Steps in starting an LLC in california [Detailed Response]



Last updated : Aug 10, 2022
Written by : Lovetta Karpiak
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Steps in starting an LLC in california

Do you have to pay the $800 California LLC fee the first year?

If your California LLC goes into existence on or after January 1st, 2021 (but before December 31st, 2023), there is no $800 payment due the 1st year. The first $800 payment is due in the LLC's 2nd year.

How long does it take for an LLC to be approved in California?

Mail filings: In total, mail filing approvals for California LLCs take 2-3 weeks. This accounts for the 3-5 business day processing time, plus the time your documents are in the mail. Online filings: In total, online filing approvals for California LLCs take 3-5 business days.

WHAT ARE LLC requirements in California?

Creating your LLC in California requires two separate filings: Articles of Incorporation, and a Statement of Information. Your Articles of Incorporation form your business in California and the Statement of Information is a periodic filing first required within 90 days of formation.

How much can an LLC write off?

If you have $50,000 or less in startup costs and are in your first year of business, the IRS allows you to deduct $5,000 in startup costs and $5,000 in organization costs from your taxes. If your startup expenses exceed $50,000, the total deduction will be reduced by however much your expenses exceed $50,000.

How do I pay the $800 franchise tax?

The state requires corporations to pay either $800 or the corporation's net income multiplied by its applicable corporate tax rate, whichever is larger. You may pay the tax online, by mail, or in person at the California Franchise Tax Board Field Offices.

Can LLC Get tax Refund?

Do LLCs get tax refunds? Generally, no. However, LLCs can elect to be treated like C corporations for tax purposes by filing Form 8832. If an LLC elects C corporation status and makes quarterly estimated payments higher than its tax liability for the year, the LLC can receive a tax refund.

How do I avoid LLC tax in California?

Can I avoid the California Franchise Tax? There's no way for a registered business to legitimately avoid the California Franchise Tax. Sole proprietors and general partnerships don't have to pay the California Franchise Tax, but they also don't have any personal liability protection.

Can I file my LLC and personal taxes separate?

The IRS disregards the LLC entity as being separate and distinct from the owner. Essentially, this means that the LLC typically files the business tax information with your personal tax returns on Schedule C. The profit or loss from your businesses is included with the other income your report on Form 1040.

What are the benefits of an LLC in California?

  • Pass-through taxation.
  • Tax options like S corp.
  • Simplicity.
  • Ownership flexibility.
  • Increased credibility.
  • Name registration.

Does an LLC need a business license in California?

LLCs, Corporations, LPs, LLPs, or GPs operating in California need to register and form their legal entity with the California Secretary of State's Office, file appropriate taxes, register as an employer, and obtain business licenses and other permits from appropriate cities or counties.

Do I need a registered agent for my LLC in California?

The California Corporation Code Section § 1700-1702 requires that all corporations, LLCs and other business entities appoint and maintain a registered agent. You can't start a business without one (unless you're a sole proprietor, in which case you don't have to form an entity at all).

Do I need a California state tax ID number?

If you plan on selling taxable goods and services in the state of California, or if you'll owe excise taxes (which are associated with specific products, like alcohol or tobacco products), you'll need a California state tax ID in addition to your federal tax ID.

At what point do I need an LLC?

If you have business partners or employees, an LLC protects you from personal liability for your co-owners' or employees' actions. An LLC gives you a structure for operating your business, including making decisions, dividing profits and losses, and dealing with new or departing owners. An LLC offers taxation options.

Is the $800 LLC fee deductible for California?

If your LLC's gross receipts are $5,000,000 or more, the gross receipts fee is $11,790. Deductibility: The $800 franchise fee is not deductible on the LLC's California tax return. The gross receipts fee is deductible for California income tax purposes.

Can you write off car payments for LLC?

Can my LLC deduct the cost of a car? Yes. A Section 179 deduction allows you to deduct part of or the entire cost of your LLC's vehicle.

Is it better to be 1099 or LLC?

The biggest difference between an LLC and an independent contractor is the fact that LLCs are required to register with the state and form business documents like articles of organization. LLCs also offer liability protection that independent contractors would not have otherwise.

Can I write off my car as a business expense?

Driving and maintaining a vehicle as part of your business can mean added car expenses. Luckily, you can offset those costs by writing off a car as a business expense when you file your taxes.

Is CA LLC fee waived first year?

A corporation that incorporates or qualifies to do business in California is exempt from paying the minimum franchise tax in its first taxable year. Business entities such as LLCs, LLPs, and LPs are subject to an $800 annual tax.

How much is CA franchise tax?

Every corporation that is incorporated, registered, or doing business in California must pay the $800 minimum franchise tax.

What happens if you don't pay California Franchise Tax?

The California Franchise Tax Board imposes a penalty if you do not pay the total amount due shown on your tax return by the original due date. The penalty is 5 percent of the unpaid tax (underpayment), plus 0.5 percent of the unpaid tax for each month or part of a month it remains unpaid (monthly).


