Some states are friendlier than others when it comes to Limited Liability Companies. These types of corporations offer tax and legal benefits to business owners, so different jurisdictions will have different rules and regulations. One of the most popular locations is in the southwest corner of the United States. This article will tell you what to do when forming an LLC in California, in particular, the pros and cons that the state can present, so you can make an informed decision about what is right for your business.
Choosing What Type of Structure is Better for your Business
Before forming an LLC in California, however, you need to decide what type of structure is right for your business, because you may end up choosing a different option. There are also General Partnerships (GP) or Limited Liability Partnerships (LLP) to name a few, or you might even decide to form a corporation and issue stock to shareholders.
LLCs, however, are especially popular among entrepreneurs. This is generally because of the tax incentive LLCs have. These types of businesses are treated by the IRS (Internal Revenue Service) as “pass-through” organizations. This means that the entity won’t have to pay taxes on the profits generated. The assets will go straight to the members of the LLC, who will then be taxed as individuals according to their personal situations.
The other factor that makes an LLC a strong choice is its status of “limited liability”. This means that even if the company enters bankruptcy, the members of the LLC will not be found responsible for this, or in other words, not personally liable. Individual assets remain aside from legal judgments incurred by the business.
Naming your LLC the Right Way
If you have chosen a limited liability company as the right fit for your business and happen to live in the golden state, there are a few more considerations you are going to keep in mind. When forming an LLC in California, your name needs to be unique to your business, and easily distinguishable from other Californian registered LLCs. At the California Secretary of State’s database, you can easily check the registered names.
Once you know that your name is unregistered, you need to complete your articles of organization, aka Form LLC-1. A registered agent can also do this on your behalf. The form will contain pertinent information about the LLC and its members, and will then need to be sent for the process at the Secretary of State’s office. Our advice is to form an LLC in this state if your business is small and doesn’t have many shareholders.
Ready, Steady, Go!
On our site, the Corporation Center, not only forming an LLC in California is possible, but also in the other 49 states. We offer web forms for LLC registrations that will definitely save you a trip to the post office. To know more about how to register your LLC online contact us today by phone or email.