How to form a California LLC by yourself (Part 2)
[Disclaimer: I am not a lawyer, nor do I aspire to be one]
I'm excited to finally be able to write this follow-up post. I submitted my Articles of Organization at the end of April, and received back filing confirmation in mid-July. It was a long wait and unfortunately, there are still a couple of more steps to complete. The good news is however, I'm almost there!
Ground to Cover:
- Complete the Statement of Information (LLC-12)
- Obtain an EIN from the IRS
- Pay the Franchise Tax
- You did it!
- Additional resources
Complete the Statement of Information (LLC-12)
In the documents that I received back from the Office of the Secretary of State, there was an addressed envelope and a copy of FORM LLC-12, the Statement of Information. The instructions for completing the form are included and it is pretty straight forward. You'll need to enter the name and address of the office of the LLC, the CEO of the LLC, and all of the managers of the LLC. You'll also need the name and address of the Registered Agent (what you entered on the Articles of Organization). Keep in mind you'll need to send this form within 90 days of the initial filing (of the Articles of Organization) to avoid a $250 penalty. Given the slow turn-around time, this doesn't give you a big window in which to file this form. Complete it quickly and include a $20 check when you mail it off.
Obtain an EIN from the IRS
Before you complete the next step (pay the Franchise Tax), you'll need to get an EIN (Employee Identification Number) from the IRS. This is surprisingly painless. You simply go to the IRS website (http://www.irs.gov/businesses/small/article/0,,id=102767,00.html) and click Apply Now. You'll be directly through a series of questions and you'll be able to get your EIN instantly. Navigating through the questions took me less than 10 minutes.
Pay the Franchise Tax
By far the most painful part of forming an LLC in the state of California is paying the hefty Franchise Tax. Each year, you'll need to pony up $800 for the privilege of doing business in California. You'll need to pay this by the 15th day of the fourth month of your taxable year (April 15th if you are operating on a calendar year). In the year that your LLC is formed, you'll need to pay by the 15th day of the fourth month after the LLC commenced business. To pay the the tax, you'll need to complete the LLC Tax Voucher (Form FTB 3522). To fill it out, make sure you have both your Secretary of State (SOS) file number and your newly acquired EIN handy. Once you complete the voucher, mail it in along with a check for $800.
You did it!
Well it took a couple of months, but that's pretty much all there is to forming an LLC in California. If you are forming an LLC with multiple members, you'll still need to adopt an Operating Agreement that has been reviewed by a lawyer. If you are operating a single-member LLC, you should be good to go.