Your first consideration when choosing a name for your LLC is that it be unique from any other business in the state of California. The state also requires that the company name in no way be misleading to the public. You can quickly and easily check your company’s potential name options at the California Secretary of State website business name database. For a $10 fee through said website, you can also reserve a company name for 60 days. To do so, you’ll need to submit a Name Reservation Request form. You can also find additional important information regarding name availability online or in a downloadable publication called Business Entity: Name Regulations & Additional Statutory Requirements and Restrictions.
In order to comply with California state law, your company’s name must contain some form of the term “Limited Liability Company.” This can appear in several different formats from the whole phrase written to several appropriate abbreviations. “Limited Company,” “L.L.C.,” “LLC,” “L.C.,” and “LC” are all considered appropriate ways to adorn your moniker. You can also choose to use abbreviations for the words “Limited” and “Company” as “Ltd.” or “Co.” respectively. The words “bank,” “trust,” “trustee,” “incorporated,” “inc.,” “corporation,” “corp.,” “insurer,” “insurance company,” or any wording that suggests the company is an insurance business are not allowed in California without providing a lengthy list of supporting documents.
The state of California requires that any LLC have a registered agent for service of process. This means your LLC must have an entity that agrees to physically accept any legal papers on the company’s behalf should it be sued. This entity does not have to be an individual person but cannot be the LLC itself, though affiliation is allowed. The registered agent can be any resident of the state of California or a business entity authorized to do business in California so long as the agent has a physical street address (not a P.O. box) within the state.
In order to be a corporate agent, one must have previously filed a California Corporations Code Section 1505 Certificate with the Secretary of State’s office. Additionally, should you require one, the Secretary of State maintains a list of private service companies who are available as acting agents. This provides you with potential options but does not prevent you from finding your own agent for service of process.
California LLCs are required to have an operating agreement in order to set the guidelines for running the company and outlining its ownership. This agreement can be oral or written. If it is written, then the agreement and all amendments to it must be kept within the company’s records.
An IRS Employer Identification Number (EIN) is required for your LLC unless it is a single-member LLC with no employees. Obtaining an EIN is as easy as completing the application on the IRS website.
It’s possible your company will need to register with the appropriate California taxing authority. Whether or not your company needs to follow this step will depend on the exact types of taxes it will be collecting and/or has been collecting from the state. If your LLC will be collecting sales tax, you’ll have to register with the California State Board of Equalization (BOE). This can be done online or in person at a BOE field office. For employer taxes, register with the California Employment Development Department (EDD).
Any LLC in California must pay an annual minimum franchise tax of $800 to the California Franchise Tax Board. However, LLCs with total annual income over a certain threshold are required to pay additional fees based on income. If your LLC elects to be taxed as a corporation, you’ll have to comply with California corporate tax law. All LLCs in California must file Form 568 (Limited Liability Company Return of Income) by April 15 after the close of the LLC’s taxable year. For details and tax forms, see the California Franchise Tax Board website.
If your company is a foreign LLC, also referred to as an out-of-state LLC, wanting to do business in the state of California, you’ll need to follow all the steps outlined above.
File the Application to Register a Foreign LLC (Form LLC-5) instead of Form LLC-1. Additionally, you must provide a Certificate of Good Standing from the agency where your LLC was originally formed.
You can still get an EIN even if you’re not a US citizen or otherwise don’t have a social security number. Download and complete IRS Form SS-4 and be sure to say "none" on section 7b. From there you’ll need to apply by phone at 267-941-1099 (not a toll-free number, so consider using a web-calling service) from 6 am to 11 pm (Eastern time), Monday through Friday, to obtain an EIN.
California law states that an LLC cannot be formed to provide any service that requires a professional state license.
Check with the California Department of Consumer Affairs to confirm that any services your LLC would be providing do not fall into this category. If it does, you have the option to form a Limited Liability Partnership (LLP). Details can be found at the California Franchise Tax website.
The location and type of your business can potentially require additional federal, state-authorized, or local business licenses. Visiting the California Office of Business and Economic Development website will help ensure that you have secured all the appropriate licensing, while this page from the U.S. Small Business Administration can help you with federal licensing. You can also hire a professional service to do this for you.