How To Form An LLC in California

Those looking to form an LLC in California can choose either to hire a professional who specializes in the formation of Limited Liability Companies and Corporations, or you might decide to save a little bit of money and form the LLC yourself. If you choose to do the work yourself we have listed here a few things steps to take.

Paying state taxes might seem a little tricky since each entity in California has different tax rates. Understanding the tax rates can also help you decide if you want to Incorporate, setup an LLC, or set up a Partnership. Currently the LLC is taxed with a $800 per year and a world-wide gross receipts tax based on a current tax table. The C Corporation has a 8.84% net profits tax and the S Corporation has a 1.5% net profits tax.

Choose a unique company name. Take the time to research existing registered names with the state. Also, check for businesses with a similar name with the one you have chosen. You might find names nearly identical to the one you choose and decide to modify your choice. Then create an ‘Operating Agreement’.

Complete and submit the ‘Articles of Organization’ with the California’s Secretary of State Office. Contact the California Franchise Tax Board to file proper paperwork and to pay the franchise tax fee. Then it is time apply for any local and state business licenses that are required for your business type by contacting your local county tax office.

During this process you can apply for an EIN, Employer Identification Number online with the IRS. Once you have an EIN number you can open a company bank account.