How to Get an LLC in California Overview

Get an LLC in California the Easy Way

The easiest and most effective way to form an LLC in California is to engage the services of corporate attorneys. Specifically, the expert team at San Diego Corporate Law can smooth the process, ensuring compliance with all necessary legal procedures and regulations. Leveraging their extensive experience and in-depth knowledge of corporate laws in California, they can save you considerable time and effort, while also minimizing potential legal difficulties down the line.

The cost of forming an LLC in California by San Diego Corporate Law can vary significantly based on several factors, including without limitation, the number of owners (referred to as members) in the LLC, the management structure, and the respective ownership percentages and management control by the members.

If the California LLC has only one member, the setup is more simple and the cost of formation by San Diego Corporate Law is lower. However, if a California LLC has multiple members, the complexity increases as does the cost of formation by San Diego Corporate Law, especially if not all members act in the management of the LLC or if not all members own the LLC equally.

In addition to the above, it is crucial to note that there may also be costs associated with federal and state securities filings. If your California LLC involves raising capital from investors, or if not all members have equal rights of ownership and management, it may require compliance with specific securities regulations. The process of complying with these regulations can be complex and may require filing appropriate documents with state and federal agencies. This additional step, if necessary, could increase the cost of the LLC formation by San Diego Corporate Law.

An example of the cost to get an LLC in California formed by San Diego Corporate Law is available on our California LLC page, but the best way to determine the flat fee to get an LLC in California formed by San Diego Corporate Law would be to contact us to schedule a consultation so we can review all the details with you and guide you through this process, ensuring all corporate laws and securities regulations are adhered to, protecting your business from potential legal issues.

Or You Could Always Get an LLC in California the Hard Way

Taking the alternative path of using an online service or attempting to form an LLC by yourself in California can be challenging and time-consuming.

While saving costs by using an online service or self-filing may seem appealing, one must consider the inherent trade-off: your time and peace of mind. It is essential to remember that any time you spend to get an LLC in California is time taken away from your business planning and other core business activities. This diversion of focus could end up costing more in the long run, both in potential profit and missed opportunities. Additionally, the complexities and possible missteps in the process could lead to future legal complications, adding stress and possible financial burdens.

This route demands a comprehensive understanding of complex documentation, California-specific corporate laws, and strict compliance requirements. Even online services, while seemingly convenient, often lack the personalized attention to detail that a dedicated legal team provides. Therefore, this approach may expose your business to potential legal pitfalls, making it a much harder and riskier way to form an LLC in California.

Nonetheless, let us explain the process of how to get an LLC in California to help you make an informed decision about how you want to get your California LLC formed.

Steps to Get an LLC in California

Steps to Get an LLC in California

The steps to get an LLC in California are as follows:

1. First, you need to choose a unique name for your LLC that is not already in use by another company in California.
2. Second, although it may be done at any time before obtaining a federal employer identification number (EIN), it is recommended that a decision regarding how the LLC will be taxed be made as a part of pre-formation planning.
3. Next, you must appoint a registered agent who is authorized to receive legal papers on behalf of your LLC.
4. The fourth step involves filing the Articles of Organization with the California Secretary of State and paying the associated California LLC filing fee for the Articles of Organization.
5. While you are waiting for the California Secretary of State to process the Articles of Organization for the California limited liability company you are forming, the next step would be drafting the Operating Agreement, negotiating its terms with your fellow members (if any), and signing the Operating Agreement when the Operating Agreement terms are finalized.
6. The next step is filing a Statement of Information with the California Secretary of State and paying the associated filing fee.
7. Finally, obtaining a federal employer identification number (EIN) from the Internal Revenue Service once the Articles of Organization have been approved.

Extra Credit: Securities Exemption Filings to Get an LLC in California

Depending on the specific composition of the LLC — i.e., who the members are, their respective management rights, and their percentage ownership — two or more additional filings may be necessary.

First, a Form D may need to be filed with the U.S. Securities and Exchange Commission (SEC). This form is essentially a notice of an exempt offering of securities.

Second, a limited offering exemption notice might need to be filed with the California Department of Financial Protection & Innovation. This notice serves a similar function as the Form D filing, but its requirement and applicability are determined by California-specific laws and regulations rather than federal laws and regulations.

Third, if any member of the California LLC is domiciled outside of California, the securities law of each state other than California where a member is domiciled may require state securities filings in addition to California securities filings.

Details on Steps to Get an LLC in California

Choose a Name for Your California LLC

The first and most fundamental step in establishing your California LLC is selecting an appropriate name for your business entity. This is a critical task as it not only forms the identity of your LLC but also has significant legal implications.

The chosen name must be unique, not currently in use by another company in California, and adhere to certain naming conventions set by the California Secretary of State.

It is pivotal to ensure your chosen name is distinguishable from other existing businesses to avoid potential trademark infringements or legal disputes.

Name Requirements for a Limited Liability Company in California

In California, the name of your limited liability company must meet certain criteria.

First, it must include the words “Limited Liability Company” or one of its abbreviations (LLC or L.L.C.).

