1. Choose a business name for the LLC and check for availability.
- Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.
- California law requires an LLC name to contain either the words "limited liability company" or the abbreviation "LLC" or "L.L.C." as the last words in the name. The words "limited" and "company" may be abbreviated to "Ltd." and "Co." Additionally, your business name may not be the same as, or deceptively similar to, that of any other California LLC or any foreign LLC registered to do business in the state.
- Although you are not required to do so, consider registering your business name as a federal and/or state trademark.
2. Prepare and file articles of organization with the Secretary of State.
- The filing fee is $70. The Secretary of State's website has a simple, fill-in-the-blank form for drafting your articles of organization. For general information on articles of organization, see the Articles of Organization page.
3. Negotiate and execute an operating agreement.
- California requires an operating agreement in order to form an LLC. See Cal. Corp. Code. § 17050(a). There is no set criteria for the content of an operating agreement, but it typically includes topics such as how meetings are conducted, how the company will be managed, what capital contributions are required from each member, and how profits and losses will be allocated. The operating agreement does not need to be filed with the state. Please see the Operating Agreement section for details.
4. File a Statement of Information with the Secretary of State.
- Owners of a newly formed LLC need to file a Statement of Information with the Secretary of State within 90 days of filing the articles of organization. The filing fee is $20.
5. Obtain any required local licenses.
- See the general section on forming a LLC for details.
6. Determine what tax and other regulatory obligations the LLC has, and take care of any necessary registrations.
- Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
- If you will be paying at least $100 to an employee or employees in a quarter (this does not include owners unless you have elected to have your LLC taxed as a corporation), you are subject to employment taxes and must register for a California employer account number within 15 days of paying that $100. You can register for employment taxes and get an account number online using the Employment Development Department's website. You must pay these taxes quarterly. For more information on being an employer, including tax information, see the California Employer's Guide.
- Whenever you hire an employee in California, you must inform both the IRS and the State of California. The IRS details all of the necessary steps, including verifying work eligibility and withholding allowances certificates, on its page entitled Hiring Employees. You can find information for the state level in the California Employer's Guide and on the website for California's New Hire Reporting Program.
- If you have any employees in California, you must carry workers' compensation insurance. The Division of Workers' Compensation administers this program.
- There may be other informational returns that you will have to file annually or semi-annually with either the IRS or the state. For more information, check out the IRS Guide To Information Returns and California Franchise Tax Board's Information Returns page.
- California imposes an $800 minimum franchise tax on LLCs doing business in the state. This minimum tax is separate from any income, self-employment, or payroll tax. For details, see the California Franchise Tax Board's Limited Liability Company (LLC) page. For many, this $800 minimum tax could be a significant impediment to forming an LLC in California, especially if you have little or no expected income from your online publishing activities.
7. Open a bank account for your business.
- It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your business. You will probably need a Tax ID number (EIN), a copy of the articles of organization, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.
Other Notable Requirements for Maintaining an LLC in California
- California LLCs must file a Statement of Information with the Secretary of State every two years after the original Statement of Information is filed (see above). The filing fee is $20.
- California requires certain documents to be kept at the LLC's principal place of business. A list of the required documents is located in Cal. Corp. Code § 17058.