California LLC Return: Everything You Need to Know
Before filing a California LLC Return, you need to prepare an application to register your LLC in California. 3 min read
How to Form an LLC in California
Limited Liability Companies (LLCs) are business entities that are designed to protect owners' personal assets from liability in case the business is sued.
When forming an LLC, the first task is to ensure your business name is available. The LLC's name needs to be different from all other registered businesses in the state. You can search for existing business names on the Secretary of State website.
Make sure your business name ends with a designator, such as the phrase "LLC" or "Limited Liability Company", which is a required part of the name that tells what type of business structure you have elected. When you choose a name, make sure to also sign up for a relevant domain name for your business website.
The next step is to choose your registered agent. This is a person (or sometimes a company) who will receive your legal mail. This is important in case of a lawsuit. You cannot use a P.O. Box for this purpose. The address used must be a street address within California. An owner, friend, relative, or commercial registered agent can act as the registered agent for your business in California. Examples of commercial registered agents include Northwest Registered Agent (at $125 per year) or IncFile (at $99 per year), with Northwest Registered Agent providing the best support.
Next, consider how you will file your Articles of Registration. This document should include a filled-out Form LLC-1 (Articles of Registration). The fee for filing in CA is $70. You can file by mail or walk in, but walk in surcharges add $15 to the filing fee. There is not currently an online filing process.
You should be able to hear back about your application in 10-15 days (excluding mail processing times). Processing times vary and are updated daily on the Secretary of State's website. You can overnight your application in order to reduce mailing time. When your application is complete, you will receive a stamped copy of your business' Articles of Organization, along with a welcome letter.
An LLC Operating Agreement is also needed to proceed. This document is part of your internal records; it doesn't need to be sent with your application. The operating agreement outlines the members (aka owners) of the business, the percentage of ownership for each member, the distribution process for profits and losses, the management structure, and the business' process for tax payment. You should have an operating agreement, even as a single-member LLC. A framework for an LLC operating agreement can be found online.
You will want to acquire a Federal Tax ID Number (EIN). These are given out to businesses by the IRS. You can think of it as similar to a Social Security Number, except for a business. An EIN can be used to open a bank account, conduct payroll, or file your business' taxes. To avoid confusion, all of these terms are equivalent:
- Employer Identification Number
- Federal Tax Number
- Federal Tax ID Number
- Federal Employer Number
You can apply for the EIN as soon as your LLC application is approved, but not before. The Federal Tax Number is free. You can obtain it in a few ways:
- Applying online on the IRS' website
- Filling out Form SS-4 and mailing to the IRS
- Faxing the form to 855-641-6935
If the business owner does not have a social security number, or the LLC is owned by another business, an application for an EIN must be submitted by fax or mail. Foreigners should write the word "foreign" on line 7b of their application.
You need to file your initial Statement of Information within 90 days of forming your LLC. Form LLC-12 should be used. You can file online for $20. Failure to file will result in a $250 fee, and the LLC will eventually be canceled if the form is not filed.
A statement of information is due every 2 years on the anniversary of the LLC's formation. File form LLC-12NC if you aren't making changes, and Form LLC-12 if you are. The form should be processed in 10-15 days. Generally, you will not receive anything back, but you can include an extra $1 in order to receive a stamped copy of your filing.
If you need help with a California LLC return, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.