?
Yes. A single-member LLC is a good option for a solopreneur who wants the protection offered by an LLC without having to deal with complicated paperwork. Also, with a California LLC, you can choose to pay your taxes as a sole proprietor, which is an easier option than paying corporate taxes.
You should be aware, though, that there are some legal questions about whether a single-member LLC offers true protection from liability. See our article Forming a Single Member LLC in California for an explanation of why that is the case and to find out what steps you can take to protect yourself.
Should I form an LLC or a Corporation?
Both forms of businesses offer protection from liability, but there are important differences in the way they are managed, the way they treat income, and the way they pay taxes. Your choice will depend on how you want to operate your business.
Our guide LLC vs. Corporation: What are the Differences provides a good explanation of these differences, so that you can make an educated decision. And to dig deeper and learn more, see our LLC FAQs.
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Frequently Asked Questions
Do you need a lawyer to form an LLC?
No, you don’t need a lawyer to form an LLC. However, it may be useful to have an attorney review your LLC’s operating agreement to make sure your interests are being protected, especially in the case of an LLC with multiple members.
SunDoc Filings can help you prepare your LLC formation documents and file them with the California Secretary of State. Our online system can walk you through the steps required to form your LLC.
Can an LLC have a single member?
Yes. A single-member LLC is an attractive option for a sole proprietor who wants the protection offered by an LLC without complicated paperwork.
A California LLC can choose to be taxed as a sole proprietorship, which makes paying your taxes much easier.
But be aware that there are some legal questions as to whether a single-member LLC offers true liability protection. Our article Forming a Single Member LLC in California explains why and what steps you can take to protect yourself.
Should I form an LLC or a Corporation?
The answer really depends on how you want to operate your business. Both a limited liability company and a corporation offer liability protection. But these two types of business entities are very different in how they are managed, how they treat income, and how they pay taxes.
Our guide LLC vs. Corporation: What are the Differences give a good explanation of these differences.
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I initially ordered with LegalZoom for their expedited package but they said there is going to be a delay for a month! They kept giving me excuses about the backlog, blah blah blah. I had to get this LLC set up ASAP so I contacted SunDoc and they got it done for me in 24 hours! What a difference. I am very happy and will never go back to LegalZoom again. Great job SunDoc!
I've been forming entities with SunDoc Filings for years. They are incredible! Mainly because of their personal touch and customer service. They actually have a human answer the phone lol. In a world of automation and AI this company remains personal and human. They get the job done quickly and effectively every single time. I will never use another company when registering my companies.
Kylene, Tressa & Sheila ROCK !!! We sent a name reservation last week and within 10 minutes the name reservation was completed. The next day we sent in a rush order and within 24 hours the entity was created !! Wow !! Thank You & you gals ROCK !!
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