5 Things to Consider When Starting a California LLC
When you’re starting a business in California, it’s important to understand the different entity types available and how to create them correctly3 min read
When you’re starting a business in California, it’s important to understand the different entity types available and how to create them correctly. Limited Liability Companies (LLCs) are popular business entities in the Golden State because of their ease of creation and management, as well as most importantly, the liability protection they offer. If you’re based in Los Angeles and want to incorporate as an LLC, there are a number of important things to consider. Here are the top 5:
1. Choose Between a Series LLC and Regular LLC
When it comes to forming an LLC in California, you have the option to choose a regular LLC or you can opt for a series LLC. A series LLC is a single entity that’s divided into several protected cells. The individual cells are each liable independently, which means your business is far less exposed to any potential risks. However, it’s important to note that this entity type isn’t suitable for all businesses, so you should consider your business’ size and needs before making a decision. It’s also important to consult with an experienced business lawyer to make sure you’re getting the best legal advice before making any serious financial decisions.
2. Decide On a Business Name
Once you’ve chosen your LLC type, the next step is to come up with a business name. In the official filing your business name must include the words “limited liability company” or “limited company”, or the abbreviations “LLC”, “LC”, or “L.L.C.” You can perform a California business entity search to check your desired name isn’t taken already, and speak to a registered business name agency if you need further help with name selection.
3. File the Articles of Organization
Next, you’ll need to file an Articles of Organization form with the California Secretary of State. This is the most important part of the formation process and provides the official record that your LLC exists. It requires details on you and other LLC members, its purpose, the registered agent, the startup date, the tax classification, and much more important information.
4. Create an Operating Agreement and Register With CA Tax Agencies
It’s recommended to create an operating agreement that outlines key information about your LLC, such as roles, responsibilities, distributions, and much more. You should also register with applicable tax agencies like the FTB and IRS. Your LLC will need an Employer Identification Number (EIN) in order to pay taxes, open a bank account, and hire employees.
5. Comply With Other Business Regulations
LLCs in California are also subject to state and local business ordinances such as zoning regulations, occupational licensing, and workplace safety. Depending on your industry you may also require a professional license. You might also need additional permits and approvals from other government agencies.
Creating an LLC in California can be tough, and it pays to get guidance from a lawyer who is familiar with business law. If you’re based in Los Angeles, it also pays dividends to choose a local attorney who has a proven track record in the city and understands the local regulations. UpCounsel provides a service that pairs businesses with legal counsel, helping you get access to the best attorneys on demand. Their network of experienced lawyers have an average of 14 years of experience and come highly recommended based on their client ratings and reviews.