Limited Liability Company (LLC)

CALIFORNIA

LLC Naming Requirements:
In California, the LLC's legal name must contain the word "Limited Liability Company" or the abbreviations "LLC" or "L.L.C."

Special Note: Professions including, but not limited to real estate brokers, contractors, architects, engineers, doctors, lawyers, accountants, and many other licensed professions are not permitted to conduct business as an LLC in California. If your profession requires a license in California, you should check with the licensing board to determine if the LLC structure is permitted before forming the LLC.

State LLC Taxes:
The California LLC Tax will vary depending on the structure chosen. Below is an overview of the California LLC taxes:

• Taxed as a Sole-Proprietorship a.k.a. Disregarded Entity: A LLC taxed as a Sole Proprietorship a.k.a. Disregarded Entity must pay an $800 tax plus an "additional fee" if the LLC's total income exceeds $249,999. The $800 tax must be paid on or before the 15th day of the 4th month of the LLC's tax year end and the "additional fees" must be paid on or before the 15th day of the 6th month of the LLC's tax year end. Below is a summary of the "additional fees":
  

  Annual Total Income	Additional Fee
  $0.00 to $249,999 ........................................	$0
  $250,000 to $499,999 ..................................	$900
  $500,000 to $999,999 ..................................	$2,500
  $1,000,000 to $4,999,999 ............................	$6,000
  $5,000,000 and over .....................................	$11,790

  NOTE: The minimum tax and additional fee must be paid in your first tax year (even if you have a short tax year).
• Taxed as a Partnership: A LLC taxed as a Partnership must pay the same tax as a Sole Proprietorship a.k.a. Disregarded Entity. Please see above.
• Taxed as a S-Corporation: A LLC taxed as a S-corporation must pay a tax in the amount of 1.5% of the net income or $800.00, whichever generates the higher tax. The tax must be estimated and prepaid to the California tax authority in 4 installment payments. This tax must be paid in your first tax year even if you have a short tax year.
• C-Corporation Tax: A LLC taxed as a C-corporation must pay a tax in the amount of 8.84% of the net income or $800.00, whichever generates the higher tax. The tax must be estimated and prepaid to the California tax authority in 4 installment payments. This tax must be paid in your first tax year (even if you have a short tax year).

California's Reporting Requirements:
All LLCs are required to file a "Statement of Information" with the Secretary of State in order to disclose the managers' names, officers' names, and name/address of the registered agent. The filing fee is $20.00. After formation, you must file an initial statement within 90 calendar days after the articles are filed. Afterwards, you must file this statement every 2 years during the 5 month period before your articles anniversary date (i.e. If your articles were filed in August 2011, then you must file your statement anytime between March 2013 to August 2013 and then March 2015 to August 2015, et cetera).

Special State Level Election:
California recognizes the federal tax structure that you select and no extra state level election is required. However, it is a good idea to file your first year tax returns along with any "IRS tax structure approval letters" as proof of your tax structure.

Professional Services:
California does NOT allow professional services (i.e. doctors, lawyers, accountants, architects, etc) to be structured as a LLC. Furthermore, some licensed professions which would generally not be thought of as a professional service (i.e. contractor) cannot be structured as an LLC. If your profession requires a license in California, you should check with the licensing board to determine if the LLC structure is permitted before forming your LLC.

State Member/Manager Requirements:
Below is a brief overview of California's member/manager requirements:

• Minimum Number: In California, you must have at least 1 member/manager.
• State Residence Requirements: The members/managers are not required to be California residents.