The California Secretary of State handles the formation and organization of Limited Liability Companies (LLCs) in California. The majority of limited liability company filings use forms provided by the Secretary of State, which were developed to simplify filing procedures. The prescribed forms provide for the minimum requirements under the Beverly-Killea Act–the law that allowed LLCs in California.
Who Can be Part of an LLC?
A limited liability company consists of one or more members which may be individuals, partnerships, limited partnerships, trusts, estates, associations, corporations, other limited liability companies or other business entities. The members of a limited liability company are afforded limited liability similar to shareholders of a corporation and have pass-through taxes comparable to a partnership.
What do I have to do to form a limited liability company? What are the advantages?
A domestic limited liability company must complete and file Articles of Organization (Form LLC-1) with the California Secretary of State. The fee for filing Articles of Organization is $70.00.
Every limited liability company which is doing business in California or has filed Articles of Organization or an Application for Registration with the Secretary of State’s Office must pay an annual Limited Liability tax of $800. The tax must be paid for each taxable year until a Certificate of Cancellation is filed.
The advantages of forming a limited liability company are that the members are afforded limited liability and can elect to be taxed as a pass-through entity similar to a partnership. This avoids the double taxation incurred by C corporations.
Does California recognize single member limited liability companies?
As of January 1, 2000, single member limited liability companies may be formed in California.
How long does the Secretary of State Office take to process my LLC formation documents?
It typically takes approximately 20 days for the Secretary of State’s Office to process LLC Articles of Organization and other LLC formation documents. A chart of mail processing times can be found here.
California LLC Name Requirements
The name must end with the words “Limited Liability Company,” “Ltd. Liability Co.,” or the abbreviation “LLC” or “L.L.C.” The name of the limited liability company may not contain the words “bank,” “trust,” “trustee,” incorporated,” “inc.,” “corporation,” or “corp.,” and must not contain the words “insurer” or “insurance company” or any other words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks.
A preliminary check of the availability of a limited liability company name can be made by mailing a name availability inquiry letter to the Secretary of State’s office in Sacramento. A Name Availability Inquiry Letter form is available in PDF file format and can be viewed, filled in, and printed from your computer.
The California Secretary of State’s office cannot file a document which contains a name that is “likely to mislead the public or which is the same as, or resembles so closely as to tend to deceive,” the name of a domestic or foreign (out-of-state or country) limited liability company that has registered with this office or a name which is under reservation for another limited liability company.
The name of a limited liability company cannot include the words “bank,” “trust,” “trustee,” “incorporated,” “inc.,” “corporation,” or “corp.” nor use the word “insurer” or “insurance company” or any other words that imply the LLC is in the business of issuing insurance policies.
The limited liability company name may not falsely imply governmental affiliation.
California does not permit foreign or domestic LLCs to perform professional services.
The person named as agent must be a resident of California or a corporation that has filed a certificate pursuant to Section 1505.