LLC in California Question

Here's the form:

Depends on how you file it. If you hand carry it into the Secretary of State's office you can get it done within a day or two. Same day costs more money. If you do it by mail, it will likely be formed within the week, but you may not get your paperwork back for a few more weeks.

$70 filing fee, $800 per year minimum tax (so your post and this reply are not completely off topic).

That's too difficult to deal with here. Get the book from Nolo Press on how to set up your California LLC.

Note that in addition to this, interests in an LLC are securities, so you will need to comply with the securities laws. Here's one of the forms for that:

If you are in certain kinds of businesses (lawyers, accountants, architects - I forget if there are others) you are not allowed to set up an LLC, and must set up an LLP instead.

I'm sure there's a lot more, but that's all I can think of off the top of my head.

There are also companies on the internet that will do it. It's more expensive than a do it yourself project, but I imagine it gives some peace of mind.

And a once every two years statement of information, currently $20. Amazing they didn't raise the fee in the budget crisis!

Why would the law be like this?

But instead of send out a pre-filled form,now they just send a postcard telling you to get a form and fill it out. Some cost savings there.

$20.

When I got started the fee was $5. I don't remember when they raised it to $20, but it doesn't seem to have been that long ago.

The $800 minimum tax has been unchanged in the 30 years I've been practicing, as well as the $100 filing fee for Articles of Incorporation. The $70 filing fee for an LLC Articles of Organization is the same as it was when the first LLC was created in California.

I haven't analyzed the differences, but I suspect it has something to do with the rule that professionals not being allowed to avoid liability for their personal mistakes.

Actually I believe they require you to file on line unless you have a really good reason and get them to give you a waiver.

yes, but can you say "Business Net Receipts Tax"? I hope not.

Corporations can file on line, but are not required to. LLCs cannot file on line.

How is the postcard a cost savings? You still have to pay the $20 fee either way, right?

The cost savings is to the govt, a postcard is cheaper than an envelope with papers in it that cost just to reproduce for the govt.

Yes, I didn't want to make it more complicated than necessary, but there is additionally a gross receipts tax on California LLCs with gross incomes of greater than $250,000 (at least the last time I checked). That's in addition to the minimum tax.

Actually, you were saying the fees hadn't increased for quite some time, but the California BNRT is being talked about to gouge business entities.

I can explain it based on history. When the California LLC statute was being written in the early 1990s, the drafters were told that if a professional practice such as an accounting or law firm were organized as an LLC, its interests would be considered securities potentially subject to registration with the SEC. The law and accounting firms didn't want to get into that. As a result, the section of the LLC statute that had been reserved for professional LLCs (California Corporations Code, Title 2.5, Ch. 9) was never completed, and such practices are statutorily prohibited from operating as LLCs in California.

Other states provide by statute for professional LLCs and don't seem to have had problems with the SEC. As far as I know this was just a decision that was made by the California drafters (a committee of the California Bar Association) based on information that was available to them at the time.

Katie in San Diego