How to Form a LLC in California (CA)
Articles of Organization
Limited liability companies are a relatively new form of business entity for the state of California. Formation and operation of such entities in California was authorized in 1994 through the Beverly-Killea Limited Liability Company Act. At this time professional limited liability companies are prohibited from forming or registering in California. The majority of limited liability company filings utilize forms prescribed by the Secretary of State.
In order to form a limited liability company, one or more persons shall execute and file articles of organization with, and on a form prescribed by, the Secretary of State and, either before or after the filing of articles of organization, the members shall have entered into an operating agreement. The person or persons who execute and file the articles of organization may, but need not, be members of the limited liability company.
Corporate Name
The name of each limited liability company:
a) shall contain either the words “limited liability company” or the abbreviation “LLC” or “L.L.C.” as the last words in the name of the limited liability company. The words “limited” and “company” may be abbreviated to “Ltd.” and “Co.,” respectively.
(b) May contain the name of one or more members.
(c) Shall not be a name that the Secretary of State determines is likely to mislead the public and shall not be the same as, or resemble so closely as to tend to deceive, (1) the name of any limited liability company that has filed articles of organization , the name of any foreign limited liability company registered to do business in this state or any name that is under reservation for another domestic limited liability company or foreign limited liability company.
(d) Shall not contain the words “bank,” “trust,” “trustee,” “incorporated,” “inc.,” “corporation,” or “corp.,” and shall not contain the words “insurer” or “insurance company” or any other words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks.
(e) The use by a limited liability company or a foreign limited liability company of a name in violation of this section may be enjoined, notwithstanding the filing of its articles of organization or its registration with the Secretary of State.
Purpose
The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the Beverly-Killea Limited Liability Company Act.
Pursuant to Section 17375, a domestic limited liability company may not render professional services, as defined in Sections 13401(a) and 13401.3. Professional services are defined as any type of professional services that may be lawfully rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, the Osteopathic Act or the Yacht and Ship Brokers Act. If your business is required to be licensed, certified or registered, it is recommended that you contact the appropriate licensing authority before filing with the Secretary of State’s office in order to determine whether your services are considered professional.
Members Information
Minimum Number – One or more
Residence Requirements – No provision.
Age Requirements – A natural person, age 18 years or older.
Members are not required to be listed in the articles of organization
Another Corporation or LLC can be a member or a Limited Liability Company.
Management
Members can manage the LLC by themselves or through a Manager. If the limited liability company is to be managed by one or more managers, the articles of organization may, but need not, include a statement that the limited liability company is to be a manager-managed company.
Unless otherwise provided in its articles of organization or the operating agreement, the limited liability company shall be a member-managed company.
Corporate Records
Corporate records must be kept; however, they are not required to be stored at a specific location.
Taxes and Fees
Registration of a limited liability company with the California Secretary of State will obligate a limited liability company that is not taxed as a corporation to pay to the Franchise Tax Board an annual minimum tax of $800.00 and a fee based on the annual total income of the entity. The tax and fee are required to be paid for the taxable year of registration and each taxable year, or part thereof, until a Certificate of Cancellation is filed with the California Secretary of State.
For further information, please contact the Franchise Tax Board at: (800) 852-5711
More Information:
California Corporations Code, Section 17000 et seq.
Cost of Incorporating in California
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