What are the requirements to set-up an LLC in California?

The American West Coast offers any person willing to bathe in its beauty an endless array of great beaches, immaculate weather, and above all an opportunity to make a small fortune. Small businesses in California have been booming over the last few years, and in late 2018, around 13% of all American small businesses could be found in the Golden State. Starting a business isn’t easy, and being a business owner isn’t without any challenges too.

So where do you start? There’s a horde of things to consider before you can open your doors, after deciding on your business idea, and how you’ll be rolling it out to become profitable, you might want to also think about the type of business structure your business will be built on.

What’s the best type of business structure to work within California?

California doesn’t only offer great natural resources and a strong buying market, but in-time the state has built a reputation for hosting some very successful businesses. Depending on what your business will offer, starting a Limited Liability Company or LLC in California gives owners more liability protection and desirable revenue growth.

Any business structure will reveal itself as being more appealing than the other, but an LLC has become the most sought after business structure in California. With better legal support, some attractive taxation benefits, and multiple ways of formation, starting your LLC can be easier than anticipated.

What is an LLC in brief?

To simplify the many layers of legal and business jargon, an LLC is a form of business that enables personal asset protection for the owner(s). This is done through the establishment of the “Corporate Veil”, meaning personal assets will be protected in the event of the business failing, lawsuits, or any other legal actions. It’s the separation of personal and professional goods, giving LLC owners more business flexibility.

What are the requirements to set-up an LLC?

We’ve made the process a bit shorter, but if you want to set up an LLC in California, don’t hesitate to read our extensive step-by-step guide online.

Step One. Naming your LLC is a pretty standard requirement, and the state of California has some regulations around the creation of your LLC name. Consider being authentic, and researching whether or not your desired name isn’t already in use. Fictitious names are allowed in many cases, with limited restrictions.

Step Two.  The state requires every LLC owner(s) to appoint an agent for the Service of Process. This might sound intimidating, but your agent or registered agent will become the responsible entity for receiving all legal business documents. You can either act as your registered agent, with some requirements, or hire a professional.

Step Three. Filing your Articles of Organization is simple, costs $70 and you can opt to do it yourself or to find a formation service provider. The filing process can be posted, or you can do it in person with the Secretary of State.

Step Four. Knowing who will be doing what and defining each member’s role will be, is known as an operating agreement. You need to create an operating agreement, which can either be done on your own or with the help of formation services. The filing is relatively easy, and it’s very important to establish this agreement in the early stages of your business.

Step Five. You need to obtain an Employer Identification Number (EIN) as this will help you to hire new staff members, file taxes, and open a business bank account. Registration is free and can be done online with the IRS.

Californian business regulations aren’t very restrictive, as it offers many business owners an attractive market, with better taxation in the growing phases of their business. LLC formation is easy, and limited requirements propose an attractive option for startup and small businesses.

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