What is an LLC?
A limited liability company (LLC) is a business structure in the United States whereby the owners are not personally liable for the company's debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.
How is an LLC more flexible than a corporation?
An LLC can be a single-owner business, a partnership, or a multi-member structure. There is no limit to the number of members in an LLC
What are the forms specific to California LLCs?
You need to know some basic forms as an LLC business owner. These include forms necessary when establishing an LLC with the state to maintain and dissolve it. The following is a list of these forms if you operate your business in California.
- Name reservation request form
- Form LLC-1 and LLC-5
- Business Entities Records Request Form
- Articles of Dissolution
- Forms filed to other authorities
What is the Name reservation request form?
One necessary step in forming an LLC is obtaining a name for it. The name needs to meet the California Secretary of State's requirements. Per California regulation, the name must be distinct from the already established LLCs registered in the state. The name must also not be misleading and indicate a different business purpose than that listed in your articles of organization. Your company's name cannot include words such as bank, trust, insurer, or insurance company. Finally, you must have the phrase "limited liability company" or one of its abbreviations.
In California, you can reserve a business name for 60 days. You can submit the bane reservation online, by mail, or in person. The secretary of state office will respond the quickest to online requests. You may submit a name reservation at https://bizfileonline.sos.ca.gov. For mail filings, ensure to include the $10 fee as a check payable to the secretary of state. Submit the form to:
Via mail: to Secretary of State, Name Availability Unit, 1500 11th Street, 3rd Floor, Sacramento, CA 95814.
The pdf form may be found here:
What are Forms LLC-1 and LLC-5?
To form an LLC in California, you must file articles of organization with the secretary of state. This is either form LLC-1 (for domestic companies) or form LLC-5 (for foreign companies). Some of the general steps for filing Form LLC-1 are listed in detail below.
Step 1: This form is a simple one-page form that you can find here: https://bpd.cdn.sos.ca.gov/llc/forms/llc-1.pdf
Complete this form as the initial step. You need to provide the following information:
- LLC name
- LLC purpose
- Whether the LLC will be manager or member-managed.
- LLC address
- Name and address of your registered agent
Step 2: You need to submit a filing fee of $70 if you do not need a certified copy of the articles of organization. However, it is recommended that you keep a copy for your records. The filing fee to receive a copy is $75. The check needs to be made payable to the secretary of state.
Step 3: Complete and submit the statement of information (see below for additional details) within 90 days after filing your articles of organization or your application will be canceled, and you will lose your non-refundable fee.
Step 4: Complete and submit the operating agreement with every company member's signatures.
Step 5: In California, new companies must pay an $800 minimum franchise tax fee to the California Franchise Tax Board. This fee must be paid within four months after the beginning of the tax year by the 15th of the month.
What is the Statement of Information (Form LLC-12)?
As mentioned previously, all newly formed LLCs must file Form LLC-12, an initial statement of information. This must be done within 90 days of the LLC's establishment and then every two years. If no information was revised since the last filing, you can use form LLC-12NC instead. These forms are submitted to the secretary of state's office with a filing fee of $20. You must include the following information:
- LLC name
- LLC filing number
- Name and address of your registered agent
- The principal address of the LLC
- The name and addresses of all of the LLC's managers and members
- LLCs email address
- LLC purpose/ business activity
What is the business Entities Records Request Form?
At times, you may need to request for a certificate of status. This certificate confirms that your LLC is in good standing with the state. It states that your business has filed all the necessary paperwork and paid all the fees to operate legally in the state. Some instances where you may need to request for this certificate include to request a bank loan, registering your LLC in another state, obtaining and renewing business permits or licenses.
The business entities' request form can be submitted online, in person, or dropped off. You must include the nonrefundable $10 handling fee as a check or money order payable to the Secretary of State. For faster service, you can order the certificate online through this link: https://bizfileonline.sos.ca.gov/
Via mail: Secretary of State, BE Certification and Records: P.O. Box 944260, Sacramento, CA 94244-2600
In-person: Secretary of State, 1500 11th Street, 3rd floor, Room 380, Sacramento, CA 95814
What are the Articles of Dissolution?
Suppose you no longer wish to continue your business in California. In that case, you should close your company's tax accounts and then file the articles of dissolution with the secretary of state. Filing this document prevents you from accumulating taxes and legal problems incurred if you were not to submit this.
You need to follow specific steps to end your organization correctly. See below.
- Hold a vote with the members of your LLC.
- Advice federal and state tax agencies of the LLC's dissolution
- Provide notice to creditors and claimants
- Close bank and open accounts, credit lines, and cancel any business licenses
What are some other California LLC forms?
The following forms are other possible paperwork you may need to file for your LLC. Unlike the forms listed above, you send these documents to places other than the California Secretary of State.
IRS forms: File for an employer identification number (EIN). This is needed to file your federal business taxes. This is obtained for free through the IRS website. LLCs with greater than one member must also file the Partnership Return Form (Form 1065) to report their incomes to the IRS annually. The links for these forms are listed below.
- EIN request: https://irs.ein-federal-tax-id.com/IRS/limited-liability-company/
- Form 1065: https://www.ftb.ca.gov/forms/2020/2020-565.pdf
- Additional instructions: https://www.ftb.ca.gov/forms/2021/2021-565-booklet.html
California Franchise Tax: LLCs in California must register with the California Franchise Tax Board as mentioned above. All LLCs need to file Form 568 in California. Form 568 is the limited liability company return of income form. If you have employees, you will also need to register for the California Employee Withholding Tax, Unemployment Insurance Tax, and Disability Insurance.
- Register with the California Franchise Tax Board: https://www.ftb.ca.gov/file/ways-to-file/online/calfile/index.asp
- Form 568: https://www.ftb.ca.gov/forms/2021/2021-568.pdf
- Payroll Taxes (if you have employees): https://edd.ca.gov/en/Payroll_Taxes/What_Are_State_Payroll_Taxes
Your business may also need state and local government permits. This varies depending on your business type and location. You can go to your local Chamber of Commerce for information about this. If you need additional guidance, consult your business attorney.