Second, it must be unique and not confusing with respect to any existing business entity registered with the California Secretary of State. This means it cannot be deceptively similar to the names of existing companies.

Third, it must not contain words or phrases that could confuse your California LLC with a government agency (such as FBI, Treasury, State Department, etc.).

Finally, certain words are restricted, such as “Bank,” “Trust,” “Trustee,” “Incorporated,” “Inc.,” “Corporation,” “Corp.,” and more. These words may require additional paperwork and legal entities involved in your California LLC.

Checking Name Availability for a California LLC

To ensure your chosen name meets these requirements, a name search can be conducted on the website of the California Secretary of State before filing your LLC formation documents.

To search for a business name on the website of the California Secretary of State, follow these steps, navigate to the website of the California Secretary of State, find and click on the “Business Search” link under the “Business Programs” section, and search by “Entity Names.

The search results will display a list of business entities that match or closely match the name you have entered. It is important to thoroughly review these results to ensure your chosen name is not too similar to an existing entity, however, keep in mind that names hyphens, spaces, numbers that are numerical versus written, and other boolean search syntax will change the search results, so do multiple searches.

Is There an Available Internet Domain Name that Makes Sense?

Once you have ascertained that your desired California LLC name is available via the entity database of the California Secretary of State, it is prudent to also check if there is a corresponding internet domain name available. This is crucial because having a website for your business is a must!

Trademark Database Search for California LLC Name

Not only do you need to be concerned about the search results from the California Secretary of State and the availability of a quality internet domain name, but you should also be cautious to avoid infringing upon the trademark rights of third parties. To ensure your California LLC name does not infringe on any existing trademarks, a search of the United States Patent and Trademark Office (USPTO) database is advised. To conduct a trademark search using the Trademark Electronic Search System (TESS) database of the USPTO, navigate to the USPTO website, select the “Trademarks” tab on the homepage, and click on “Searching Trademark” on the next page.

It is worth noting that trademarks may be registered at the federal level with the USPTO, but with each state as well. This article cannot go into the details of how to search the trademark databases of each state separately, but professional trademark search services are available to run trademark searches for a fee and allow you to review the search results.

Common Law Search for California LLC Name

In addition to the formal databases of the USPTO and state-level registrations, it is important to understand that not all trademarks are formally registered. These are referred to as “common law” trademarks and they are established through actual, legitimate use of the mark in commerce, rather than through registration.

Though these trademarks may not appear in official databases, they can still potentially pose a conflict with your chosen California LLC name. Therefore, it is highly recommended to conduct a comprehensive internet search for your proposed name. This involves checking industry directories, local business listings, and web search engines to identify any businesses operating with the same or a similar name, even if they have not formally registered their trademark.

California LLC Name Reservation

If you have selected a name for your California LLC but are not quite ready to file Articles of Organization, you can reserve your selected name with the California Secretary of State.

To obtain a name reservation with the California Secretary of State by mail, obtain the “Name Reservation Request Form” from the website of the California Secretary of State, typically found in the “Forms and Fees” section, fill out the form with your information and the LLC name(s) you wish to reserve, and file the form with a $10 per name fee by check or money order payable to “Secretary of State” by mailing to the address on the form.

Remember to double-check the spelling and punctuation of your business name on the form. Also, the approval process can take up to a week, so plan accordingly. If your requested name is available and meets the naming guidelines, it will be reserved for your use. If not, you will need to submit a new request with different name choices.

If you want a name reservation without the wait, you may also opt to reserve your chosen name online. The website of the California Secretary of State provides this feature, but you will need to create an account on the website. This online process offers an efficient alternative to mailing in your reservation request and waiting for a response.

Once your request is approved, your chosen name will be reserved for 60 days.

Doing Business As (DBA) or Trade Name

While the above has detailed the naming process for a California LLC, please note that the process of filing for a fictitious business name, also known as “Doing Business As” (DBA) or trade name, is not described here. This is not a required step in forming an LLC in California, and a fictitious business name filing is only necessary if the trade name under which your business will be conducted differs from the legal name of your California LLC. If you intend to operate under a different name, you will need to register your DBA after California LLC formation.

Choosing a Tax Classification for your California LLC

When forming a California LLC, you have the flexibility to choose your taxation method based on your business needs. There are four primary options available, namely disregarded for tax purposes, partnership taxation, S-Corp taxation, and C-Corp taxation.

These tax classifications each have their advantages and disadvantages, so it is important to carefully evaluate the specific needs and circumstances of your business before making your choice. It may be beneficial to consult with a tax advisor or accountant to help make the most informed decision, but an explanation of each tax classification follows.

California LLC as a Disregarded Entity

If your California LLC is a single-member LLC, you can opt to be taxed as a disregarded entity. This means your profits and losses will be reported on Schedule C to your personal Internal Revenue Service Form 1040 tax return and corresponding California Franchise Tax Board Form 540 tax return, similar to a sole proprietorship.

