How to Create a California LLC: A Step-by-Step Do It Yourself (DIY) Guide | Inc Authority
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How to Create a California LLC: A Step-by-Step Do It Yourself (DIY) Guide

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Creating a Limited Liability Company (LLC) in California offers various benefits, such as limited liability protection, pass-through taxation, and flexible management options. Here’s a step-by-step guide to help you create a California LLC:

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STEP 1: Choose a Name for Your LLC

Select a unique name for your LLC that complies with California’s naming requirements.

The name must include “Limited Liability Company,” “LLC,” or “L.L.C.”

Ensure the name is distinguishable from other registered business entities in California.

You can search the California Secretary of State‘s (CalBiz) business database to check if your desired name is available: https://businesssearch.sos.ca.gov/

Consider reserving the name for up to 60 days if you’re not ready to form your LLC. File a “Name Reservation Request” with the Secretary of State and pay the $10 reservation fee.

Time it Takes to name an LLC

Researching and deciding on a name: 1-2 hours

If opting for a name reservation: The act of filing can take about 10-15 minutes.

If opting for a name reservation: Filing can take minutes, but approval might take a few days to a week.

STEP 2: Appoint a Registered Agent

Choose a registered agent for your LLC. This individual or business entity will receive legal documents and correspondence on behalf of the company.

The registered agent must be a California resident or a business entity authorized to do business in the state.

Ensure your registered agent has a physical address (not a P.O. box) in California where they can receive official mail.

Time it Takes to be a Registered Agent

Registered Agents MUST BE at the Business Address everyday during business hours. This is why Home Addresses Are Not Accepted.

If you already have someone in mind (like an attorney or a service), this can be quick. If you need to find and appoint a registered agent: 1-3 hours.

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·       Convenience: Serves as your public & legal business address

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STEP 3: File Articles of Organization

Prepare your Articles of Organization (Form LLC-1), which is the official document needed to form your LLC in California.

Provide the following information:

1. LLC name

2. Registered agent’s name and address

3. Purpose of the LLC (can be a general-purpose statement)

4. Management structure (member-managed or manager-managed)

5. Organizer’s name, signature, and address

File the Articles of Organization by mail or online with the California Secretary of State.

Pay the $70 filing fee.

Time it takes to write the Articles of Organization

Preparing the document: 1-2 hours

Filing online: 30 minutes to 1 hour.

Waiting for confirmation/approval: This can range widely, but typically, online filings can be processed in a few days to a couple of weeks.

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STEP 4: Create an Operating Agreement

Draft an Operating Agreement for your LLC, outlining the rules, regulations, and procedures for managing the company.

Include details about the roles and responsibilities of members and managers, capital contributions, profit sharing, and dissolution procedures.

Although not required by California law, having a written Operating Agreement is highly recommended to avoid potential conflicts.

Time it takes to write an Operating Agreement

If using a template and making minimal changes: 1-3 hours

If drafting from scratch or having extensive negotiations among members: Several days to weeks.

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STEP 5: Obtain an Employer Identification Number (EIN)

Apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) for tax purposes.

You can apply for an EIN online at no cost through the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

The EIN will be used for tax filings, opening bank accounts, and hiring employees.

Time it takes to get an EIN / Tax ID

Filling out the online form and receiving the EIN: Approximately 0.5 to 1 hour (the online process is relatively quick if there are no complications).

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SO HOW MUCH TIME WILL IT TAKE TO FORM AN LLC MYSELF? DO IT MYSELF (DIY) an LLC?

Total Time Investment (Minimum): 5 hours (if you exclude the higher range estimates and name reservation)

Total Time Investment (Maximum): 11.5 hours (if you include the higher range estimates and name reservation)

This gives a ballpark range of 5 to 11.5 working hours for an individual, excluding all waiting times. It’s worth noting that these times can vary based on the person’s familiarity with the processes and any specific details or challenges related to the business being set up.

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