Want to form a single-member LLC (SMLLC) in California? Here’s what you need to know.
These are the steps to form a single-member restrict liability company ( SMLLC ) in California. Remember: For most formation purposes, a California SMLLC is considered the lapp as a multi-member restrict liability company ( LLC ) .
1. Name Your SMLLC
The identify of a California SMLLC must contain the words “ limited Liability Company ” or the abbreviation “ L.L.C. ” or “ LLC. ” The son “ limited ” may be abbreviated as “ Ltd. ” and the word “ Company ” may be abbreviated as “ Co. ” The name must not contain the words “ Bank, ” “ Trust, ” “ Trustee, ” “ Incorporated, ” “ Inc., ” “ Corporation, ” or “ Corp. ” The appoint besides must not contain the words “ insurance company ” or “ indemnity company ” or any other words suggesting that it is in the business of issuing policies of insurance and assuming policy risks. The SMLLC ‘s name must be one that the California Secretary of State ( SOS ) does not find misleading to the populace. The name besides must be distinguishable on the Secretary of State ‘s records from other names already registered or reserved with the state of matter
bridle to make certain the name you want is available by doing a business name search on the SOS web site. For a tip of $ 10 you can reserve a name for 60 days by filing a name Reservation Request form. The form must be sent by mail or hand-delivered.
The SOS provides extra, crucial information regarding business name handiness both on-line and in a downloadable publication ( Business Entity : name Regulations & Additional Statutory Requirements and Restrictions ) .
2. File Articles of Organization
You create a California SMLLC by filing Articles of Organization with the California Secretary of State. To complete the articles you ‘ll need to provide :
- the official name of your new SMLLC
- the initial street and mailing addresses for the SMLLC
- the name and street address of the SMLLC’s registered agent
- an indication of whether the SMLLC will be member-managed or manager-managed, and
- a few other basic details.
You can download a blank articles of arrangement kind ( Form LLC-1 ) by going to the SOS web site. The stream filing fee for articles filed by mail is $ 70. An extra $ 15 fee applies for hand-delivered forms .
Every California SMLLC must have a register agent. A register agent is an person or business entity that agrees to accept legal papers on behalf of the SMLLC. A California SMLLC can not act as its own registered agentive role. The read agent can be either an individual California resident or a corporation that has filed the proper certificate ( a California Corporations Code section 1505 Certificate ) with the Secretary of State. The register agent must have a physical street address in California. You can find a number of companies that will act as register agent on the SOS web site .
All of the paperwork and procedural steps to start a single-member limited liability company in California can be done on-line using Nolo ‘s California Online LLC Formation lotion .
3. Prepare an Operating Agreement
California does not require an SMLLC to have an operational agreement. however, even though an SMLLC has equitable one member, an operate agreement is highly recommended. An SMLLC operational agreement does not need to be filed with the state .
The operational agreement is normally made between the single member and the LLC itself. The agreement typically covers the penis ‘s rights, duties, and obligations, a well as the SMLLC ‘s management structure. Having an agreement in place can help with liability protection by separating your business from you personally. It besides can be utilitarian with lenders and other businesses when entering into business transactions .
In most states, if you do n’t express that your SMLLC will be manager-managed when you first register with the submit, then your SMLLC will be treated by nonpayment as member-managed. The distinction between member-managed and manager-managed can be authoritative so be sure to consider both options before you decide which type of management structure you want for your SMLLC .
For more information and assistant creating an SMLLC engage agreement, see Nolo ‘s Guide to Single-Member LLCs, by David M. Steingold ( Nolo ), or use Nolo ‘s Online LLC.
4. Do You Need an EIN?
An SMLLC that keeps its nonpayment tax status of disregarded entity ( like as a sole proprietorship ) and does not have employees is not required to obtain a federal Employer Identification Number ( EIN ). rather, owners of these SMLLCs can report their business profits and losses on their personal tax returns using their own Social Security number or tax identification number .
If your SMLLC has employees or if you choose to have your SMLLC taxed as a pot rather than as a disregarded entity, you must obtain a federal Employer Identification Number ( EIN ) from the IRS. even if you are not required to obtain an EIN for your SMLLC, there are frequently clientele reasons for doing so. Banks much require an EIN to open an report in the business ‘s name and other companies you do business with may require an EIN to process payments. In many cases it makes sense to obtain an EIN for your SMLLC even if it is not required for federal tax purposes .
You can get an EIN by completing an on-line application on the IRS web site. There is no file tip .
5. Register to Pay Taxes
In some cases—for model, if you will be selling goods and collecting sales tax, or if you have employees—you ‘ll need to register with the appropriate California taxing authority. For example, if you will be collecting sales tax, you ‘ll have to register with California State Board of Equalization ( BOE ), which you can do online or in person at a BOE sphere function. For employer taxes, cash register with the California Employment Development Department ( EDD ). For more information on state LLC tax adjustment, check Nolo ‘s article LLC Annual Report and Tax Filing Requirements : A 50-State Guide .
California imposes an $ 800 annual tax on typical SMLLCs ( those not electing to be taxed as corporations ). In addition to the $ 800 minimum franchise tax you ‘ll owe, California besides imposes an annual fee on SMLLCs with high income. even though an SMLLC may be a neglect entity for federal tax purposes, the SMLLC is considered a separate, taxable entity for California ‘s LLC tax and LLC tip and must report its income on a freestanding state tax reappearance. The tax and tip are collectible to the California Franchise Tax Board ( FTB ). For more information about the tax and tip, including guidance on which forms to use for your especial business, check the FTB web site .
For any LLC formed in California in 2021, 2022, or 2023, there is a annual exemption — available for the LLC ‘s inaugural taxable year — from California state ‘s $ 800 minimum annual franchise tax. Starting in the second taxable class, all LLCs would be subject to the annual $ 800 annual minimum franchise tax until they formally dissolve. The aim for the exemption is to temporarily ease the effect of forming a new commercial enterprise in California .
6. Obtain Business Licenses
Depending on what kind of business you ‘re running and where it ‘s located, you may need to obtain local or country occupation licenses for your SMLLC. Among early possibilities, these might include licenses related to :
- your profession or occupation
- specific goods or services you’ll sell or provide
- an assumed or fictitious name for your business, or
- health and safety matters.
You can find detail information about many state and local business licenses via California ‘s CalGold web site .
7. File Your Statement of Information
The State of California requires you to file an initial information instruction within 90 days of filing your articles of constitution. To complete the statement, you ‘ll need to provide much of the lapp information needed for the articles of administration, along with the names and addresses of either your SMLLC ‘s managers or your SMLLC ‘s member, and a few early pieces of information. The argument can be completed on-line at the SOS web site. You can besides download a blank information statement form ( Form LLC-12 ) that you can complete on calculator, print out, sign, and file by mail or hired hand manner of speaking. There is a $ 20 fee to file the initial argument.
thereafter, extra statements of information are ascribable every two years by the end of the anniversary month of the file of your SMLLC ‘s articles of administration. More specifically, there is a filing period that runs for the 6 months prior to the final due go steady. For model, if you filed your articles of constitution on September 15 of an odd-numbered year, you should file statements of information every other year at some point between April 1 and September 30 of each subsequent odd-numbered year. As with the initial report, subsequent reports can be completed on-line or you can download a lacuna form and file by mail or hand delivery. The current filing fee for each biennial information affirmation is $ 20 .
For more data on SMLLCs, see the Single-Member LLCs section of Nolo ‘s web site or Nolo ‘s Guide to Single-Member LLCs, by David M. Steingold .