California LLC Taxed as a Partnership

If your California LLC has two or more members, you can choose to be taxed as a partnership. In this case, the limited liability company itself does not pay federal income taxes but does file an informational tax return on Internal Revenue Service Form 1065 and California Franchise Tax Board Form 565. The profits and losses are “passed through” the business to each member as reported on Schedule K1 to Internal Revenue Service Form 1065, which each member adds to their personal tax returns to pay taxes on their share of the income.

California LLC Taxed as an S-Corp

A California LLC can elect to be taxed as an S-Corporation to potentially reduce the self-employment taxes paid by the members. Under this taxation method, the profits and losses of the California limited liability company are reported on an informational return on Internal Revenue Service Form 1120S and California Franchise Tax Board Form 100S and are passed through to the personal income tax returns of the members on Schedule K1, similar to a partnership. The difference between partnership and S-Corp taxation, however, is that the members under S-Corp taxation pay themselves salaries and may receive distributions of additional profits, which can result in tax savings.

California LLC Taxed as a C-Corp

A California LLC can also choose to be taxed as a C-Corporation. While this method involves more complex tax filing requirements and can result in double taxation, it may be beneficial for larger companies that plan to reinvest profits back into the business or for business models that require investor funding.

Registered Agent Requirements to Get an LLC in California

A California registered agent is a designated individual or business entity responsible for receiving and managing legal documents on behalf of an LLC in California. This includes service of process (such as lawsuits), official government notifications, and correspondence from the California Secretary of State. The registered agent must have a physical street address in California (P.O. Boxes are not acceptable) and must be available during regular business hours.

Being the Registered Agent for Your Own California LLC

While an LLC member can act as the registered agent, many businesses opt to hire a professional registered agent service to ensure timely and accurate handling of important legal and tax documents. It may seem cost-effective and straightforward for a member of a California LLC to act as the registered agent, but there are several reasons why it might not be the best choice.

A registered agent needs to be available at the registered office during normal business hours, which may not work for professionals or busy entrepreneurs. The address of the registered agent is a matter of public record, and if you are working from home this will mean your home address will be public record. Finally, receiving service of process in front of your clients or employees could potentially harm your professional image, whereas hiring a professional registered agent service would ensure these situations are handled discreetly.

Hiring a Registered Agent Service

There is a variety of registered agent services available in California, encompassing various price points that cater to different budgetary needs. These services can be investigated with ease online. It is advisable to conduct thorough online research, read reviews, and compare services to identify a registered agent service that aligns with your specific needs and budget.

San Diego Corporate Law offers to provide registered agent services at no additional cost for each California LLC that we form. Importantly, that commitment does not end after the formation of the LLC, and we continue to offer our registered agent services free of charge for each LLC we form as long as that LLC maintains some minimal amount of ongoing business with us.

California LLC Articles of Organization

The Articles of Organization for California Limited Liability Companies officially establish those limited liability companies with the California Secretary of State as the founding document.

Filed under California Secretary of State Form LLC-1 in California, the document provides essential details about your LLC, such as the name of your company, the purpose of your business, information about your registered agent, and the management structure of your LLC. Filing the Articles of Organization is a mandatory step towards forming an LLC in California. This document lays the foundation for the legal and operational structure of your California LLC and sets the stage for the growth and success of your business.

The following is an explanation of how to fill out California Secretary of State Form LLC-1 for filing.

California LLC Articles of Organization Cover Sheet

The cover sheet included with the California Secretary of State Form LLC-1 template should be completed with your appropriate details. If you choose to file by mail, it is crucial to include this cover sheet with your submission to ensure the California Secretary of State has all the necessary information to return your approved Articles of Organization.

Articles of Organization Form LLC-1: Box 1

Box 1 of the Articles of Organization Form LLC-1 is where you record the chosen name of your California LLC, including the “limited liability company,” “LLC,” or “L.L.C.,” designation. The selected name must be unique and must adhere to the specific naming requirements established by the state (as discussed above). It is important to thoroughly check the availability of your chosen name and ensure that it adheres to the name requirements to prevent rejection of the Articles or Organization based on the name.

Articles of Organization Form LLC-1: Box 2a

In Box 2a of the Articles of Organization Form LLC-1, you are required to record the “Initial Street Address of Designated Office” in California. This must be a valid California address, as it serves as the official location for the LLC. It is important to note that a P.O. Box is not acceptable for this purpose. It is also important to understand that this address becomes a permanent public record.

Articles of Organization Form LLC-1: Box 2b

Box 2b of the Articles of Organization Form LLC-1 is designated for providing the “Initial Mailing Address” of the LLC, provided it is different from the address provided in Box 2a. This address does not necessarily have to be in California, and it can also be a P.O. Box. As with the address in Box 2a, it is important to understand that this address becomes a permanent public record.

Articles of Organization Form LLC-1: Box 3a

Box 3a of the Articles of Organization Form LLC-1 is where you will state the full legal name of your California registered agent, provided the agent is an individual and not a corporation. If your California registered agent is a corporation rather than an individual, you should leave boxes 3a and 3b blank and proceed to Box 3c.

