Online California LLC FAQ

How do I form an LLC in California?

In California, you create an LLC by filing "articles of organization" with the Secretary of State's office and paying a filing fee. You'll also need an LLC operating agreement, though it doesn't need to be filed with the Secretary of State. Your operating agreement explicitly states the rights and responsibilities of the LLC owners (and managers, if applicable). An operating agreement clarifies the business arrangement between the owners and governs how your LLC will be run. If you don't create a written operating agreement, the LLC laws of your state will govern the inner workings of your LLC. For more information, see Does my LLC need an operating agreement?, below.

After your articles of organization have been filed and you have an operating agreement, your LLC is official, but you will still need to obtain the licenses and permits that all new businesses must have to operate. These may include a business license (sometimes also referred to as a "tax registration certificate"), a federal employer identification number, a sellers' permit, or a zoning permit. Forming an LLC does not exempt you from any of these requirements that apply to all businesses.

For more information, see the Licenses & Permits for Your Business area of Nolo's website.

To begin creating your California LLC, visit the Online California LLC page at the Nolo website.

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How much will it cost to form my California LLC?

The price of Nolo's Online California LLC formation service varies depending on your needs.

Nolo's Basic Service. The price starts as low as $79.00 for Nolo's Basic Service, which includes preparation of the articles of organization, preparation of a customized operating agreement, and standard filing, which will take two to three weeks.

Nolo's Standard Service. For $249, you get all of the benefits of the Basic Service plus preparation of the IRS application for a tax ID (Form SS-4) and the a Business Forms Bundle, containing 30 forms and contracts that every small business needs. Includes access to NoloCloud Legal Forms for business anywhere at any time from your account. Processing time is two to three weeks.

Nolo's Express Premiere Service. For all of these items plus Priority Rush Filing, a personalized LLC records book, membership certificates, an LLC seal, and preparation of the IRS application for a tax ID (Form SS-4), choose Nolo's Express Premiere Service for $299.00. With Priority Rush Filing, your LLC will be filed with the Secretary State within one business day, and you'll receive your final LLC documents three to four business days later.

Note that filing fees charged by the state are not included in our package prices. The Secretary of State charges $75 in filing fees, which includes a certified copy of the articles of organization. The filing fee will be added to your total when you check out.

In addition, within 90 days of your formation, you will need to submit a statement of information along with a $20 filing fee. (You can file it online here.) LLCs also pay an $800 annual tax, due on the 15th day of the 4th month following your LLC's formation and every April 15 thereafter (assuming your LLC has a calendar tax year), or on the 15th day of the 4th month after the start of your fiscal year.

What this means is that, if you create your LLC with the Secretary of State in December, you'll have to pay $800 by March 15 for your first (short) tax year and then another $800 by April 15. There is one exception to this rule. If you create your LLC on or after December 17, and you don't do any business until January 1, the first year's $800 minimum tax is waived, and you would just owe $800 by April 15.

To compare Nolo's California LLC packages, see the package and pricing details. Please note that coupon codes are not applicable to LLC packages.

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How long will it take to form my California LLC?

If you order the Basic or Standard package, we will file your paperwork with the California Secretary of State within four to five business days and you will receive your completed LLC documents by email one to two weeks later, depending on the Secretary of State's processing times.

If you order the Express Premiere package, we will file your paperwork with the California Secretary of State within one business day. We will send you your completed LLC documents three to four business days later. You'll receive your LLC records kit directly from the manufacturer.

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How long do I have to work on my LLC order?

You have as long as you like to work on your LLC formation without purchasing it. Every time you work on your LLC order on Nolo.com, your answers are automatically saved.

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Will I have to pay taxes on my California LLC?

Federal taxes. The IRS does not impose taxes on the LLC; LLC income is reported on the members' individual tax returns.

State taxes. You must pay an annual LLC tax to California's Franchise Tax Board (FTB) within 3-1/2 months of formation. That tax is currently $800 per year. After the year of formation, the tax is due by April 15 each year, assuming your LLC has a calendar tax year. This tax must be sent to the Franchise Tax Board with FTB Form 3522, Limited Liability Company Tax Voucher, available at http://ftb.ca.gov.

In addition, if your LLC's net annual income exceeds $250,000, you may be required to pay an additional "fee" with your annual tax return, Form 568, Limited Liability Company Return of Income. Like individual tax returns, your LLC tax return is due by April 15 of each year (assuming a calendar tax year). You can find Form 568 on the Franchise Tax Board's website at http://ftb.ca.gov.

Self-employment taxes. LLC members (owners) who are active in the business will probably have to pay self-employment taxes on their share of LLC profits—just as partners in a partnership do. Fortunately, an LLC member can deduct, as a business expense, half of the self-employment taxes paid. (Members in manager-managed LLCs may not have to pay self-employment taxes if they are not active in the business; if you are in this situation, consult a tax adviser to see if you should pay self-employment taxes.)

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Can I form an LLC in a different state than the one in which my business will operate?