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Steps in starting an LLC in california


Comment by Ruben Kelsch

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Thanks for your comment Ruben Kelsch, have a nice day.
- Lovetta Karpiak, Staff Member


Comment by Refugio

this is gonna be fun this is gonna be fun you wanna start a company i'll show you how so let's go to this california secretary of state website because this is how you start an llc and i think a lot of people are interested in this so here's what we did let's start over we're going to go to sos.ca.gov this is the california secretary of state website this is the only place that you need to go to start a company an llc for that matter let's talk about how to do it click on business and then we're going to go down here to ooh look at that it's under hot topics cool number seven forms samples and fees for business entities and if you need tips those are here too all right so we're going to click on the form samples and fees section so we can look at the type of forms that are available to someone who's just going here and checking it out and trying to figure this out on their own you can see there's two sections there's corporation and there's limited liability company two very different options most people are going to want to form an llc most people need an llc there's very few people that need corporation status all right so file online fastest service i always recommend filing these documents online totally totally the best way to do it if you have to mail it in it's going to take weeks i've done both and filing it online is way better so in order to form an llc in california you're going to want to click on llc formation you can see that the filing fee is seventy dollars there is a certified copy fee which is five dollars copies are free anyways we're gonna hit the start button this is a privacy warning you can scroll through this and read what they do with your privacy and the information that you uh submit some people are interested in reading it some people don't i asked my question or my attorney about it and we were good to go all right so here is where you fill out the limited liability company name notice that it says don't include llc or llc period in the name you don't need to include any of that the llc will be added to the end of your name so if i wanted to start vaniter llc i would simply type in vaniter right here is where you're going to choose the llc identifier so if you want it to be vanity or llc you'll pick vanity or llc if i wanted to be vanader limited liability co that's what i would choose and this is the name that's going to show up on your official tax records and your statement of information and articles of organization with the state of california this is what's going to show up name reservation check this box if you have reserved a name and would like to apply the reservation to this llc program now correct me if i'm wrong somebody but i'm fairly certain that the reservation name is a service that california provides to where if you want to reserve a business name but you're not ready to pay and start for it yet you can pay them to do so but we'll find that out another time okay we don't have one of those so we're gonna go to next here's where you're gonna put up uh put in your business address enter the initial street address of the designated office and if different the initial mailing address of the llc a lot of people have different business addresses and different mailing addresses for their llc's there's a ton of reasons why you'd want to do something like that or why you would have to do something like that and so they want to know if the business resides in california or where it resides in california everybody's trying to get a piece so just put in the address you can use your house i do if it's the same as the mailing address just hit yes just go to next agent of process so you can have an individual or a california registered agent an attorney or there's a registered agent in california you can choose but you can type in uh like a legit like registered agent service or you can just have an individual basically the secretary of state wants to make sure that if they want to get a hold of you they can and so that's why you put the registered agent in there you can't put a po box it has to be a place where you can receive mail it has to be a place where someone could get a hold of you and maybe serve you with papers to uh appear in court for example so if you feel comfortable with that and that's something you can handle you can be your own registered agent i have my attorney be my registered agent because i don't i move around a lot and all the time and you know i just pay him a couple bucks you know a couple bucks a year just to take care of that for me it's not really that big of a burden or you can pay a registered agent that provides that service you can go on online and look for registered agents and they'll they'll teach you and i'll teach you they'll do that all for you we have the first name okay this is all for the service of process of the individual let me go to next and the management structure okay is gonna be this is where a lot of people get confused who will be managing the llc select the management structure now if you have questions you can click on filing tips and this will tell you but it doesn't give you a whole lot of information in my opinion having one manager is the best right to start your own llc and then if you start another venture with another partner or you want to start another partner just start a second llc and both of your llc's can be the managing members that's how i prefer to do it because partnerships are kind of risky but anyways let's circle back to this real quick so i can explain it before i move on the llc will be managed by you have one manager more than one manager or all llc members so one manager is going to be the most common if you're starting your own llc now if you're starting an llc with a business partner for example like your sister or friend or anyone really doesn't matter you can select all llc members and then that will make sure that you all have managing authority however that means that when you want to open up a bank account you have to go down to the bank together these are things that you have to do together right so there are strings attached to it but you can always change this later on too it's not a problem there are forms that you can file with the secretary of state to remove members from the llc so don't think that once you do it it's done forever organizer electronic signature all right so this is the perfect person that's organizing or organizing or putting together the llc right so sometimes it's a company like legalzoom or inc file sometimes it's yourself but basically you're going to put this down right your name your email not the company name or the company email but yours so you have to acknowledge that you're the person forming the llc and that all this information is true and correct they need someone on the hook for that okay so type in the organizer name um your email and then double check the email uh what's this file date the future file date oh okay so this is if you want to file the llc you want to put it all together right now pay for it and then file it in january let me tell you why that might be a good re


Thanks Refugio your participation is very much appreciated
- Lovetta Karpiak


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