How to set up an LLC in California by yourself without hiring a service to do it for you
California has one of the highest rates of newly formed LLCs in the USA, one of the advantages of forming an LLC in this state is how simple and straightforward the process is and you can do almost everything online. You can start benefiting from the personal liability coverage that an LLC offers as well as substantial tax breaks in no time.
Setting up an LLC in California is easy if you just follow these steps to find out how TRUiC can help you successfully set up your LLC. There are two ways to form an LLC, you can go through the filing process on your own or you can hire a service to do it for you. We will talk about the process of setting up an LLC on your own and also mention some registered agent’s and formation services in the market that can help you with the process if you choose to use them.
Basic Requirements to file for an LLC on your own or through a professional service
Choose a name for your LLC : every state has their own set of rules and guidelines you must adhere to. You should also keep in mind that your name needs to have some form of LLC in it. Do a search on your Secretary of State’s website and make sure that your LLC’s name is not taken, avoiding any names that have similarities to your own in order to make sure that your business will not be confused with any other business which can be misleading.
Appoint a Registered Agent – you can choose to act as your own registered agent or you can appoint a professional service to do this on your behalf. A register agent helps your LLC stay active and will help you file all of the necessary reports with the state.
File the articles of organization with the secretary of state – this costs $70, and you can choose to have a member managed LLC which is ideal for smaller companies or a manager managed LLC where not everyone is involved in the day to day operations of the business and is more suitable for larger companies
File an Initial Statement of Information – you need to file a form LLC -12 within 90 days of forming your LLC with the state of California
Create an Operating Agreement –this is needed for internal reasons and helpful to establish ownership rules and members roles, define how members vote, which members support the LLC, how profits are shared throughout the LLC, how it may be dissolved etc. It does not need to be filed with the state.
Obtain an EIN or employer identification number – this is your LLCs social security number that is required for you to legally hire employees and open business banking account. It is free of charge and can be filed online or by mail.
Finally, there is an annual franchise tax you should be aware of when forming your LLC. It is $ 800 when your LLC has an annual revenue of less than $250k and a fee of more than $800 if annual revenue is higher than 250k.
If i choose to use a formation service to set up my LLC, what can they offer?
ZenBusiness is an LLC formation service with packages starting from $39 per year plus state fees of course. They are well known for the premium packages they offer when you need the formation to be expedited they can offer a rush service to get your LLC quickly off the ground. Apart from their basic package they offer services for each step of the formation process including registered agents and EINs that can be offered as add-ons.
Incfile is another formation service that is more geared towards startup owners and entrepreneurs that are just starting out. They offer packages starting at 0$ plus any state fees that apply, apart from offering LLC formation services they also provide a free registered agent service for the first year helping business owners get their startup off the ground easier. Apart from their basic package that is free you can then hire them for any one of the LLC formation steps you need help with.
Northwest Registered Agent is the last LLC formation company worth an honorable mention and they offer similar packages to the above two formation service companies with a basic package that includes a registered agent service starting at $49. They are well known for their customer service support, providing each client with a designated customer service guide that will be appointed to their specific account.