How to Use this Guide
The first step is making sure the brand name you want is unique, not misleading, doesn’t contain any restricted words, and isn’t too similar to any other names registered in California State Records. Conduct a Business Entity Search through the state as well as a quick trademark search using the TESS System through the U.S. Patent Office.
Keep in mind the name must contain the words ‘Limited Liability Company’ or ‘Limited Liability Company’ or abbreviations like ‘LLC’ or ‘L.L.C.’ can also be used. Check for name availability at this link, https://businesssearch.sos.ca.gov/; the names list are updated every few days.
The next step is appointing a Registered Agent to receive and help to handle/process all official documents like state filings, tax forms, legal notices, etc. To be considered the agent the person must be a CA resident or registered business entity with a physical street address, not a P.O. Box. You can elect yourself as agent for service of process.
So you can hire a professional that charges as much as $160 a year, or you can can get a qualified/certified registered agent for free by registering your LLC through a filing service like IncFile.
In order to legally conduct business you must file Articles of Organization with the California Secretary of State’s office.
First complete the LLC-1 form and sign by an individual, like yourself, and then submit it with the current filing fee either online or through postal mail. There are expedited options and also private companies that will walk in the applications, see link: http://www.sos.ca.gov/business-programs/business-entities/preclearance-expedited-services/
Filing Fee: currently $70
A EIN, or Employer Identification Number, is required if you want a smooth tax season, to be able to set up a business bank account, legally hire employees and so forth.
Most business activity is tracked using this number so it’s not optional by any means. Thankfully you can easily get your EIN free of charge through the IRS Website. It’s quick and easy. Make sure to save the PDF document and/or number once the IRS website gives you that option! Once you click “continue” you cannot go back and must wait 2-3 weeks for the paper copy.
There are two primary reasons to open unique business bank accounts, the first of which has everything to do with the many perks banks and lending institutions (like Capital One and Chase) are offering these days. There are a fair amount so be sure and check around if you aren’t familiar.
The second has to do with making your finances easier by syncing the single account with an accounting software, and adding a HUGE layer of protection by being separated from any other business/personal accounts.
Call ahead at your chosen bank. Most banks require the EIN document from the IRS and the Articles of Organization, some require additional documents such as a business license or “tax certificate” from the local city/county.
Note: Never, ever use LLC accounts for personal finances.
This is a formal contractual agreement between all owners, called “members,” of a company that outlines financial and managerial responsibilities. It’s not mandatory or required by law, but whenever possible one should be in place to protect all parties, including the brand. And yes, even solopreneurs should have one.
To get started, consider checking out a free online Operating Agreement template which you can customize yourself.
Obviously getting situated with state and federal taxes isn’t optional. These days it can be much simpler though with help. How many licenses you’ll need and how many fees and things will be determined by a number of variables including your type of business, whether you work with the public, location, etc.
To get started bookmark the closest California district office of the Small Business Administration, and Secretary of State’s Business Resources section because they’re likely going to be go-to sources for a variety of things along the way. If you need help with this step, consider using a professional Business License Service that quickly source all documents for you.
Some counties and cities require a business license, also called a tax certificate in some counties, to do business even if you’re operating from a home. Look up the local city/county city hall webpages to determine where to file. You must renew every year.
California has many requirements for many professions. Besides doctors, plumbers, and contractors, there are requirements to work certain jobs. For example, importing materials for sale in California requires an importing license, commercial license; a bar requires liquor license(s), business licenses, safety checks; a nail salon requires beautician licenses.
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Note that this article on how to form an LLC in California isn’t a legal document or legal advice. It’s for informational purposes and the information above is subject to change. For specific legal questions regarding California LLC formation, please consult with a local business attorney. We recommend AIPG Law.