Articles of Organization Form LLC-1: Box 3b

Box 3b of the Articles of Organization Form LLC-1 is dedicated to recording the street address of your California registered agent listed in Box 3a. It is important to note that a P.O. Box is not suitable for this purpose.

Articles of Organization Form LLC-1: Box 3c

Box 3c of the Articles of Organization Form LLC-1 is specifically designed for instances where your California registered agent is a corporation. In this box, you state the full legal name of the corporation that has agreed to serve as your registered agent.

If a corporation is to be appointed to act as a California registered agent for another company, it must file and maintain an up-to-date California Secretary of State Form 1505. This form, also known as the “Registered Corporate Agent for Service of Process Certificate,” must be filed with the California Secretary of State.

Before designating a corporation as your registered agent, it is crucial to verify that they have a current Form 1505 on file with the California Secretary of State. This verification step ensures legal compliance and eligibility of your chosen registered agent or registered agent service, which in turn ultimately safeguards the regulatory standing of your California LLC.

If the registered agent is an individual, this box should be left blank.

Articles of Organization Form LLC-1: Box 4

Box 4 of the Articles of Organization Form LLC-1 delineates your selection for the management structure of the California LLC. This box is essential as it specifies how the LLC will be governed.

The options provided allow for a selection between “One Manager,” “More than One Manager,” or “All LLC Members” and may only be changed through the filing of an amendment to the Articles of Organization.

Each of these management types has distinct implications for the operation of the LLC. A “One Manager” structure delegates decision-making power to a single individual and the existence of one or more members who do not participate in management, while a “More than One Manager” arrangement implies a multi-manager setup where decision-making power is shared but there are one or more members who do not participate in management. The option “all LLC member” denotes a member-managed structure where every member of the LLC participates in the decision-making process, which includes single-member LLCs managed by the sole member.

Articles of Organization Form LLC-1: Box 5

Box 5 of the Articles of Organization Form LLC-1 is “Free Parking” when it comes to the California LLC formation process. Why? The California Secretary of State has already done the heavy lifting for you regarding the purpose statement by providing the language for you.

Articles of Organization Form LLC-1: Box 6

Box 6 of the Articles of Organization Form LLC-1 is, save for Box 5, the most straightforward part of the California LLC formation process. This is where you will be required to sign and print your name to affirm under penalty of perjury that the information provided is true and correct and that you are authorized by California law to sign (so make sure that the person or corporation you designate to provide your California LLC with registered agent services has agreed to do so before signing!).

How to File Articles of Organization in Person with the California Secretary of State

After you have thoroughly completed the Form LLC-1, you can file it in person at the office of the California Secretary of State in Sacramento. Be prepared to provide the original completed form and a duplicate copy and bring checks or money orders payable to “Secretary of State” for the required filing fee of $70 and a separate $15 handling fee (do not include handling fees for filing made by mail or online). After your form and payment have been accepted, you will receive a filed-stamped copy of your document at a later date.

How to File Articles of Organization by Mail with the California Secretary of State

To file a California Secretary of State Form LLC-1 by mail, include a check or money order for the $70 filing fee made payable to “Secretary of State” and mail the form, payment, and cover sheet to Secretary of State, Business Entities, P.O. Box 944260, Sacramento, CA 94244-2600 or such other address as may be listed on the Form LLC-1 filing instructions.

Once your documents and payment are received and processed, a filed-stamped copy of your document will be mailed to the return address listed on the envelope, confirming that your LLC has been officially registered.

How to File Articles of Organization Online with the California Secretary of State

To file the California Secretary of State Form LLC-1 online, you will first need to visit the online business filing and search portal of the California Secretary of State. Once there, select “Form a New Business” and then choose “Limited Liability Company (LLC)”.

This will take you to a page where you can fill in the Form LLC-1 online. Make sure all the fields are completely and accurately filled out. At the end of the form, you will have the opportunity to review all the details before you are asked to pay the filing fee for the final submission of the filing. Payments may be made using a credit or debit card or with a pre-established account with the California Secretary of State.

Upon successful filing, a digital receipt will be generated, followed by a notice email sent to your designated email address when the Articles of Incorporation have been accepted by the California Secretary of State. Upon receipt of the notice of acceptance, you may log back into your account on the website of the California Secretary of State to download a filed-stamped copy of your Articles of Incorporation.

California Secretary of State Processing Times

The processing times for the Articles of Organization vary throughout the year, depending on the volume of requests received by the California Secretary of State. There may be peak times when the processing could take longer than expected.

To get a better sense of the potential timeline, it is advised to check the official website of the California Secretary of State. There, you will find an estimated time frame for processing your documentation.

California LLC Operating Agreement

An Operating Agreement is a legal document that outlines how the California LLC may operate and be governed.

Although having the Operating Agreement in writing is not a requirement under the California Corporations Code, it is a crucial internal document that sets clear guidelines on various operational aspects of the business, and it is advisable to have the Operating Agreement in writing to avoid potential disputes or misunderstandings among the members.

