The following information is provided for educational purposes only and in no way constitutes legal, tax, or financial advice. For legal, tax, or financial advice specific to your business needs, we encourage you to consult with a licensed attorney and/or CPA in your State. The following information is copyright protected. No part of this lesson may be redistributed, copied, modified or adapted without prior written consent of the author. A Limited Liability Company is a hybrid between a Corporation and a Partnership. An LLC protect your assets in the event of a lawsuit. In order to form your LLC, you must file LLC Formation Documents with the Secretary of State. Once your documents are approved and sent back to you, your LLC is now in existence and authorized to do business in the State. We have spent considerable time to make the details of this video simple and easy to understand. However, we cover a lot of ground and you are going to hear a lot of new terminology. We do recommend that after you watch this video, you watch it a second time in order to fully comprehend all the information provided. Please make sure you have watched the first Lesson on researching your LLC’s name. Your desired LLC name must be available for use before you proceed with filing your LLC Formation Documents. Your LLC is required to list a Registered Office and a Registered Agent within your LLC Formation Documents. The Registered Office is a physical address (it cannot be a PO Box) that is located in the State where your LLC is formed. A Registered Agent is a person or a company who agrees to accept legal mail and important documents on behalf of your LLC. The Registered Agent is located at the Registered Office and is generally accessible during normal business hours. As we mentioned, a Registered Agent can be a person or a company who has an address in the State where your LLC is formed. You, as an individual, can be your LLC’s Registered Agent. However, your LLC cannot be its own Registered Agent. For individuals who have an address in the State, it is most common that they serve as the LLC’s Registered Agent. Having said that, the individual person you choose as the Registered Agent does not need to be a member of the LLC. It can be a friend or a family member, or, frankly, anyone you know who agrees to accept Service of Process on behalf of your LLC. Service of Process is the delivery of legal mail and important documents sent from the State or a law firm to your LLC. Correspondence from the State can include items such as Annual Report notices, late notices, and copies of Formation Documents. Legal documents can include items such as subpoenas, and/or complaints for legal action. Again, the purpose of designating a Registered Agent is to authorize someone to accept Service of Process on behalf of your LLC. Whoever agrees to be your LLC’s Registered Agent must agree to do so. Some states require that they sign your LLC Formation Documents, but California does not require this. You will just need to list their name and address within your LLC Formation Documents. Takeaways. The purpose of a Registered Agent and its Registered Office is to be a point of contact for the State and to accept Service of Process for your LLC. You or someone you know can be your LLC’s Registered Agent, so long as you have an address in the State. Of you don’t have an address in the State that you can use, or don’t want to serve as your LLC’s Registered Agent, you can hire a Commercial Registered Agent. Using a Commercial Registered Agent will also help protect your privacy as the information listed in the LLC Formation Documents will become public record. A Commercial Registered Agent is a company that specializes in receiving Service of Process on behalf of businesses nationwide. They typically charge between $100 and $300 per year. If you decide to use a Commercial Registered Agent, we recommend Northwest Registered Agent, LLC. They have been in the business for more than two decades and have built up a solid reputation. Their fees are among the most affordable, and their support is top-notch. We’ve joined forces with them in order to provide Registered Agent services nationwide to your clients. There’s a link below this video where you can find instructions on how to sign up for their Registered Agent services. Now, let’s discuss your LLC Formation Documents. The name of the LLC formation document for the State of California is called the Articles of Organization. This document is not complicated and contains basic information, including listing your Registered Office and Registered Agent. We will walk you through the details of the Articles of Organization in just a couple minutes, and we will make sure you get it filled out correctly. Once your Articles of Organization are completed, you