Establishing an LLC in California: The Top 5 Things to Consider
Starting a limited liability company (LLC) in California can be a long and complicated process2 min read
Starting a limited liability company (LLC) in California can be a long and complicated process. Although the process itself can be time-consuming, it is extremely important to consider all of the details involved in the process of setting up the LLC. When forming an LLC in California, it’s important to take the time to properly research and understand the rules and regulations that apply to your business. Here, we have outlined the top five factors to consider when establishing an LLC in California.
1. Choose a Unique Business Name
The first step to forming an LLC in California is to select a unique business name. It’s important to be sure that the name you choose is not being used by another business in the state. You can search online for other businesses with similar names or look through the California Secretary of State website for the business name that you’d like to register. Additionally, your business name must contain one of the following terms: “limited liability company,” “LLC,” “L.L.C.” or “limited company.” The name also must not contain any words prohibited by state law or any words implying a false purpose or registration.
2. Appoint a Registered Agent
When forming an LLC in California, you must appoint a registered agent. A registered agent is a person or business entity that is made responsible for accepting service of process (SOP) for the LLC if the LLC ever gets sued. The registered agent must be either a California resident or a business that is registered to do business in the state. He or she must have a physical address in the state and must be available during regular business hours.
3. Prepare and File Articles of Organization
The article of organization is the document used to legally form the LLC. The document needs to be completed and filed with the Secretary of State along with the filing fee. The articles of organization must include the LLC name, purpose, principal office address and agent for service of process.
4. Create an Operating Agreement
In California, all LLCs must have an operating agreement. This is a legal document that details how the LLC will be managed and outlines the rights and responsibilities of each member. The operating agreement should include information such as how profits and losses will be distributed, how meetings will be held, how decisions will be made, how long members can remain in the LLC and how new members can be added.
5. Comply With Other Legal Requirements
In addition to selecting a name, appointing a registered agent and forming the LLC, there are other legal requirements that must be followed in order to keep the LLC in compliance. These include obtaining any necessary business licenses and permits, obtaining an employer identification number (EIN), registering with the California Franchise Tax Board (FTB) to determine whether the LLC is subject to the LLC fee and filing all applicable tax returns.
For businesses located in Dallas, it is strongly recommended that they seek assistance with the California LLC formation process from attorneys that understand local regulations in order to ensure a smooth and successful process. Legal professionals such as those available via UpCounsel can provide extensive advice and support, and help navigate any complexities of the LLC setup.