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Maria's Journey to Registering a California LLC

  1. The Cost and Time to Register a California LLC
  2. 8 Steps that need to follow
  3. The Unexpected Perks
  4. Other states costs table

1.The cost and time:It cost her $118, and it took about 8 business days for her LLC to be approved.

2. 8Steps that need to follow

  1. The Initial Decision: Where to Register?
  2. Choose an LLC Name
  3. Understanding the Role of a Registered Agent
  4. Filing the Articles of Organization
  5. Creating an Operating Agreement
  6. Getting an EIN and Filing the Statement of Information
  7. The Annual Franchise Tax And Estimated Fee
  8. Bio Report

Maria had been running her cleaning business in California for a few years.and she finally decided it was time to take things to the next level by formalizing her business.

She knew that forming an LLC would help protect her personal assets (you can visit this link for detail:(https://llcclass.com/How-LLC-to-protect-your-personal-assets)) and give her business more credibility. But she was unsure where to begin, she started an article on LLCClass that detailed the process of setting up an LLC: (https://llcclass.com/how-to-set-up-an-llc/).

  1. The Initial Decision: Where to Register?

As Maria began reading, she found herself questioning whether she should register her LLC in California, her home state, or consider other states like Nevada or Delaware, which she had heard were tax-friendly and popular among businesses. The idea of saving money on taxes in Nevada or joining the ranks of large corporations in Delaware was tempting.

However, after reading another article on LLCClass.com about the differences between Domestic LLCs and Foreign LLCs, Maria realized that registering in her home state of California was the best choice. She learned that registering in another state would mean she'd have to pay taxes and file reports in both California and the state where she registered, which would complicate her finances. Choosing California would keep things simple and avoid the hassle of double taxation.

(Link to the article she read: (https://llcclass.com/domestic-llc-vs-foreign-llc-whats-the-difference/))

2.Choose an LLC Name

Search your California LLC Name to make sure it’s available in the state.

You need to do this because two businesses in the state can’t have the same name.

First, search your business name and compare it to existing businesses in California. You can make sure the LLC Name you want is unique from existing businesses using the (https://bizfileonline.sos.ca.gov/search/business).

Second, familiarize yourself with the naming rules in this state (so your LLC gets approved).

3.Understanding the Role of a Registered Agent

Next, Maria learned about the requirement for a Registered Agent in California. At first, she thought about serving as her own Registered Agent, but the idea of having her home address on public record made her uncomfortable. Plus, she didn’t want to worry about being available during business hours to receive important legal documents.

As she continued researching, Maria found another helpful article on LLCClass.com that explained what a Registered Agent does and why it’s beneficial to hire a professional service. After comparing different providers, she was convinced by Northwest Registered Agent. Their service included a free year of Registered Agent service, privacy protection by using their address, and professional customer support—all for a competitive price with no upsells.

(Link to the article she read: (/what-is-llc-registered-agent))

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4.Filing the Articles of Organization

Armed with this knowledge, Maria moved on to the next step: filing the Articles of Organization. She spend 39$ for hiring Northwest registered agent to deal with the California Secretary of State and 1 year free business address. She followed the instructions on Nothwest registered agent, which made the process easy to navigate. For a $70 state fee, she officially created her LLC, and she received confirmation within 8 days.Total costs are $39(agent fee)+$70(state fee)+9$(bio report fee)=$118.

We write the process on Northwest:(/northwest-register-process/).

And what is bio report in 8th item below.

5.Creating an Operating Agreement

Although not required by California law, Maria understood the importance of having an Operating Agreement for her LLC. It would serve as a guide for how her business should be run and provide clear instructions in case of any disputes.It has some details .

Here are instructions about it:

What is a Single-Member LLC?