The Operating Agreement is customizable according to your specific needs, and if well written, will provide a comprehensive framework for the smooth functioning of your business.

While it is not possible in this writing to provide comprehensive coverage of every detail that should be addressed in your Operating Agreement, what follows are examples of the types of topics that might be addressed in your Operating Agreement.

Heading and Recitals

The “Heading and Recitals” section of an Operating Agreement typically contains the initial, formal details of the agreement.

The “Heading” often includes the name of the LLC and a mention that the document is an Operating Agreement.

The “Recitals” section typically includes details about how the LLC was formed under the laws of the State of California, a listing of all initial members of the LLC, and a purpose statement (which may be more detailed than the purpose in the Articles of Organization, if desired).

Definitions

The “Definitions” section of an Operating Agreement may be used to provide specific interpretations of key terms used throughout the agreement.

Formation and Organizational Matters

The “Formation and Organizational Matters” section of an Operating Agreement typically delineates the fundamental aspects of the LLC and its creation and operation. This section may include topics such as the formation history of the LLC, the specific California law under which the LLC will be governed, the designation of the primary location where business will be conducted, and for how long the LLC will operate unless sooner terminated.

Capital Contributions

The “Capital Contributions” section of an Operating Agreement typically details the initial contributions made by each member to the LLC. This section may include details regarding the amount or value of capital members have initially contributed, procedures for making additional contributions in the future, and rules regarding if, when, or how members may withdraw or receive a return of their capital contributions, if ever.

Members and Membership Rights

The “Members and Membership Rights” section of an Operating Agreement is crucial for establishing the rights, powers, and obligations of each member. This section typically includes details about the fractional interest of each member, whether interests are expressed as percentages or in units, how voting rights are determined, the duties and obligations of each member, and procedures for how new members may be admitted to the LLC.

Management and Rights of Control

The “Management and Rights of Control” section of a California LLC Operating Agreement is where the structure of the management, and who has the right to make decisions, is defined as well as when managers must consult members before acting in the management of the California LLC. This part typically includes stating whether the LLC is member-managed or manager-managed, procedures for how decisions are made, how meetings will be held, if the LLC will have officers (and the roles of officers), and the types of records the LLC must keep along with the designation of where such records will be stored.

Allocations of Profit and Loss

The “Allocations of Profit and Loss” section of an LLC Operating Agreement typically outlines the rules and procedures for how and when profits and losses will be distributed among members. This section also usually includes limitations on distributions, how non-cash distributions are valued, how losses are handled, and what happens to distributions if someone ceases to be a member or when a new person becomes a member.

Ownership Transfer Rights and Restrictions

The “Ownership Transfer Rights and Restrictions” section of an Operating Agreement typically details the terms and conditions related to the transfer of ownership interests in the California LLC. This section usually includes an explanation of the conditions under which an ownership interest may be transferred, the procedure to be followed for transferring ownership interests, the impact of distributions on voting rights, and other restrictions or limitations on the transfer of ownership interests.

Accounting, Recordkeeping, and Reporting Requirements

The “Accounting, Recordkeeping, and Reporting Requirements” section of an LLC Operating Agreement typically outlines the financial management procedures, recordkeeping practices, and reporting obligations the LLC must adhere to. This section usually includes establishing the fiscal year of the LLC, the accounting method to be followed (cash method versus accrual method of accounting), procedures for maintaining the books and records, the location where the books and records will be maintained, and the types of financial reports that will be generated and the frequency at which they will be generated and distributed to the members.

Terms of Dissolution and Winding Up

The “Terms of Dissolution and Winding Up” section of an LLC Operating Agreement typically outlines the procedures to be followed when the LLC is to be closed, or dissolved, and how its assets will be allocated. This section usually includes the specific circumstances or events that can trigger dissolution, procedures for winding up affairs, clear guidelines on how assets remaining after all debts, liabilities, obligations, and judgments are satisfied may be distributed to members, and provisions and requirements for the members to vote to approve dissolution.

Insurance and Indemnification Provisions

The “Insurance and Indemnification Provisions” section of a California LLC Operating Agreement typically covers the necessary insurance that the company should maintain, along with the provisions for indemnifying members and managers. This section usually includes details about the types of insurance the LLC is required to carry, minimum coverage amounts, indemnification provisions explaining circumstances under which the LLC will indemnify (reimburse) members or managers for liabilities incurred when acting for the LLC, and the limitations on such indemnification.

Investment Representations (If the LLC Has or Plans to Have Investors)

The “Investment Representations” section of an Operating Agreement, while only necessary if the LLC has or plans to have investors or if any membership interests issued are deemed to be securities under federal or state securities laws. This section serves to protect the LLC from potential legal and financial consequences and typically includes an acknowledgment that ownership interests may be deemed to be securities, that the securities have not been registered under federal or state securities laws based upon one or more exemptions from registration, representations and warranties of the holders of the securities regarding their understanding of investment risks, economic prospects, investment experience, and ability to bear risk, acknowledgment of disclosures, restrictions on transferability, and compliance with applicable laws and regulations.