LLCs formed in California are required to have a designated office in California, though it does not have to be where business activity takes place. If your business does not have a physical address in California, Nolo cannot create a California LLC for you.

If you were to form an LLC out of state, say in Delaware, you would still need to qualify your LLC to do business in your home state—and this means you'll have to file additional paperwork and pay additional fees. For more information on whether you'll need to qualify to do business in certain states, read Nolo's article Qualifying to Do Business Outside Your State on Nolo's website. Note that if you don't register to do business in another state when required, you won't be able to enforce contracts in that state.

Also, be ready for some state tax complications if you form your LLC in a state that's different from the state where all of its members live. For one thing, the LLC members might have to pay personal income taxes in the other state on LLC income. (At best, you might get credit for those taxes in your home state and not have to pay twice. At worst, you might have to pay taxes you wouldn't have had to pay at home.) Other state taxes vary from state to state, and might influence your choice of location for an LLC. An LLC—like any business—has to pay franchise taxes, sales and use taxes, other transaction and excise taxes, and employment, property, and transfer taxes.

In addition, in most states, you need to maintain a registered agent in the state where you form your LLC. To avoid these hassles, most smaller LLCs that will operate in only one state form their LLC in their home state. For more information, read Nolo's article Where to Form Your LLC.

Also, keep in mind California won't let professionals (such as accountants, architects, and massage therapists) form LLCs. Professionals who are not allowed to form an LLC in California can form a registered limited liability partnership (RLLP) or a professional corporation. The Secretary of State's website has more information on these options.

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Can I form an LLC in California for cannabis-related activities?

Due to a new law legalizing recreational marijuana in California, effective January 1, 2018, the California Secretary of State is now accepting articles of organization for LLCs that will perform cannabis-related business activities. Filing articles of organization with the Secretary of State alone, however, does not provide an LLC with the necessary licenses to conduct cannabis-related activities. After submitting articles of organization, you'll need to submit a licensing application to either the Bureau of Cannabis Control, the Manufactured Cannabis Safety Branch, and/or CalCannabis Cultivation Licensing, depending on whether your LLC will be involved in growing, selling, testing, or manufacturing cannabis-related products. You'll also need to work with the city and/or county where the cannabis-related activities will take place. More information can be found at the Secretary of State's California Cannabis Portal at www.sos.ca.gov/business-programs/cannabizfile/, or you may find their Cannabis FAQ helpful.

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How can an LLC be ended after it has been formed?

Your LLC will exist—and incur taxes and fees, whether or not you are actively operating a business—until you take legal steps to dissolve it. If you decide to discontinue business as an LLC, you must file a certificate of cancellation and possibly a certificate of dissolution with the Secretary of State. For specifics, read the Frequently Asked Questions on the Secretary of State's website.

In addition, certain franchise tax requirements must be met before you are off the hook for your business. For more information, see FTB Publication 1038, Guide to Dissolve, Surrender, or Cancel a California Business Entity on the Franchise Tax Board's website at http://ftb.ca.gov.

For general information on closing a business, read the article Closing Your Business: What You Need to Do on Nolo's website.

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What happens after I pay?

Note: You will receive a confirmation email that includes the following information.

Your articles of organization will be generated and filed with the Secretary of State. Turnaround times vary according to the package you choose.

If you ordered Nolo's Express Premiere Service, your LLC records binder and company seal will be sent to you independently, directly from the manufacturer.

As soon as your filing is complete, we will email you your final LLC documents, including your customized operating agreement and instructions on a few more steps you need to take, including holding an initial meeting of your members or managers.

After completing your purchase, you may no longer go back and change your answers because your order is being processed. You may, however, view your answers by signing in to your Nolo account at www.nolo.com/products/customer/account/login, clicking on My Account, and clicking on California LLC.

Once we send your documents to the Secretary of State, we cannot refund your state filing fees or other third-party costs should you decide to cancel your order. If you have a question after submitting your order, you may contact our filings specialists here.

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What if I want to change the information I gave you for my new LLC?

You can take as much time as you like to work on your LLC answer choices. Every time you add or edit an answer, your work is automatically saved.

After completing your purchase, you may no longer go back and change your answers because your order is being processed. You may, however, view your answers by signing in to your Nolo account at www.nolo.com/products/customer/account/login, clicking on My Account, and clicking on California LLC.

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Is there an advantage to using Nolo to form an LLC?

Yes, Nolo's formation service provides comprehensive on-screen help to guide you through any questions you may have along the way, as well as customer service phone support and automated error checking. You also receive a customized operating agreement, which is integral to the proper set-up and operation of your LLC, and if you choose, an LLC records kit and seal and a filled-out IRS Form SS-4, Application for Employer ID Number.

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Where can I learn more about LLCs?

To learn more about limited liability companies, visit the Limited Liability Company area of Nolo's website or read Nolo's Quick LLC: All You Need to Know About Limited Liability Companies, by Anthony Mancuso. For information about running your LLC, including minutes form and resolutions, see Your Limited Liability Company: An Operating Manual.

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