How to Form an LLC in California
As you contemplate forming an LLC in California, known that an LLC, or limited liability company, is a legal business structure that grants the business owner or owners, properly called members, limited legal liability as to the actions taken and debts incurred by the LLC. In most situations, LLC member liability is limited to each individual member’s investment in the company. In other words, members’ personal assets and possessions are protected from legal action. To properly form an LLC in California and obtain the limited liability benefits of this legal structure, you must file the appropriate documents with the California Secretary of State. Although the filing process can be completed without professional help, it is good practice to obtain advice from a lawyer and an accountant before filing to ensure that you are making the best decision for your business.
Choose an Appropriate Business Name
You must choose a name for your LLC that meets the requirements of California law. First, your business name cannot include any of the following words: bank, trust, trustee, incorporated, inc., corporation, corp., insurer, or insurance company. Further, the name may not imply or suggest that your LLC is going to write insurance policies or take on insurance risks. Next, your business name must be unique and sufficiently dissimilar from all other limited liability companies and corporations registered in California. Additionally, if your business name is deemed to be misleading to the public in relation to other registered business names, your filing may be denied.
You can check the availability of your chosen business name by submitting a Name Availability Inquiry Letter to the California Secretary of State’s office. If you find that your name is available but you are not yet ready to file the LLC formation documents, you can submit a Name Reservation Request Form to the Secretary of State’s office, which will reserve this name for your use for a period of 60 days. Both of these forms are available for download on the Secretary of State’s website.
Other Prerequisites
First, you must choose an agent for your LLC. Each California LLC must have an official agent who agrees to accept service of process and other legal documents on behalf of the LLC at an address within the state. An agent can be virtually any person, including yourself. The agent’s name and address must be listed on the LLC formation documents. Also, you must identify the basic management structure of the LLC on the formation documents. Three basic structures are available: one manager, more than one manager, or all LLC members.
Complete and Submit the Articles of Organization
LLC Articles of Organization are available for download from the Secretary of State’s website. Among the Articles of Organization are instructions for filing and a listing of required fees. Complete the documents and submit them as instructed, along with all appropriate fees. You may submit two additional copies of the documents for certification and return to you, free of charge. Additional copies require payment of a fee.
Submit a Statement of Information Within 90 Days
A Statement of Information form is available for download from the Secretary of State’s website, but you can expect to receive this form in the mail. This filing must be completed within 90 days of filing your Articles of Organization, and then biennially thereafter. This form requires the names and addresses of the LLC managers and executives, among other details. When complete, submit the form as instructed along with all appropriate fees.
