Forbes: This Business Banking Fintech Crossed $1 Billion in Assets on the Platform

How to Start an LLC in California (May 2024 Update)

Meow Technologies, Inc.

Meow Technologies, Inc.

Starting a business can be an exciting yet daunting endeavor. As you ideate, strategize, and work to turn your entrepreneurial dreams into reality, one of the first big decisions you’ll need to make is choosing a business structure.

One of the most popular options for small business owners is forming a limited liability company, commonly known as an LLC. This business structure combines aspects of partnerships, sole proprietorships, and corporations to provide business owners with personal liability protection without many of the cumbersome administrative requirements and double taxation issues faced by corporations.

In California, starting an LLC can pave the way for smart money management and strategic business growth. While the state does have some particular compliance rules, forming an LLC is still an advantageous choice for many business owners. This comprehensive guide will walk you through the entire process step-by-step.

Steps to Form an LLC in California

1. Choose a Business Name

Your first task is choosing an official name for your LLC. You’ll want to select a name that’s unique, memorable, and evocative of your brand. However, California does have some naming requirements you’ll need to follow:

  • Your LLC name must contain the words "Limited Liability Company," the abbreviation "LLC," or "L.L.C." You can also abbreviate "Limited" as "Ltd." and "Company" as "Co."
  • The name can’t be confusingly similar to any existing business names in California. Do a business name search through the Secretary of State portal to check availability.
  • Your chosen name can't be misleading to consumers. For example, you can't choose a name that falsely implies government affiliation.

Once you’ve settled on an available name that meets the state's guidelines, you can opt to reserve it for 60 days for a small fee. This ensures no one else can claim it in the meantime while you complete the rest of the formation process.

An important additional step is to check whether your desired name is available as a domain name. If not, you may need to tweak it slightly or consider registering under a fictitious business name or "DBA."

2. Appoint a Registered Agent

All California LLCs need to designate a registered agent, also called an agent for service of process. This agent's role is to accept legal documents and important notices from the state government on behalf of your business.

Your registered agent must be a California resident or business entity over the age of 18 with a physical street address in-state. Many LLC owners opt to use a professional registered agent service instead of naming themselves or another business leader. This keeps your legal documents private and ensures time-sensitive materials are dealt with properly if you become unavailable.

3. File Formation Paperwork

To form your California LLC, you'll need to file two documents: Articles of Organization and an Initial Statement of Information.

The Articles of Organization formally registers your LLC with key details like your business name, registered agent information, management structure, and business address.

Within 90 days after submitting your Articles, you must additionally file an Initial Statement of Information that provides more in-depth data on your ownership structure, principal office address, and type of business activities.

Both documents incur small filing fees and can be completed through the Secretary of State portal, by mail, or in-person.

4. Create an Operating Agreement

While not filed with the state, all California LLCs must have a written operating agreement governing internal business operations and ownership details. An operating agreement establishes rules for:

  • Admitting new members
  • Member responsibilities
  • Profit/loss distribution
  • Decision-making processes
  • Amending existing terms

Having this document in place can help you avoid disputes down the road and formally demonstrate your intention to operate as a legitimate separate entity from your personal finances.

Use legal software or work with a business lawyer to create a customized operating agreement. Even single-member LLCs benefit from having one.

5. Obtain Tax IDs

As a newly minted LLC, you’ll need to get an Employer Identification Number (EIN) from the IRS if you plan to open a business bank account, have employees, or have multiple owners. This number functions like a Social Security Number for tax and identification purposes.

You may also need to register for state employer taxes if you’ll have California workers. And if selling taxable goods or services, get ready to collect and remit state sales tax.

Understanding the many California tax obligations for LLCs right from the start ensures full legal compliance.

Additional Considerations

Starting an LLC is about more than just paperwork and legal compliance. You’ll also need to take further steps to legitimize, protect, and grow your new business venture.

