What Is the simplest and cheapest way to set up an LLC in California?

For most business owners, the fastest and easiest way to start a business in California is by creating a California LLC. Make sure to read our other articles if you are unsure of what an LLC is.  There are various steps that need to be followed in order to successfully set up your LLC. Overall, here are some of the essential requirements:

Register your California LLC 

The California Form LLC-1must be filed if you would like to start an LLC. This document names an agent for service of the process provides a name for the LLC and lists the LLC’s principal business address.

Naming your California LLC

The LLC name must be different from other LLCs and must include certain words in order to qualify and be approved. You can choose any name as long as it ends with “Limited Liability Company,” “Ltd. Liability Co.,” or any variant of its abbreviation. Another California rule is that your business name cannot include “Agency,” “Commission,” “Department,” “Bureau,” “Division,” “Municipal” or “Board.”

Filing the Articles of Organization. 

To form an LLC, you must first file the Articles of Organization with the Secretary of State, as well as the Statement of Information. The fees are about $70 and $20, respectively but they are subject to change. Contact the California Secretary of State for the most current filing fees. You only need to file your Articles of Organization with the State of California once, but you will need to file a Statement of Information every two years for your LLC, which has its own fees.

Setting up an Operating Agreement for your LLC

An LLC with more than one member is also required to have a limited liability operating agreement among its members. The State of California requires LLCs to have either a verbal or written Operating Agreement, although having a formal, written one is advisable. You don’t have to file it with the Secretary of State, you can just keep it in your records. This operating agreement contains the terms entered into by the members of the LLC and states the roles of each member, voting rights, who manages the LLC, how members are admitted or removed, dissolution of the LLC, and other various procedures. 

The business address for your LLC

Every California LLC must have a street address. This can be your home address, your company’s office building, or any physical address of your preference. The address can be outside the state of California, but it cannot be a P.O. Box.

Assign an Agent for Service of Process for Your California LLC

Every California LLC must have a “Registered Agent,” known in California as an “Agent for Service of Process,”. The Agent for Service of Process is someone who receives official legal and tax correspondence and has responsibility for filing reports with the California Secretary of State.

This position can be filled by you, another manager in the business, a friend whom you trust, or a dedicated Registered Agent service. Your California Agent for Service of Process must over 18 years of age, have a physical street address in California, and must be present to receive important documents for your company during business hours.

EIN for your LLC

You will need to have an EIN to identify your business with the IRS. An EIN makes it possible for you to open a bank account for your business, apply for business permits, set up payments for your employees, and pay federal payroll taxes. You can receive an EIN directly from the IRS.

Setting up an LLC is a process that requires lots of attention to detail and plenty of patience. We hope this article has helped you to simplify the process. Once you have the above steps out of the way, you are all set to start your own LLC in California.