If you are an entrepreneur who is starting a business in California and are thinking about establishing a limited liability company (LLC), there are a few things that you need to know about before making that decision. Keep in mind, while you can handle establishing an LLC in California on your own, an experienced attorney at your side can greatly ease the path forward. Either way, it’s important to be aware of the core issues at stake.

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Learn how to establish a limited liability company and when that business entity is right for your new enterprise.

What is a Limited Liability Company?

A limited liability company is a type of business entity that is completely separate from the business owners. It is a distinct legal entity that is responsible for its assets and liabilities. The reason why an LLC is considered a “limited liability” business entity is because the owners of the company are not personally liable for the debts incurred by the business. If an LLC has to file for bankruptcy, the business owners would only be out whatever they invested in the company and creditors can not come after them individually for the LLC’s debts.

How to Form a California LLC

Establishing an LLC requires more than the creation of a sole proprietorship or general partnership. While some companies exist that can help you fill out the forms for starting a California LLC, you should consider consulting with an experienced attorney to customize your new business entity to your specific needs.

  • The first step in forming an LLC in California is picking a name. The state has various naming regulations, and your lawyer can run a search to ensure that the name you want is not already taken by another company. Next, you must pick a registered agent for your LLC that is authorized to transact business in California.
  • The next step is drafting and filing Articles of Organization with the California Secretary of State. This document includes the name and address of your business, the names of the owners of the company, the registered agent for your business, and the purpose of your LLC. You must also file an Initial Statement of Information within 90 days of forming an LLC with the California Secretary of State, as well.
  • The last step in establishing an LLC in California is the creation of an operating agreement. This document is incredibly important to the success of your business, as it details the ownership and operating procedures of your business. An operating agreement dictates who makes the decisions on what issues, how disputes are resolved, how assets and liabilities are split, contribution requirements, and how an owner or member can exit the business. Whenever an issue arises in your LLC, the first step will always be to review the operating agreement for an answer. This document needs to be tailored specifically to your business and the needs of your company’s owners. To learn more, talk to our office today.

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At the Counsel for Creators in Los Angeles, we understand the critical importance of correctly setting up a limited liability company. To learn more about your legal options when starting a business, call or contact our office today.


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