How to Create a Limited Liability Company in California

[Nomad]

For those who want to start a Limited Liability Company (LLC) in California, here is a brief guide:

First of all, you need to decide on a unique business name. California has specific rules for LLC names that require businesses to have unique names.

You will have to fill out the California Articles of Organization form, create an operating agreement, and get an Employer Identification Number (EIN). You will have to pay the filing cost of $70.

Once your company is registered, you need to obtain business permits, open a business bank account, and set up a budget for your company. It's crucial to separate personal and business finances and consider insurance for liability protection.

Additional requirements include submitting form LLC-12 every two years and paying annual taxes.

If you want to learn the step-by-step process related to creating a Limited Liability Company (LLC) in California, you can check this comprehensive guide.

 

[Eric]

Thanks for sharing, Nomad. My dad has an LLC for his stump grinding business back in Michigan (shameless plug: www.mrstump.net). It is possible to have a sole proprietorship and have liability protection through general liability insurance but forming an LLC takes that protection a step further, legally speaking. As stated in that resource you shared, "LLC owners are typically not held personally liable for company debts or if the company is sued." For any work involving interacting with people/property (i.e., pretty much any service), there's always some risk that something could go wrong and you could be litigated. I'd say that risk is highest when you're doing something out in the physical world where inadvertent property damage or personal injury become scenarios that really need to be taken seriously (e.g., any contractor work such as stump grinding).

 

[Jake]

There's a lot to learn when it comes to setting up an LLC. There are various different kinds too, so it can be quite confusing. A community I helped volunteer for many years ago established a 501(c) fiscally hosted community or something along those lines. They were a non-profit though, so I don't know what the difference would be in how it all works. I remember them bringing up the EIN and all that stuff when they started up, but they also had employees they hired on later that required different paperwork and forms to file before they could be hired on.

If I ever start my own company one of these days, I will for sure try to make it into an LLC.