A Single-Member LLC is a Limited Liability Company (LLC) that has only one owner, referred to as a "member." This type of LLC is popular among solo entrepreneurs and small business owners because it combines the benefits of a sole proprietorship with the liability protection of a corporation. In a Single-Member LLC, the member enjoys the following advantages:

  • Limited Liability Protection: The member's personal assets are generally protected from business debts and liabilities. This means that if the business faces legal action or debt, the member’s personal assets (like their home or car) are typically safe.

  • Pass-Through Taxation: A Single-Member LLC is usually treated as a "disregarded entity" for tax purposes, meaning the business itself is not taxed separately. Instead, all profits and losses are reported on the member's personal tax return, simplifying the tax process.

  • Simplicity in Management: Since there’s only one member, decision-making is straightforward, and there’s no need for complex management structures or extensive record-keeping.

Member-Managed LLC vs. Manager-Managed LLC

When forming an LLC, members must decide how they want the business to be managed. There are two primary management structures: Member-Managed and Manager-Managed LLCs.

In a Member-Managed LLC, the owners (members) are directly involved in the day-to-day operations of the business. This structure is common in smaller LLCs where the members want to retain control over the business’s activities.

Manager-Managed LLC

In a Manager-Managed LLC, the members appoint one or more managers to handle the day-to-day operations of the business. This structure is beneficial when members prefer not to be involved in daily management or when the LLC has many members.

She used the Manager-Managed template provided on Northwest registered agent and customized it to fit her cleaning business.

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Download a free Template (/wp-content/uploads/2024/08/Free-LLC-Operating-Agreement-template.doc) ,(/wp-content/uploads/2024/08/Template-Manager-Managed-LLC-Operating-Agreement.docx)
6.Getting an EIN and Filing the Statement of Information

Maria then applied for an EIN (Employer Identification Number) through the IRS:(https://www.irs.gov), which she needed to open a business bank account and handle taxes. She also filed the Statement of Information with the California Secretary of State through Northwest registered agent, another mandatory requirement for keeping her LLC in good standing.All LLCs in California must file a “Statement of Information” (Form LLC-12) every 2 years. This cost her an additional $20 every two years.

Statement of Information Deadline

Your first Statement of Information must be filed within 90 days after your LLC is approved. For instance, if your LLC was approved on May 15, 2024, you’ll need to submit your first Statement of Information by August 13, 2024.

After this initial filing, you'll need to file a Statement of Information every two years, with the due date being on or before your LLC’s anniversary date. This ensures that your LLC remains in good standing with the state.

This is one thing that you must concern in california.

After registering your LLC, there are a couple of key requirements to keep in mind to stay compliant:

  1. Statement of Information: As mentioned, this must be filed within 90 days of your LLC's approval, and then every two years thereafter by your LLC's anniversary date.

  2. Bio Report: Another important requirement, which we'll dive into in detail in the next section. This report ensures your LLC's ongoing compliance and keeps your business information up to date.We will declear it below.

  3. The Annual Franchise Tax                   Your first $800 Annual Franchise Tax payment is due 4.5 months after your LLC is approved.

  4. The LLC Estimated Fee                        First Estimated Fee would be due by the "15th day of the 6th month" after her LLC was approved. It sounded a bit confusing at first, but here’s how it worked out: her LLC was approved in May 2024, so May was considered "month 1." Six months later would land her in October, and the fee would be due on October 15, 2024.

7.The Annual Franchise Tax And The LLC Estimated Fee

Maria knew she also had to pay the $800 Annual Franchise Tax every year, which is a fee for the privilege of doing business in California. While this seemed like a steep cost, she understood it was a necessary part of running a legitimate business in the state.And when to pay it is a question.

The state considers the month your LLC was formed as the first month in their calendar calculations.

For instance, if your LLC was approved in April 2024, your first $800 payment is due by July  15, 2024. Moving forward, the Annual Franchise Tax is due every year by April 15th, starting the year after your LLC is formed.

Previously, the first payment was waived, but this is no longer the case. However, by timing your LLC formation strategically, you can avoid making two consecutive Franchise Tax payments.

