California is an excellent place for young entrepreneurs looking to open their first business. The tech industry is booming across the state, and there has been no better time for innovative start-ups. Unfortunately, however, many entrepreneurs are a bit confused when setting up their first business, because they are unsure how to set up an LLC in California. Fortunately, this post can help and will detail the steps for how to set up an LLC in California.
1) Preemptive Administrative Work
Before they get too far ahead of themselves, entrepreneurs learning how to set up an LLC in California should take care of administrative duties. They should choose a name for their business that ends in LLC or Limited Liability Company. This is required under California law. After selecting a name, entrepreneurs should look through the California database to ensure their name is available.
2) Choose A Registered Agent
A registered agent is required for every LLC in the state of California. Registered Agents receive all legal correspondence for a business. They must be over the age of 18 and must have an address in the state of California. A registered agent must be at this address during regular business hours. Business owners would be wise to consider choosing a third-party registered agent company to handle these duties.
3) Articles Of Organization
The next step to answering “How to Set Up an LLC in California” involves filing the Articles of Organization. Entrepreneurs will want to file a Form LLC-1 with the Secretary of State’s office. Valuable information will be included on this document, including:
- The name of the new business
- The purpose of the LLC
- Information about corporate and management structure
- The address for the new business
- Information about the registered agent
4) Statement Of Information
After filing their Articles of Organization, entrepreneurs must then submit a Statement of Information with the state. They can do so by filing a Form LLC-12 with the Secretary of State’s office. New business owners must submit this form within 90 days of sending their Form LLC-1. Business owners must file the initial LLC-12 online or by mail.
5) Business Licenses
The state of California requires certain companies to secure licenses before conducting business. New business owners can find more information about business licenses at the California Office of Business and Economic Development website.
Once entrepreneurs have taken steps to register their LLC with the Secretary of State’s office, they should look into their tax obligations to the state of California. LLC owners must pay taxes to the California Franchise Tax Board as long as they meet the following criteria:
- The business is organized in California OR
- The business is registered in California OR
- A company conducts business in California
- The company has not elected to be taxed as a corporation
Business owners should prepare to pay at least $800 in taxes, since this is the annual minimum franchise tax for all LLCs in the state of California. To file taxes, business owners must submit a Form 568, Limited Liability Company Return of Income.
By following these steps, Californian entrepreneurs should have no problem setting up their new LLC.