will need to submit them to the State along with the filing fee. You will find the filing fee amount, accepted forms of payment, and the address where to send your Articles of Organization to below this video. Your Articles of Organization do not need to have original signatures. You can file your original, or you can file a copy if you prefer. It is a good idea however, to keep a copy for your business records. Once you mail the filing fee, along with your Articles of Organization, the State will review and process your paperwork. If there are any issues with your Articles of Organization, the State will mail back a letter with instructions on what needs to be corrected. If there are no issues with your filing, the State will mail back a stamped approved copy of your Articles of Organization within approximately 10 – 15 business days. Once you receive your stamped and approved Articles of Organization, your LLC is now a legally formed business in the State of California. Please keep a copy of this document with your business records. Do not order your EIN (also known as your Federal Tax ID Number) or start to use your LLC for any business purposes until you have this approval. California has additional ongoing requirements (and fees) that must be submitted in order for your LLC to remain in compliance. Failure to file these items on time will result in the State charging late fees and they may dissolve (or shut down) your LLC. The first of these requirements is the initial Statement of Information. It is due within 90 days of approval of your LLC and the filing fee is $20. Your next requirement will be your Annual LLC Franchise Tax. Your Annual LLC Franchise Tax will be due every year and will be a minimum of $800. Then, every two years, you will have to file an updated Statement of Information. The cost will remain the same at $20. These additional filing requirements are discussed further in Lessons 5 and 6. Don’t worry, we will walk you through completing the paperwork for both. We are now ready to fill out the Articles of Organization. You can download this document below the video. Let’s get started. Here we are, inside the Articles of Organization. This is a 1-page PDF document. The form can be filled out on the computer or it can be printed, and then filled out by hand. If you fill it out by hand, please use blue or black ink. Make sure to print the document on white paper that is letter-sized (that’s your standard 8.5 by 11 inches). Also, please note that I have a professional version of Adobe Acrobat. You may just have a simple version of Adobe Reader, and you may not have as much functionality in order to edit and type inside the document. If that’s the case, simply print the document and then fill it out by hand. You’ll notice at the top of the Articles of Organization, they mentioned the filing fee. The next paragraph that says a separate non-refundable $15 service fee, this is only if you drop the application off in person so this is not applicable. There’s also a notice here regarding the minimum $800 Annual Franchise Tax fee. We have details and instructions and documentation on that for you in Lesson 6. Before we get started, one other thing to note at the bottom of this document, you will have a PO box and the address where to send these documents to. Make sure that you double-check and you cross-reference this address with the address that we have listed below this video. You may be watching this video in the future, and we want to make sure that you have the most up-to-date address and you’re not just looking at the address that you see on the video right now. And one last thing, if you’re filling out this document on the computer, they did kind of mess it up a little bit, so down underneath Service of Process, they have like this extra line, and then down here there’s an extra line, but those don’t need to be filled out. All right. let’s get started. To save time, I’ve already filled this document out, so let’s go through each section together. Under Section 1, I’m going to list the name of my LLC. For this example, I’ve used “ABC Widgets, LLC”. Make sure that you include the letters “LLC” or “L.L.C.” at the end of your name. And in this example, I’ve used a comma, but the comma is not required so it’s a personal preference. You can use one if you’d like, or you can leave it out. Section 2, you don’t need to do anything there. It just says that the LLC is authorized to do any and all lawful activities within the State. Next in Section 3, you’re going to list the address of the LLC. This cannot be a PO Box, so this could be your home address, or could be a business address. Next in Section 4, we’re going to include the name of the Registered Agent and the Registered Office. For this example, let’s say that I’m John Doe. I’m going