Setting up a Limited Liability Company (LLC) in California may be the best course of action for someone considering launching a business there. The flexibility of a partnership and limited liability of a corporation are combined in an LLC as a company structure. But what precisely is required in California to create an LLC? Let’s look at it.
You must first decide on a name for your LLC. The name must be distinctive and not too close to the name of any other California-registered firm. By conducting an online search of the California Secretary of State’s database, you can determine whether a name is available. By submitting a Name Reservation Request to the Secretary of State’s office after discovering a name that is available, you can reserve it for up to 60 days.
Articles of Organization must then be submitted to the Secretary of State’s office. In this document, your LLC is formally established, and you may find out the company’s name, objectives, and address. Articles of Organization are currently filed at a charge of $70.
The Secretary of State’s office must first approve your LLC before you can apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). An EIN is a distinct nine-digit number that serves as your company’s tax identification number. An EIN is required to open a bank account, hire staff, and file taxes. A free online EIN application is available.
LLCs are exempt from needing a state business license in California. However, you might need to acquire a regional business license or permission depending on the type of your enterprise. For instance, the local health department will require that you get a food service permit if you’re opening a restaurant. To find out what licenses and permissions are necessary for your particular business, contact your city or county.
Last but not least, establishing an LLC in California entails selecting a distinctive name, submitting Articles of Organization, obtaining an EIN, and sometimes acquiring regional licenses and permissions. Currently, the filing fee plus any additional fees for state licenses and permissions totals $70 to incorporate an LLC in California. If you’re unclear of the procedure, think considering employing an internet formation service or speaking with a company attorney to make sure everything is done properly.
You can submit your LLC’s original articles of formation before the 15th day of the fourth month of the current tax year to avoid paying the $800 franchise tax in California. The franchise tax may also be decreased or eliminated if you want to be taxed as a S corporation rather than a regular corporation. For guidance tailored to your case, it is advised that you speak with a tax specialist.