Steps to Creating an LLC in California
A limited liability company (LLC) is an effective, efficient legal structure for many different types of businesses. If you are considering forming an LLC in California, it is crucial that you understand the steps that you need to take and your ongoing/future tax obligations. In this article, our San Diego business lawyer highlights the steps to creating an LLC in California and explains the key things to understand about how taxes work for these types of companies.
Five Key Steps to Build a Successful Limited Liability Company in San Diego, California
The current business environment is hyper-competitive. Business owners and entrepreneurs need to be sure that their company is in the best position to succeed—and that includes ensuring that the proper legal structure is in place. Here are five key steps to building an LLC in Southern California:
- Craft a Business Plan: Building a thriving company takes planning. LLCs are no exception. You and your business partners need a comprehensive plan. Make sure that an LLC is truly the best structure for your needs and your goals.
- Select a Name for the LLC: You must choose a name for your limited liability company. The name must be sufficiently unique. California regulators could reject an LLC name that is deemed too similar to an existing company.
- File Articles of Incorporation: Using Form LLC-1, you should file your official articles of incorporation with California’s Secretary of State. There is a $70 filing fee.
- Choose Your Agent: In California, an LLC must have a registered agent who is located in the state. You or a business partner could act as the registered agent. Alternatively, you could designate another party.
- Prepare Your Operating Agreement: California does not require LLCs to adopt an operating agreement. That being said, it is almost always a best practice to do so—particularly if multiple parties have ownership interests in the limited liability company.
What to Know About LLCs and Business Taxes in California
As an owner and operator of an LLC, it is imperative that you are in full compliance with all federal and tax regulations. LLCs are taxed as pass-through entities. In effect, this means that owners pay taxes largely through their individual return. However, there are some more requirements in California. As explained by the State of California Franchise Tax Board, every limited liability company that is doing business within California “must pay an annual tax of $800.” Further, LLCs with annual net income over $250,000 are subject to an additional fee based on their earnings.
Get Help From a Business Law Attorney in San Diego and La Jolla
At The Law Office of Kris Mukherji, our California commercial law attorney has the professional skills and legal expertise to help entrepreneurs set up LLCs. If you have questions about creating an LLC or the taxation of an LLC, we are more than ready to help. Call us now or send us a message for your strictly confidential consultation. From our office in La Jolla, we serve communities throughout the area, including in San Diego, El Cajon, La Mesa, National City, Santee, and Chula Vista.