Secure Relevant Licenses and Permits

While California doesn’t require general business licenses on a state level, many counties and cities impose their own permitting rules. Thoroughly research which health, building, zoning, or other permits you’ll need based on your LLC’s industry and location. This may take some legwork, but skimping could result in hefty fines down the road.

Invest in Business Insurance

The right insurance coverage helps safeguard your company’s financial stability. In California, workers’ compensation insurance is legally required if you have employees. However, you should also consider general liability insurance, professional liability insurance if offering services, and property coverage if your LLC owns significant assets or equipment.

Build Your Online Presence

These days, establishing a professional website and social media presence fuels a young company’s credibility. Even something as simple as reserving your domain name and launching basic business pages helps demonstrate that you’re serious about your commercial endeavors. As you hustle to build your customer base, develop compelling web content that spotlights what sets your products or services apart.

Create a Business Plan

Every new business needs a roadmap guiding high-level strategy and tactical goals. Crafting a lean yet thorough California LLC business plan covering market opportunity analysis, startup funding requirements, 5-year financial projections, marketing game plan, etc. forces you to refine your vision and formalize actionable next steps for getting there. Revisit this living document regularly to track progress.

Conclusion

Starting an LLC allows business owners to unlock growth potential with less risk. California does have particular legal and tax considerations to factor in, but you now have a solid grasp of the basic five steps for forming an LLC in the state:

1. Choose a unique business name
2. Designate a registered agent
3. File Articles of Organization and Statement of Information
4. Create an Operating Agreement
5. Obtain relevant tax IDs

Additional legal, accounting, tax, insurance, and strategic planning should happen concurrently to set your business up for success.

Meow Technologies is a financial technology company, not a bank or FDIC-depository insured institution. Likewise, Meow Technologies is not an investment adviser and none of the information presented herein should be relied upon as financial advice or a recommendation to make any financial decision nor should it be considered to be tax or legal advice. The information is the opinion of Meow Technologies for educational purposes and may not be suitable for all companies. Products, like the one described herein, are offered through Meow Technologies and are not advisory services which are only offered through Meow Advisory, LLC.** The FDIC’s deposit insurance coverage only protects against the failure of an FDIC-insured bank.**

Get started with Meow

Apply Now

Put your company's idle cash to work

TwitterLinkedIn

Resources

Legal

*Disclaimer: Meow Advisory LLC is a registered investment adviser. Registration as an investment adviser does not imply any level of skill or training.
For accounts opened through Atomic Brokerage LLC: Meow Advisory LLC has an engagement with Atomic Brokerage LLC (“Atomic Brokerage”), a registered broker-dealer and member of FINRA and SIPC , to bring you the opportunity to open a brokerage account. Brokerage services for customers of Meow Advisory LLC are provided by Atomic Brokerage. For more details about Atomic Brokerage, please see the Form CRS, General Disclosures, and the Privacy Policy. Check the background of Atomic Brokerage on FINRA’s BrokerCheck.
For subadvisory services for accounts opened through Atomic Invest LLC: Meow Advisory LLC has an engagement with Atomic Invest, LLC (“Atomic Invest”), an SEC-registered investment adviser, to bring you the opportunity to open an investment advisory account. Investment advisory services are provided by Atomic Invest. Companies which are engaged by Atomic Invest receive compensation of 0% to 0.85% annualized, payable monthly, based upon assets under management for each referred client who establishes an account with Atomic Invest (i.e., exact payment will differ). Atomic Invest also shares a percentage of compensation received from margin interest and free cash interest earned by customers with Meow Advisory LLC. Meow Advisory LLC is not a client of Atomic Invest, but our engagement with Atomic invest gives us an incentive to refer you to Atomic Invest instead of another investment adviser. This conflict of interest affects our ability to provide you with unbiased, objective information about the services of Atomic Invest. This could mean that the services of another investment adviser with whom we are not engaged could be more appropriate for you than Atomic invest. Advisory services through Atomic Invest are designed to assist clients in achieving a favorable outcome in their investment portfolio. They are not intended to provide tax advice or financial planning with respect to every aspect of a client’s financial situation and do not include investments that clients may hold outside of Atomic Invest. For more details about Atomic Invest, please see the Form CRS, Form ADV Part 2A, the Privacy Policy, and other disclosures. Brokerage services for Atomic Invest are provided by Pershing Advisor Solutions LLC (“PAS”), a registered broker-dealer and member of FINRA and SIPC.
Neither Atomic Invest nor Atomic Brokerage, nor any of their affiliates, is a bank. Investments in securities are Not FDIC insured, Not Bank Guaranteed, and May Lose Value. Investing involves risk, including the possible loss of principal. Before investing, consider your investment objectives and the fees and expenses charged by Atomic Brokerage and/or Atomic Invest.
See the Legal Section within the Meow website for additional agreements.