to be the Registered Agent for this LLC, or for my LLC. So, I’m going to put my name here, and again I’m going to put my address once again. Let’s take a look at another document if we were to use a Commercial Registered Agent. I have one filled out over here. Let’s scroll down. Let’s say for this example I’ve used Northwest Registered Agent. One thing to make note of if you’re using a Commercial Registered Agent which is already registered with the State of California (which most likely they are), you don’t even have to include their address. You simply just list their name under Section A. So in this case I’ve just listed “Northwest Registered Agent, Inc.” and they include their Registration Number there. So pretty much the documents are very similar: if you have a Commercial Registered Agent you’re just going to list the company name on A. You don’t even need to list the name on B. For this example, this is myself acting as a Registered Agent for the LLC. If it was a family member at a different address, I would simply just put their name there and enlist their address in B. Under Section 5 for Management, you’re going to check off that the LLC will be managed by all Limited Liability Company (Members), and that’s it. It’s a pretty simple document. Down below, you’re just going to print your name, and then once you print this document out, you’ll simply sign above the line here that says “Organizer”. One question that customers do ask is whether or not this document needs to be notarized. It does not. You’ll simply just print it out, sign it, send this in with your filing fee, and in about 10-15 business days you’ll get back this document with your stamp of approval. Pretty simple, let’s just do a quick one-through once again. At the top, Section 1, you’re going to list the name of the LLC. Section 2, there’s nothing to be done there. Next in Section 3, you’re going to list the address of the LLC. Now this doesn’t have to be an official business address or anything of that sort, it can be a home address or it can be a business address if you do have one. Under Section 4, you’re going to list the name and the address of the Registered Agent if it’s an individual person. If it’s a Commercial Registered Agent that is registered with the State, over in this example we’re just going to list their name on line A and we’ll leave line B blank. so for this one, I’ve used myself as the Registered Agent and I’ve included my address. If you’re using a friend or family member, you just switch and put their name on A and their address on B. Section 5 for Management, you check off “All Limited Liability Company (Members)” will be managing the business, and you’re going to print your name here, print this document out, and sign on this line. Again, once you submit everything to the State, you’re going to get back a copy of your Articles of Organization with a stamp of approval, and that will arrive in approximately 10-15 business days. And that concludes this Lesson.
Use a future file date to avoid back-to-back $800 franchise tax payments
If you’re forming your LLC in October, November, or December, and you don’t need your LLC open right away, we recommend having your California LLC go into existence on January 1st of the following year by including a Future File Date Attachment with your Articles of Organization.
Not only will this save you the hassle of filing any federal, state, or local tax returns for that “short year”, but it will help you avoid the dreaded back-to-back $800 annual franchise tax payments ($1,600 due within a few months!). Please note that your future file date can’t be more than 90 days ahead.
Here’s how it works. Let’s say your LLC was approved in November. This means your LLC will be in existence for 2 months during a taxable year. You owe an $800 franchise tax payment for that year and it’s due by February 15th of the following year. Then you have to pay for the next taxable year and that’s due by April 15th. So that means you have to pay $800 in February and another $800 in April. Ouch! So the solution is to select a future file date of January 1st of the filing year. That means you’ll make one payment of the $800 annual franchise tax, due by April 15th, and your next payment will not be due until April 15th of the following year.
California Registered Agent Recommendation
If you need a California Registered Agent, we recommend Northwest Registered Agent. They have excellent customer service and they charge $125 per year (most companies charge $200 – $300 per year).
Additionally, if you’d like to keep your address private and off of public records, Northwest will let you use their office address throughout your entire Articles of Organization. And any mail that is sent to your LLC will be scanned and uploaded to your online dashboard.
