How To Create An LLC In California [2023]

Are you ready to start a new business in California but don’t know where to start? Don’t worry; it’s easy! I will give you a step-by-step guide to registering an LLC in California, which will include:

• Preparing the proper forms
• Correctly naming your LLC
• Registering your LLC
• And other crucial details involved in the whole process

Make sure to stick with me until the end as I will give you access to my FREE Business Startup Success Checklist. Part of this complete guide will reveal my trustworthy registered agent who will help set up your LLC for FREE and save you time and money.

Step 1: Name your LLC

Your LLC name has to be unique, not just for legal reasons. Your business name will reflect your brand. It either has to be catchy or easy to remember. 

Just Google “Business Entity Records California Secretary of State” or click on the link in the description box.

This page contains all the businesses registered in the state of California. Type in the business name you want to use. If there are “no matches found,” that means you are free to use and register it. If it shows a list of duplicates, you have to use a better name variation or think of another one that no one else is using. 

Next (and this is important), go to https://www.namecheckr.com/. This tool will help you check if your business name has a domain name available and other social media pages and platforms. You don’t want to register an LLC name that someone is already using online. That will limit your marketing and online sales opportunities. You’d think naming a company would be easy, but you really have to put more thought into it! 

Important tip:

Come up with an LLC name that will present well online and be relevant enough to use as online tags and domain names. This is important so online users can find you when they search online for products or services they need. Online users have many choices and get bored quickly,  so make sure your LLC name can get their attention. No matter how good your products are, you will have a hard time selling if people don’t click on your page. Imagine this; if online users are to choose between these two coffee shops – The Coffee Shop or the Groovy Brew Shop, people are more likely to click on the Groovy Brew Shop and buy from them. Your business name matters!

Before I go off-topic, California laws also require adding LLC, L.L.C., or Limited Liability Company to your registered business name. You can’t use terms like “corporation,” “corp,” “inc,” or anything else that could mislead people about your business type. 

Any word or phrase that can confuse your LLC with a government agency is also strictly prohibited. Using words like “bank” or “attorney” on your business name would require more paperwork. Adding these words would also require you to have a licensed professional as part of your LLC.

You also need to reserve the name with the Secretary of State. This will ensure that no other company can use your LLC name for 60 days. It only costs $10 to submit online or by mail. For in-person submissions, there is an extra $10 non-refundable special handling fee.

Step 2: Choose a registered agent

The state of California requires all LLCs to choose a registered agent,  commonly known in California as an “Agent for Service of Process,” who will be the point of contact to receive important business documents like tax warnings, subpoenas, and other official papers. 

While it is okay to appoint yourself or trusted friends and family members, I recommend a professional registered agent that has the knowledge and experience needed to manage potential issues and protect your business at all costs. This will get some responsibilities off your hands and allow you to focus on running a successful business.

The registered agent must be available during business hours and have a physical address to receive official mail. A P.O. box will not suffice. A registered agent’s address is shown on public records, so you don’t want to use your home address. I recommend you use a professional service like anytimemailbox.com for this purpose. Their services include physical addresses you can use, scanning your mail, and forwarding them to your home or business address for a small fee. Why bother with the small details when you can have a professional service like Anytime Mailbox to do the work for you? I have a special link in the description box below for you. 

Hiring a registered agent is not expensive if you are worried about the cost. You can get a registered agent for free if you pay for a service to register the LLC. 

I highly recommend ZenBusiness. Their service can help you register your LLC and provide a registered agent as part of the package at no extra cost. They also provide a dashboard where you can keep close track of all documents and correspondence that the agent receives. Believe me; their easy-to-use tools will save you plenty of time and hassle. Feel free to check out my special link on ZenBusiness if you are interested in signing up for their service. 

Step 3: File the California LLC Certificate of Formation

One of the most crucial steps in this process is filing the California LLC Certificate of Formation. You can do this through the Business Entities Division under the Secretary of State.