U.K. Gilt pricing quoted net of fees. ~5% U.K. Gilt yield is sourced from Investing.com December 2023 6-month United Kingdom 6-Month Bond Yield. ~5% Treasury Bill yield is sourced from treasurydirect.gov December 2023 12-week U.S. Treasury Bill auction.

**Disclaimer: Meow Technologies is a financial technology company, not a depository, bank or credit union, and your account at Meow is not, itself, an FDIC-insured product.

Meow currently partners with three banking providers. Banking services are provided by Third Coast Bank SSB; Member FDIC, Grasshopper Bank, N.A; Member FDIC, and FirstBank, a Tennessee corporation; Member FDIC.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Grasshopper Bank, N.A, you deposit your funds into a deposit account at Grasshopper Bank, N.A. which sweeps those funds into deposit accounts across a network of Federal Deposit Insurance Corporation (“FDIC”)-insured banks, for up to the current standard maximum deposit insurance amount (“SMDIA”) of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including Grasshopper's ICS Deposit Placement Agreement. Grasshopper Bank, N.A. uses a third-party vendor and agent to help administer this sweep process. Visit https://www.intrafi.com/network-banks/ for a list of the banks and savings associations with which we/Grasshopper, N.A. have a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Grasshopper, N.A. or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of Grasshopper Bank, N.A, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheets for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Third Coast Bank SSB, you deposit your funds into a deposit account at Third Coast Bank SSB. If you also hold funds in a sweep program with Third Coast Bank SSB, Third Coast Bank SSB sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per receiving bank, for each ownership capacity or category, including any other balances you may hold at that receiving bank directly or indirectly through other intermediaries, including broker-dealers. Third Coast Bank SSB uses a third-party vendor and agent to help administer this sweep process. Visit Third Coast Bank SSB for a list of the banks and savings associations with which we/Third Coast Bank SSB have a business relationship for the placement of deposits at receiving banks, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Third Coast Bank or you). The current maximum deposit insurance amount for your funds is up to $50 Million in FDIC insurance through the sweep network of Third Coast Bank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and conditions and refer to the applicable rate sheet for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by FirstBank, a Tennessee corporation, you deposit your funds into a deposit account at FirstBank, which sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including FirstBank's ICS Deposit Placement Agreement. FirstBank uses a third-party vendor and agent to help administer this sweep process. Visit IntraFi for a list of the banks and savings associations with which FirstBank has a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by FirstBank or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of FirstBank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheet for additional information.

***FDIC insurance coverage is only available to protect you against the failure of an FDIC-insured bank that holds your deposits (and does not protect you against the failure of Meow or other third party). Your account with Meow and all services provided to you are subject to the Meow Terms of Service (“Account Agreements”) and other applicable terms and no other representations or warranties, express or implied, are provided to you except as expressly set forth in those written Account Agreements. If you have any questions regarding your account, please contact team@meow.com.

FirstBank Funds Availability Notice

FirstBank’s general policy is to allow you to withdraw funds deposited in your account on the first business day after the day we receive your deposit. Funds from electronic deposits will be available on the day we receive the deposit. In some cases, we may delay your ability to withdraw funds beyond the first business day. Then, the funds will generally be available by the SECOND business day after the day of deposit.