Miscellaneous Provisions

The “Miscellaneous Provisions” section of an Operating Agreement usually includes a variety of general clauses that provide guidance for scenarios not specifically addressed in the preceding sections. This section may also include what is commonly referred to as “boilerplate” language, but even this more standard language should be individually tailored to meet the unique needs of your LLC.

Consent of Spouse or Registered Domestic Partner

The “Consent of Spouse or Registered Domestic Partner” is typically a separate document in which the spouse or registered domestic partner of a member of an LLC acknowledges and consents to the terms of the Operating Agreement.

This consent is particularly relevant in community property states, where, absent a prenuptial or postnuptial agreement to the contrary, a spouse may have a claim to 50% of the membership interest as community property.

In other jurisdictions, this consent can be instrumental in avoiding disputes, as it signifies the understanding and acceptance of the spouse or domestic partner that certain property rights might be waived or impacted by the provisions of the Operating Agreement.

It is advisable to include this consent as an exhibit to every Operating Agreement to ensure clarity of ownership and to avoid potential future disputes or confusion regarding the rights of a spouse or registered domestic partner in the LLC.

California LLC Statement of Information

The “Statement of Information” is a critical document that every California LLC is required to file with the California Secretary of State. This document, also known as California Secretary of State Form LLC-12, provides necessary details about the LLC, including the business address, the name and address of the registered agent, and the names and addresses of the managers or members.

This form is required to be filed within 90 days of the formation of a California LLC and must be updated every two years thereafter or whenever significant changes to the information reported may occur.

The purpose of the Statement of Information is to keep the state updated with the most current information about the California LLC and also may be used to change the address of the LLC with the California Secretary of State. Failure to submit a Statement of Information in a timely manner can result in penalties and potentially the suspension or involuntary dissolution of the LLC.

The following is an explanation of exactly how to fill out California Secretary of State Form LLC-12 for filing.

California LLC Statement of Information Cover Sheet

The cover sheet included with the California Secretary of State Form LLC-12 allows the office of the California Secretary of State to efficiently match the cover sheet and the filed Statement of Information to the correct LLC record and provides a clear return address.

Statement of Information Form LLC-12: Box 1

Box 1 of the California Secretary of State Form LLC-12 is dedicated to providing the name of the California Limited Liability Company (LLC) for which the Statement of Information is being filed. It is crucial to ensure that the name you input here matches exactly with the official name of your LLC as registered with the California Secretary of State.

Statement of Information Form LLC-12: Box 2

In Box 2 of Form LLC-12, the California LLC must provide its entity number. The “Secretary of State Entity Number” is a unique identifier assigned by the California Secretary of State to each Limited Liability Company (LLC) registered in the state.

The number is 12 digits long and starts with the numerical expression of the year in which the Articles of Organization were approved by the California Secretary of State. This number may be found printed on the face of your filed-stamped copy of the Articles of Organization and will be displayed if you search for your LLC on the website of the California Secretary of State.

Statement of Information Form LLC-12: Box 3

Box 3 of the California Statement of Information Form LLC-12 requires an LLC to specify the state, foreign country, or place of organization if outside of California. For a California LLC, this may be left blank, but we generally advise specifying “California” in this field for the avoidance of doubt.

Statement of Information for California Limited Liability Company Form LLC-12: Box 4a — Street Address of Principal Office – Do not list a P.O. Box

In Box 4a of the California Secretary of State Form LLC-12, the Limited Liability Company (LLC) must provide the street address of its Principal Office.

This address must be a physical location and should include the street number and name, the city, and the state. Note that a P.O. Box is not acceptable in this field. Any changes to this address must be reported promptly to the office of the Secretary of State via an updated Statement of Information.

It is important to understand that this address becomes a permanent public record.

Statement of Information Form LLC-12: Box 4b

Box 4b of the California Secretary of State Form LLC-12 is used for indicating the mailing address of the LLC if it differs from the street address provided in Box 4a.

This address may be a P.O. Box and it is where the LLC would like to receive mail from the office of the Secretary of State.

It is important to understand that this address becomes a permanent public record.

Statement of Information Form LLC-12: Box 4c

Box 4c on the California Secretary of State Form LLC-12 is specifically for LLCs to provide the street address of their California-based office, but only if the principal office address provided in Box 4a is not in California.

If the primary office of the LLC is located outside of California, this field is where you should provide the physical location of your California office. It is important to note that a P.O. Box is not acceptable in this field, as the address in Box 4c must be a physical location. If the principal office address provided in Box 4a is within California, then Box 4c may be left blank.

It is important to understand that this address becomes a permanent public record.

Statement of Information Form LLC-12: Box 5a

In Box 5a of the California Secretary of State Form LLC-12, the LLC is required to provide the full name of each member (if all members manage) or the full name of each manager (if manager-managed) who are natural persons and not business entities or trusts. More members or managers may be listed on a supplemental sheet if they do not fit in the space provided. Do not fill out Box 5a if you are using Box 5b.

