How to set up an LLC in 3 easy steps

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How to set up an LLC

You have a great idea!  You want to share it with the world!  So, you decide to set up an LLC.  But, how does one go about that?  We show you how to set up an LLC in 3 easy steps.

1. Decide on a Name

To start a company, you need to give it a name.  Here’s how to select the name that’s best for you:

  • Be Creative
    Choose something that is unique. If you make widgets, you may not want to use WIDGETS, LLC.  It may be too broad of a name and most likely has already been taken by someone else.
  • Be Descriptive
    Pick something catchy that people will identify with like… Mo’s Plumbing, ABC Accounting, True Color Photography
  • Do Research
    Your business name needs to be exclusive to you.  To make sure that someone else isn’t already using your name, do the following:
    1.  Perform an initial search by going to https://www.sos.ca.gov and click on Business and then Business Search with Free Images.  Be sure to click the box for “LP/LLC Name” and type in your proposed name in the box.  If there are “no results,” you may want to pay for a more thorough search.   If your search produces several names, browse through them to see what others have selected using similar names to yours.
    2.  Consider paying a corporate company, such as Parasec, to check the state’s records.  For a nominal fee, they can perform a search, saving you time and money in the long run.
    3.  To search for name availability, go to www.sos.ca.gov/business/be/name-availability
  • Decide how you want your LLC title to be shown.
    Properly naming your LLC is imperative.  See below for the requirements:

    1.  You must include one of the following:  LLC, L.L.C., Limited Liability Company, Limited Liability Co., Ltd. Liability Company, or Ltd Liability Co
    2.  The LLC name may not include: bank, trust, trustee, incorporated, inc., corporation, or corp.
    3.  The LLC name may not include: insurer, insurance company
    4.  The name is not likely to mislead the public and is distinguishable from other LLCs of record

2. File Formation Documents

The next step is the super easy part! There are two documents that are required to set up your LLC.

  • LLC-1 Articles of Organization
    This is the first document that needs to be filed with the secretary of state (“SOS”) in the state that you plan to do business.
    The form provides your business name and address, initial agent for service of process, and the number of members you have.
    You can mail the form to the SOS or hand-deliver it.  You need to include a check for $70 for the filing fee.
    Important note for opening a bank account:  You will need a certified copy of this form if you plan to open a checking or savings account in the name of your LLC.
  • LLC-12 Statement of Information
    This form is required to be filed with the SOS within 90 days after your LLC-1 is registered with the SOS.
    Unlike the LLC-1, this form can be filed electronically with the SOS, along with a $20 payment.
    This form provides the type of business, the managers or members and the name of your CEO.

3. Stay Current!

Lastly, when you receive the filed LLC-1 from the SOS, it will include important information about keeping your LLC current, aka in good standing.  Here are two important “must dos”:

  • Minimum Tax Requirement:
    Registered LLCs in California may need to pay a minimum tax of $800 to the California Franchise Tax Board each year.  Check with your CPA to determine if an LLC is right for your circumstances.
  • Annual Statement.
    An LLC-12 Statement of Information must be filed with the SOS every two years from your registration date.  The form must be filed with the SOS, even if nothing has changed.  The SOS will suspend your company if you miss your deadline. The suspension will be removed after the form has been filed with the SOS.

In conclusion, if you are overwhelmed with the process on how to set up an LLC, or simply just don’t have the time, we can help. Once you have spoken to your CPA and know that it is right for you, then the process can begin. We will help you get the legal stuff out of the way so that you can open your doors and enjoy the rewards! I’d love to personally congratulate you as the owner of your own limited liability company.

 

This content is general knowledge and can be found on any bookshelf in a public library or bookstore in California.
Carol Ramirez
Carol Ramirez
Carol Ramirez, CLA, LDA, is a registered and bonded Legal Document Assistant providing affordable legal document preparation to consumers with the highest degree of confidentiality and professionalism.

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