In this video I’m going to show you how to signup and register for Northwest Registered Agent. There’s a link below this video that will take you to their website. Once you’re there, in the upper right hand corner, it says order online and there’s a drop-down menu. Let’s go ahead and select Registered Agent service. And let’s scroll down on the page. We have a four-step process. In the first field you’re going to enter your desired LLC name and then in the drop-down select LLC. I’m going to enter ABC Widgets LLC as my example company. And don’t worry if you end up switching your name; you can change it in the system later. It’s not that important. Then we’re gonna hit next step. It says are we changing Registered Agent. In my case is no. Underneath States I’m going to select the state in which you’re forming your LLC. For this example, I’m going to choose Pennsylvania. Next, it says would you like your attorney notified at the same time we notify you if you get sued. If you don’t have an attorney, you can leave it on. If you do have an attorney, you can go ahead and fill in their email address. Once that’s complete click next step. On the next page, you’re going to enter your name your, your phone number, your email address, your mailing address, and then click on final step. On the next page at the top, it’s going to ask if you’d like to sign up for one year, two years, or three years. One year is going to be on by default. If you’d like to save a little bit of money, you can go ahead and sign up for two years, or three years if you’d like. Once you have that in place you’re going to enter the password. When you log into your account at Northwest Registered Agent, you’re going to use the email address that you end on the last page, and you going to use this password, so make sure you say this in an important place. Next, under payment information, you’re going to select pay with a credit card. You’re going to enter your name, your credit card number, expiration date, billing address, and then at the bottom go ahead and click the finalized button. In this case it says yeah I’m done. It’s now going to redirect you and it’s going to process your payment. And on the next page, you’ll see a thank you message. It says all the state forms are under the filing resources. In your case you’re not going to need any of the state forms as we have them all in our course. They’re here as well if you do need them. We will click over there in just a second to get their address. If you happen to be changing your Registered Agent from an existing company, there are instructions here, and there are forms in the filing resources. Next, there’s some important email addresses to make sure that you add to your address book or you white list them as it’s called in your email, just to make sure they don’t go to spam. And these emails are very important because if you ever get Service of Process or if you ever sued, you definitely wanna make sure you get notified of that, so make sure you say these email addresses. There’s a nice thank you message down here. Once you agree to this page, you can go ahead and click on filing resources. One thing to note in the back end here, we are at www.llcagent.com. That’s different than the existing site that we’ve been on. If you need assistance at any time, go ahead and go to www.NorthwestRegisteredAgent.com. And you can always find their phone number on the page, or you can click on the contact button. Let’s go back to our back-end tab here, under the LLC agent, and under filing resources, here’s the most important information I need right now. It is the name. Make sure you double check in the state that you’re forming, in this case Northwest Registered Agent operates under the name Northwest Registered Agent LLC in the state of Pennsylvania, but in some states they go into the business name Northwest Registered Agent Services Inc., or some other variation. Now that we have their address here, we can continue with their LLC formation documents. This page has additional resources if you do need them. Most of these documents will not apply to you. There’s documents here for corporations. There are documents here for LLC’s, but again, we have all that documentation for you inside the course. But there are some nice additional resources on this page in case you need them. Again, if you have any questions about the process go to www.NorthwestRegisteredAgent.com, give them a call. Great company, great people, they have excellent support. And once you have your address, you can go ahead and continue with the next step, which is going to be completing your LLC formation documents. And that concludes this video.
The Mail Submission Cover Sheet is private (not publicly available) and will be used by the state to contact you if they have any questions about your California LLC filing.
Contact Person: Enter your name and phone number.
Entity Information: Enter your complete LLC name. Leave “Entity Number” blank (since you don’t have one yet) and you can also leave the “Comments” section blank as well.
Return Address: Enter your name, leave “Company” blank, and then enter the mailing address where you’d like your approved LLC Articles of Organization to be returned to. This can be any address located in any state. It doesn’t have to match the address you listed on your Articles of Organization.
Mail your signed Articles of Organization and your check or money order for $70 (made payable to the “Secretary of State”) to:
Secretary of State Business Entities PO Box 944228 Sacramento, CA 94244-2280
California LLC Approval
After you mail your LLC’s Articles of Organization to the California Secretary of State, they will review and process your LLC filing within 10-15 business days.
Accounting for “mail time” to and from the state, that means it usually takes 3.5 to 4 weeks before you get back your LLC approval in the mail. If the state gets backed up, it can sometimes take up to 5 weeks.
Your California LLC approval will come in the form of a stamped and approved copy of your Articles of Organization.
This will be mailed to you at the address you listed in your Mail Submission Cover Sheet.
In the upper-right corner of your Articles of Organization you’ll now see an “approval stamp” which includes the date your LLC was filed (this is your LLC’s effective date) as well as your LLC’s California Entity Number. This is a unique number that helps the Secretary of State identify your LLC.
Congratulations! Your California LLC is now officially in existence.
Here’s a copy of an approved Articles of Organization if you’d like to see what it looks like:
Next Step: LLC Operating Agreement
Once your California LLC is approved by the Secretary of State you can proceed to Lesson 3: LLC Operating Agreement.
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