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What are the steps needed to file an LLC in the state of…

What are the steps needed...
What are the steps needed to file an LLC in the state of California? I'm trying to decide if it's simple enough or if I should use a service like LegalZoom.
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10/26/2017
KLAW
KLAW, Attorney
Category: Business Law
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Experience: I have over 20 years of experience in commercial real estate law, finance, consumer credit, landlord tenant, and business law.
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Hello and welcome to Just Answer. No attorney-client relationship or privilege is formed by speaking to an expert on this site, the answers are for general information. By continuing, you confirm that you understand and agree to these terms.

A limited liability company (“LLC"), is a popular form of business entity in California, as well as the rest of the country. It is very easy to form, and can be formed by yourself. If you have multiple members of the LLC you would need to draft an operating agreement, which you may need the assistance of a service such as legal zoom or an attorney.

A little background. An LLC provides asset protection to its members while being easier to maintain than a corporation. An LLC may have one or more owners (known as “members"), and may have different classes of owners. In addition, an LLC may be owned by any combination of individuals or business entities. In general, all the members are shielded from individual liability for debts and obligations of the LLC.

To your question of steps for formation. An LLC is formed by filing "Articles of Organization" with the California Secretary of State prior to conducting business. A company can be formed on a routine basis usually in about 2-3 weeks, or on an expedited 24-hour basis for an additional filing fee.

Either before or after filing its Articles of Organization, the LLC members must enter into a written Operating Agreement signed by all the parties involved, both managers and members. If it just you then you do not need an operating agreement.

An LLC is typically managed by its members, unless the members agree to have a manager handle the LLC’s business affairs. The level of the involvement of the members in the day-to-day affairs is generally established in the Operating Agreement and varies depending on the structure of the business.

An LLC’s life is perpetual in nature. However, the members may agree to a date or event of termination.

One reason many business’ prefer an LLCs over a corporation is that there is less formalities and filings.

Generally, members of an LLC that is taxed as a partnership may agree to share the profits and losses in any manner. Members of an LLC classified as a corporation receive profits and losses in the same manner as shareholders of a corporation legally organized as such. If you are a single member LLC then you are taxed as an individual and the income passes through to you directly.

Here’s a list of how to form:

First choose a name. Under California law, an LLC’s name must end with “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.” The words “Limited” and “Company” may be abbreviated to “Ltd.” and “Co.” The LLC’s name may not contain the words “bank,” “trust,” “trustee,” “incorporated,” “inc.,” “corporation,” “corp.,” “insurer,” “insurance company,” or any other words suggesting that it is in the insurance business.

Names may be checked for availability by searching the California Secretary of State’s database.

Second you must file an articles of organization with the California Secretary of State’s office. Complete and file Articles of Organization, Form LLC-1. The articles of organization must include the following information: the LLC's name, its purpose, information on how it will be managed, its address, and the name and address of its registered agent.

Third, you must designate an agent for service of process in the state. This is any individual or corporation that agrees to accept legal papers on the LLC’s behalf if it is sued. An LLC may not serve as its own agent for service of process and only one agent can be designated. The agent should agree to accept service of process on behalf of the limited liability company prior to designation.

This could be you, if you reside in California and you have a street address (not a P.O. box).

Fourth, you may have to draft an operating agreement if you have other members. Remember, is not required in California, but is highly advisable. The LLC operating agreement is not filed with the California Secretary of State.

Fifth, you must file a Statement of Information, Form LLC-12, with the California Secretary of State within 90 days after filing your articles of organization (Form LLC-1). Thereafter, a Statement of Information must be filed every two years during the applicable filing period. The filing period is the calendar month during which the original articles of organization (or Application for Registration by a foreign LLC) were filed and the prior five calendar months.

Form LLC-12 is available on the California Secretary of State's website. The initial Form LLC-12 must be filed by mail or hand delivered. Subsequent filings can be completed and filed online as well as by mail or hand delivery. The filing fee is $20.

Finally, all LLCs must pay California taxes to the California Franchise Tax Board (FTB) if:

  • they are organized in California, registered in California, or conduct business in California, and
  • they have not elected to be taxed as corporations--that is, they are taxed as partnerships or sole proprietorships (disregarded entities). LLCs taxed as corporations must comply with California’s corporate tax rules.

The minimum tax is $800 a year.

I hope this helps.

It was a pleasure assisting you today, and I would appreciate if you would rate my service, so I will receive credit and payment for my work. After you rate the question you can ask follow up questions, and you will not be charged any additional money for the follow-up questions.

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Customer reply replied 8 months ago
thank you. For the minimum $800 tax. If I sell taxable goods, and my sales tax liability exceeds the $800 , do I still pay $800 on top of that or do I pay whatever the sales tax liability I incur?

If your LLCs has an income over $250,000 then you must pay an additional fee. If not you will pay the $800.00. I hope this clarifies.

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If you have any other questions pleas just ask. Please don't forget to rate the question.

KLAW
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Category: Business Law
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Experience: I have over 20 years of experience in commercial real estate law, finance, consumer credit, landlord tenant, and business law.
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