The state of California does not charge a filing fee for submitting an application for an LLC Certificate of Formation; they do, however, charge $25 or more for filing any document.

You can submit your form along with the name reservation form through mail or submit them online. The process can take 8 to 10 week if you file by mail and 3 to 5 days if you submit online. You can also pay for a 24-hour response time for only $350 and same-day response time for $750.That gets you much closer to starting your operations, so if you can afford it, then that is a smart idea. 

If you find information like this useful for your business, feel free to like and subscribe to my channel. And if you have any questions, comment below, and I’ll help you out.

Step 4: Prepare an operating agreement

The state of California does not require LLCs to have an operating agreement, but it is a good business practice to have one. Having a document that will guide all company members, especially co-owners, directors, managers, and even new hires, is always better.

An operating agreement outlines every critical process that needs to be followed, especially regarding “big picture” issues. These issues may include but are not limited to:

• Allocation of earnings and losses in case the company is dissolved
• Decision-making process and voting rights
• Transfer of membership interest, profits, and losses
• And any other concern that impacts the business overall

This is why using ZenBusiness to set up your LLC is great. They will help you with these 3 previous steps for FREE. And if you decide to use ZenBusiness to set up your LLC, they can also help you with the operating agreement document for only $125. This will save you a lot of time and will ensure that you have all the correct documents ready for the registration process. Writing an operating agreement is not easy. I believe it’s better to let the experts do it for you! 

Step 5: File a Statement of Information

California requires all LLCs to file a Statement of Information within 90 days of forming the business. 

The Statement of Information requires you to state:

• The name of the LLC and the California Secretary of State file number
• The name and address of the registered agent
• The principal executive office address of the LLC
• The LLC’s official mailing address
• The name and business or residence address of any of the LLC’s managers. If there is no manager elected, submit the name and business or residence address of the CEO
• The LLC’s official email address
• The principal business activity the LLC will be engaged in

It costs $20 to file this and is done by filling out Form LLC-12 with the California Secretary of State.

Step 6: Obtain an EIN

Next, we need to get an EIN for your LLC. An EIN or Employer Identification Number is a federal tax ID issued by the IRS to your company. Your EIN is used by the IRS to readily identify your firm on tax filings. All California firms pay a Business Privilege Tax, and the state requires you to have an EIN to file. You may also be required to provide your EIN when opening a bank account or applying for municipal permits or licenses.

Obtaining an EIN is a slightly longer process compared to the previous steps. I’m sure you know, anything to do with the IRS is confusing and tedious. You need to have complete knowledge of your LLC all the way down to small critical information regarding vehicular assets and federal excise taxes. This is another reason why working with Zenbusiness is beneficial for you and your business. For an additional fee of only $99 they will take care of this step for you so you can focus on important matters like planning and running the actual business.

You can click on this link in the description below to get access to Zenbusiness’s one-of-a-kind offer – a FREE Starter Package with services such as preparing and filing your articles of organization. You still have to pay the filing fee of $25 or more which you would have to do anyway if you chose the DIY option. But looking at the bigger picture, all other companies will still charge for their service fee on top of state filing fees but Zenbusiness does not collect this fee.

I do recommend ZenBusiness’ $199 Pro Package to everyone if you have the money as it will save you a lot of hassle and time. The Pro Package  includes faster filing, operating agreement and worry-free compliance where they will help submit your annual reports. 

For an even faster 1-2 day processing time with all the bells and whistles, you can go up to their $299 Premium plan which also provides you with a domain name, a website, and a business email. This would be perfect for a business that want to have that online presence.

Summary

There are still a few more essential steps to complete your business setup. However, it may drag this video out too long, so I have condensed everything into an actionable step-by-step Business Startup Success checklist that you can grab from here for FREE.

Now, if you have decided to get started with ZenBusiness, then I recommend you watch this next video. However, if you are happy to do it all yourself, then this video is the next one you need to watch.

And I’ll see you in the next video!