Statement of Information Form LLC-12: Box 5b

Box 5b of the California Secretary of State Form LLC-12 is specifically for listing all members or managers of the Limited Liability Company (LLC) who are business entities or trusts, rather than natural persons. All business entities or trusts acting as members or managers must be listed here, with their full legal names. If the space provided is insufficient, additional members or managers may be listed on a supplemental sheet. Do not use Box 5b if you are using Box 5a.

Statement of Information Form LLC-12: Box 5c

Box 5c of the California Secretary of State Form LLC-12 is designated for furnishing the addresses of each member or manager that has been listed in Box 5a and/or 5b.

If the space provided in Box 5c is insufficient to list all addresses, the additional addresses may be listed on the supplemental sheet used to list the additional members or managers listed in Box 5a and/or 5b.

It is important to understand that this address becomes a permanent public record.

Statement of Information Form LLC-12: Box 6a

Box 6a of the California Secretary of State Form LLC-12 requires disclosure of the name of its California registered agent, given that this agent is not a corporation. If the registered agent is a corporation, use Box 6c instead of Box 6a. Note that the registered agent must agree to take on this role.

Statement of Information Form LLC-12: Box 6b

If Box 6a is used in the California Secretary of State Form LLC-12, Box 6b is the designated section to provide the street address for the California registered agent. This field requires a physical location, meaning a P.O. Box will not be accepted.

It is important to understand that this address becomes a permanent public record.

Statement of Information Form LLC-12: Box 6c

Box 6c of the California Secretary of State Form LLC-12 is for listing the registered agent of the LLC when that registered agent is a corporation. In such cases, the full legal name of the corporate agent should be listed in Box 6c. It is important to note that if Box 6c is used to list a corporate registered agent, Boxes 6a and 6b should be left blank.

Statement of Information Form LLC-12: Box 7

In Box 7 of the California Secretary of State Form LLC-12, the LLC is required to provide a brief description of the type of business or services it conducts or provides. This is an overview of the primary purpose or activities of the company.

It is required to accurately describe the business of the LLC, but there is no need to be overly specific, and there is no need to list every single line of business in which the LLC might be involved, as Box 7 does not act as a limitation on the purpose of the LLC.

Descriptions could be general terms like “retail sales,” “real estate,” or “consulting services,” but avoid using broad and unspecific terms such as “any lawful activity.”

Statement of Information Form LLC-12: Box 8a

Box 8a of the California Secretary of State Form LLC-12 is used to provide the name and address of the Chief Executive Officer (CEO) if the LLC has elected one. Should a new CEO be elected, it is important to file a new Statement of Information to reflect the identity of the new CEO.

Statement of Information Form LLC-12: Box 8b

Box 8b on the California Secretary of State Form LLC-12 is used for providing the current address of the CEO if the LLC has appointed or elected one. However, if there is no CEO, as indicated by leaving Box 8a blank, then Box 8b should also be left blank.

It is important to understand that this address becomes a permanent public record.

Statement of Information Form LLC-12: Box 9

Box 9 of the California Secretary of State Form LLC-12 is a recent addition to the form, introduced to meet new reporting requirements. This box is specifically designated for Labor Judgment History.

The complete call of the questions reads, “Does a Manager or Member, as further defined by California Corporations Code Section 17702.09(a)(8), have an outstanding final judgment issued by the Division of Labor Standards Enforcement or a court of law, for which no appeal is pending, for the violation of any wage order of provision of the Labor Code?”

Indicate “yes” or “no” in the space provided, keeping in mind that a California Statement of Information is signed under penalty of perjury, so be sure of your answer every time you sign and submit a Statement of Information.

Statement of Information Form LLC-12: Box 10

Box 10 of the California Secretary of State Form LLC-12 provides an optional feature for LLCs to opt-in for email notifications. Instead of relying on traditional mail service, the office of the Secretary of State can send important reminders, notices, and updates about the LLC directly to the email address provided in this section.

Statement of Information Form LLC-12: Date, Print, Title, and Signature

Once all of the required information has been accurately filled in on the California Secretary of State Form LLC-12, you are nearly finished. The final step is to fill in the Date, Print Name, Title, and Signature sections at the end of the form. Once these steps are completed, your California Secretary of State Form LLC-12 is ready for submission.

How to File Statement of Information in Person with the California Secretary of State

Filing a Statement of Information in person with the California Secretary of State can be done at the public counter in Sacramento. Submit the completed Statement of Information together with a check or money order payable to “Secretary of State” in person to submit the form at the public counter, and your filing will be processed and you will receive a receipt.

How to File Statement of Information by Mail with the California Secretary of State

Filing a Statement of Information by mail with the California Secretary of State involves a few straightforward steps. After completing Form LLC-12, send the cover letter together with a check or money order for $20 payable to “Secretary of State” along with the Form LLC-12 to the office of the California Secretary of State at Secretary of State, Statement of Information Unit, P.O. Box 944260, Sacramento, CA 94244-2600 or other such address as may be specified in the instructions together with a check or money order for $20 payable to “Secretary of State”.

