How to make Starting an LLC in California Easy

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California has by far the largest population in the US, with approximately 39,613,493 citizens. This means that California has nearly 10,000,000 more citizens than the population of the second most populous state, Texas. This has provided California with a significant workforce, as well as the potential for a vast amount of businesses across industries. Whilst California is known as the tech capital of the US, given that Silicon Valley lies within it; the state is also ripe with potential for many other sectors. 

Every day, more and more entrepreneurs begin the process of funding and initializing their own businesses. The process can be arduous, but there are many options for entrepreneurs to both hasten and simplify their formation process. Since Limited Liability Companies are one of, if not the most, popular forms of business entities, many startups choose it as the foundation of their business. LLCs require an array of documents and actions to reach formation. But, there are methods to increase the likelihood of a smooth and uncomplicated formation process. 


(Copyright: TRUiC)

What is an LLC and why do Businesses Form Them?

The State of California’s Franchise Tax Board notes that, “A limited liability company (LLC) blends partnership and corporate structures. You can form an LLC to run a business or to hold assets. The owners of an LLC are members. LLCs protect its members against personal liabilities.” The latter part is perhaps one of the most compelling aspects of LLCs. Many entrepreneurs want to ensure that they are not liable for multiple aspects of business engagement. This can include business debt or any legal liability. 

Though LLC laws and regulations differ by state, California LLCs have a clear outline and structure when it comes to taxation and liability protection. All LLCs within California are expected to pay taxes if they are registered in California. Similarly, this is especially true if they have not been elected as an S corporation. LLCs that are taxed as S corporations are expected to then adhere to corporate tax rules in California. LLCs are also expected to pay a minimum tax fee of $800 per year. California is one of the few states that imposes double taxation. This, however, does not deter entrepreneurs from forming an LLC, as the liability protection is far too important an asset. 

How to Make Starting an LLC in California Simple

Starting an LLC in California can be difficult, but startups and burgeoning businesses can make use of tools and resources to make their lives easier:

Use an LLC Formation Service

LLC formation services can save new businesses time, effort, and money in their formation period. This is important, as all three factors are important to businesses in their early stages. Many businesses do not have the luxury of time to spend hours dedicated to the documentation and filing process for formation. This is where LLC formation services come in handy. These services facilitate and handle the entire formation process for businesses at a fee. Many formation services are customizable to the needs of clients, and offer data security and privacy. Some formation services include: Tailor Brands, ZenBusiness, and Northwest. 

Read up about LLC Formation through Free Online Resources

Many small business entrepreneurs do not know where to start with their formation process. Luckily, the internet is full of resources that detail the entire formation process for businesses. Many platforms offer state-by-state guides for LLC formation and this is especially helpful as businesses need to know the different requirements for LLCs in their chosen state. TRUiC is one platform that offers comprehensive guides and resources on the topic of LLC formation. 

Prepare Early and Obtain all Documentation

For businesses that do not want to make use of LLC formation services, but have read up on all they need to know before starting the formation process; it is vital that time is allocated to preparing documentation. The most simple way to go the independent route is to prepare early, obtain all necessary documentation, and allocate ample time to allow for information and document collection. That way, by the time businesses need to register and finalize their formation, all documentation has been adequately prepared and researched. 

Final Thoughts

California is a state with much opportunity for startups and new small businesses. However, the formation process can feel daunting, and many entrepreneurs expect a lengthy and drawn out process. This does not have to be the case. There are tools, services, and resources available to ensure that growing businesses have all they need to make their formation process smooth, simple, and efficient.