How Do I File the $800 Annual Franchise Tax?

The $800 Annual Franchise Tax must be filed with the California Franchise Tax Board. You can submit it either by mail or online. If you choose to file by mail, you’ll need to include the payment voucher (Form 3522).

When Mia decided to start her cleaning business in California, she knew there were a few financial hurdles to clear. One of the things that caught her attention was the LLC Estimated Fee. But what exactly is it, and how much would it cost her?

Understanding the LLC Estimated Fee

Mia discovered that if her cleaning business brought in over $250,000 in gross annual receipts (that's total revenue), she would need to file and pay an Estimated Fee using Form 3536. This fee is like a tax on the future, predicting how much her business might earn. If her revenue stayed below $250,000, she could skip this step—no need to file Form 3536 at all.

When is the LLC Estimated Fee Due?

Now, timing is everything. Mia learned that her first Estimated Fee would be due by the "15th day of the 6th month" after her LLC was approved. It sounded a bit confusing at first, but here’s how it worked out: her LLC was approved in May 2024, so May was considered "month 1." Six months later would land her in October, and the fee would be due on October 15, 2024.

Once that first payment was out of the way, Mia would need to keep track of the ongoing Estimated Fees, which must be filed and paid by June 15th each year. It was a small detail, but one that could easily slip through the cracks if she wasn’t careful.

Mia was relieved to understand the process clearly, knowing that by keeping on top of these payments, she could focus more on growing her business and less on unexpected financial surprises.

8.Bio Report

What is the BOI Report? A critical new requirement that came into effect in 2024, known as the Beneficial Ownership Information (BOI) Report.

The BOI Report is a mandatory filing that requires all LLCs, regardless of when they were formed, to disclose information about their beneficial owners. A beneficial owner is anyone who exercises substantial control over the company or owns at least 25% of it. This report is designed to help federal authorities keep track of who really controls LLCs, preventing the anonymous ownership that has often been used for illegal purposes such as money laundering and tax evasion.

Who Needs to File the BOI Report?

Every LLC, whether registered before or after the law took effect in 2024, must file this report. If your LLC was registered before 2024, you’ll need to submit your first BOI Report by the end of 2025. If your LLC was registered in 2024 or later, you must file the report within 90 days of your LLC’s formation.

What Information is Required?

The report must include the name, date of birth, address, and an identifying number (like a passport or driver’s license number) of each beneficial owner. This information is kept confidential and is only accessible to authorized government agencies.

Northwest Registered Agent’s $9 BOI Service is an easy and reliable way to meet the new 2024 BOI filing requirements.

For just $9, Northwest Registered Agent will manage the entire BOI filing process for you. They’ll collect the necessary information, ensure it’s accurately reported, and submit it on your behalf. This service is especially beneficial if you’re concerned about navigating the complexities of the new law or if you want to ensure that your personal information is handled with the utmost confidentiality.

After Maria 's LLC was approved, she immediately opted for Northwest Registered Agent's $9 Bio Service. This service proved to be incredibly convenient and affordable, making it an easy decision for her. By using the service, Maria ensured that her LLC complied with the latest 2024 requirements for reporting beneficial ownership information (BOI). This step was crucial for avoiding legal issues related to the unlawful possession of LLCs, and Northwest's streamlined process made it hassle-free for Miriam to stay compliant.

3.The Unexpected Perks

One of the most exciting parts of forming her LLC was discovering the perks she hadn’t anticipated. Thanks to her LLC registration, Maria was able to apply for $5,000 in AWS credits, $10,000 in Azure credits, and $300 in Google Cloud credits. These resources were incredibly valuable as she expanded her business online. She was able to develop a website for her cleaning services without worrying about server costs, which significantly boosted her business.

(Link to the step-by-step guide she followed: (/northwest-register-process/))

4.Other states costs table

We’ve provided the registration costs for many other states. To see them, please click here:(https://llcclass.com/how-much-llc-set-up-cost-by-state/)

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