Note that you will not receive a return copy, so periodically search your LLC and review the documents on file through the website of the California Secretary of State to ensure your filing was received.

How to File Statement of Information Online with the California Secretary of State

Filing a Statement of Information online with the California Secretary of State is a convenient and time-saving procedure.

Visit the California website of the California Secretary of State and navigate to the “Online Services” tab. Within this section, you will find the “eFile Statement of Information” link which will lead to the start of the online filing process. Enter your entity number or LLC name, select your LLC from the search results, and follow the prompts to provide the information required for the online Form LLC-12 filing. When all sections are completely filled out, you will be directed to the payment page for the $20 filing fee, which accepts credit or debit card payments.

Once payment is made, you will receive an email confirmation of your submission, and you should save and print this confirmation for your records. The processing time for online submissions is typically faster than in-person or mail submissions, and online filing provides you with instant confirmation of your submission.

Apply for an EIN

Applying for an Employer Identification Number (EIN) is a necessary step for most businesses in the United States. There are several methods you can use to apply for an EIN: online, by fax, or by mail.

How to Apply for an EIN Online

The most convenient and fastest method to obtain an EIN is through the Internal Revenue Service EIN Assistant online. The online application process is available for businesses located in the U.S. or its territories. You can apply for an EIN online if your principal business is located in the U.S. or U.S. Territories. The person applying online must have a valid Taxpayer Identification Number (SSN, ITIN, EIN). The application must be completed in one session; there is no ability to save and return to it. You will receive your EIN immediately upon completion if you opt to receive your EIN letter electronically.

How to Apply for an EIN by Fax

You can also apply for an EIN by fax. Complete Form SS-4 and fax it to the appropriate fax number. If you provide your fax number, a return fax will be sent within four (4) business days.

How to Apply for an EIN by Mail

To apply for an EIN by mail, submit Form SS-4 to the appropriate mailing address. This method is slower, as the processing time for the EIN application can take up to four weeks.

Extra Credit: Trusted Advisors, a Business Bank Account, and Business Licenses

Find Trusted Advisors Your LLC in California

Seeking the counsel of an experienced corporate law firm, such as the attorneys at San Diego Corporate Law, provides numerous advantages. Corporate attorneys can provide invaluable assistance in navigating complex business laws and regulations, reducing the risk of legal complications. This can save your business significant amounts of time and money in the long run. Furthermore, they can assist in drafting contracts and agreements, ensuring they are legally sound and protect your business interests.

Working with a Certified Public Accountant (CPA) can provide substantial advantages to your LLC, especially in areas of tax planning and accounting. You will certainly need assistance to pay taxes for your California LLC, including sales tax (both sales tax collected from customers and sales taxes on purchases made by the California LLC) and annual franchise tax payments (see this article about the California annual franchise tax and LLC fees), but smart business owners know that accountants are needed long before it is time to pay taxes. A CPA is a trusted financial expert with rigorous training and a comprehensive understanding of tax laws and financial regulations required to pay taxes, but the expertise of a CPA ensures that the financial and tax affairs of your LLC are in order, allowing you to concentrate on running and growing your business.

A reputable insurance broker can assist you with their extensive knowledge of insurance products and can guide you in identifying the types and levels of insurance coverage that are most appropriate for your LLC. This includes general liability insurance, professional liability insurance, workers’ compensation insurance, and more. The broker will assist in navigating the complexities of insurance policies, ensuring that your business is adequately protected against unexpected risks and liabilities. Remember, having the right insurance coverage is not just a prudent business decision, but it also provides peace of mind as you focus on growing your business.

Establishing Banking Relationships for Your LLC in California

Establishing a separate business bank account for your LLC is a critical step in maintaining your business’s legal structure. A business bank account safeguards your personal assets from business liabilities and simplifies accounting and tax preparation.

In addition to a business bank account, you may also consider opening a business credit card after establishing your business bank account to build a credit history for your legal entity.

Business Licenses and Permits for Your LLC in California

Depending on the nature and location of your business, your California LLC may require one or more business licenses and one or more permits from different governmental levels.

Each jurisdiction in California, city, county, and the state itself, may have its own business licenses and permits, and you may be required to have multiple business licenses and permits in various jurisdictions. Failing to obtain necessary business licenses and permits can result in substantial fines and penalties. Therefore, it is crucial to thoroughly research and obtain all relevant and required business licenses and permits in every jurisdiction where your LLC operates to ensure legal compliance and smooth business operations.

Your New California LLC!

If you have followed all the steps above, you have navigated through the detailed California LLC formation process and have now officially established your presence as a business entity. This is a significant accomplishment that sets the foundation for your business endeavors in California.

If, however, the above information about how to get an LLC in California and the California LLC formation process seems complex, the corporate attorneys at San Diego Corporate Law can help with the formation of your business entity. Contact us to schedule an initial consultation to discuss further how we can help you form a California LLC or other legal entity for your business.