The actual steps you take to form a California limited liability company are pretty simple. You can, if you want, follow the instructions below. (These instructions are up-to-date as of July 27, 2020.)
We’ve also got a free, downloadable “do it yourself” kit you can use. In other words, the price you pay to purchase equals “zero.” That kit provides more information about LLCs and includes a couple of free LLC operating agreements. (We used to sell the kit but since the Covid-19 pandemic have simply given the kit away.)
1. Check if the LLC name you want is available
Your first step in setting up an LLC is to check if the name you want to use is even available. You can do this in either of two ways: If you just want to quickly get a rough idea as to whether your desired name is available, you can use the California business search online service at:
https://businesssearch.sos.ca.gov/
By entering the name you want to use in the search box, you’ll be able to see if there’s another business already using the name that you want. You can’t use a name, by the way, that’s the same or deceptively similar to another existing LLC’s name.
If you want to be more cautious, you can pay $10 and reserve a name prior to filing. You can download the name reservation request form at:
https://bpd.cdn.sos.ca.gov/corp/pdf/name-reservation-request-form.pdf
2. Download Form LLC-1 from the California Secretary of State’s web site, and then print this form
The URL, or web page address, is as shown below.
https://bpd.cdn.sos.ca.gov/llc/forms/llc-1.pdf
Alternatively, you may also file online at:
https://llcbizfile.sos.ca.gov/registration
3. Identify the name you want to use for your new LLC
After you download and print the LLC-1 form (see Figure 1), you are ready to fill the form out.
To start, enter your business or investment name into box 1 of the LLC-1 form. The name must include one of the phrases or acronyms, “Limited Liability Company,” “Ltd. Liability Co.,” “LLC,” or “L.L.C.” For example, all of the following names should be acceptable:
- California Limited Liability Company
- California Ltd. Liability Co.
- California LLC
- California L.L.C.
Tip: You should be able to name your LLC something close to what you want or need. Note, however, that California does have a handful of rules. A limited liability company name may not falsely imply governmental affiliation. LLC names must use the English alphabet or Arabic numerals (0, 1, 2, 3, 4, 5, 6, 7, 8, 9) or a combination of these characters, but no symbols except for the ampersand symbol (&) which can be used in place of the word “AND”. And, finally, note that the name of a limited liability company cannot include the words “bank,” “trust,” “trustee,” “incorporated,” “Inc.,” “corporation,” “corp.,” “insurer,” “insurance company” or any words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks.
4. Give your name and address
California wants to know the name and contact information for a real person within the state of California that the state can contact if it has questions or concerns about an LLC’s operation. You can pay someone else to be this registered agent, but it is really easiest and cheapest to just be your own registered agent.
Accordingly, enter your name and California address into box 3a and box3b.
5. Indicate how your LLC will be managed
LLCs can be managed either by all of their owners, called “members,” or they can be managed by only one or some of their members, who are in this case called “managers” or “manager-members.” To indicate how your LLC will be managed, mark the appropriate checkbox in box 5: One Manager, More Than One Manager, or All Limited Liability Company Members.
Note: If you have multiple members or managers, you will absolutely want to have an attorney draft an operating agreement. This operating agreement should describe who the manager is or who the managers are if you are setting up a manager-managed LLC. If you are a single-member LLC, you should probably also have an operating agreement because having an operating agreement and honoring its terms improves your liability protection. We have included a sample operating agreement with the kit.
6. Sign and date the Articles of Organization
Sign the articles of organization document at the bottom of the page. Note that you need to both sign the document and print your name.
7. Mail in the application
After you complete the Articles of Organization form, mail the completed form and a check for $70 to:
Secretary of State
Business Entities Filings
P.O. Box 944260
Sacramento CA 94244-2600
Processing lead times vary, but in general, it takes several weeks to get your LLC certificate back from the Secretary of State’s office. (You can look up the date for which they are processing documents received from the Secretary of State’s web site at http://www.sos.ca.gov/business/be/processing-times.htm.)