California Limited Liability Company (LLC)
Limited Liability Companies (LLC) is a relatively new business entity May not be used to render certain professional services. Professional services are those that may be lawfully rendered only pursuant to a license or certification. Business and Professions Code, the Chiropractic Act, the Osteopathic Act, and the Yacht and Ship Brokers Act. By default an LLC is member managed. Every member is an agent of the LLC and can bind the LLC unless the member has no authority to act and the person with whom the member is dealing has actual knowledge that the member has no authority to act. Manager managed. Members are not agents of the LLC and cannot bind the LLC. However, every manager is an agent of the LLC. LLCs are extremely flexible Limited Liability Company is distinct from its members. Perpetual in duration
Formation
Must include the words "limited liability company," "Ltd. Liability Co.," "L.L.C.," or "LLC." Name cannot include the words "bank," "trust," "trustee," "incorporated," "inc.," "corporation," "corp.," "insurer" or "insurance company." Must not be a name that is likely to mislead the public and must be distinguishable from other names registered with the secretary of state. $70 to file articles of organization.
Taxation
The United States Internal Revenue Code does not directly address LLCs. The IRS, however, has promulgated a flexible set of regulations to insure proper tax treatment. These regulations are known as the "check the box" regulations. Subject to several limitations, these regulations allow you to decide if you would like the LLC to be taxed like a partnership (pass-through taxation) or a corporation (double taxed). LLCs that are wholly owned by a single person will be disregarded by the IRS and the LLC's income will be taxed to that owner as if the entity did not exist.
California imposes a minimum income tax on both corporations and partnership for the "privilege of doing business in the state." Unless your LLC is a disregarded entity, then it will be subject to this tax. The tax equals the greater of 8.84% of net income or $800. The minimum Franchise Tax Board tax is waived for the first year of operations. For the first year, the tax is simply 8.84% of the entity's net income. This tax must be submitted to the state 4 months and 15 days from the start of the entity's taxable year.
Corporations Code — California Revised Uniform Limited Liability Company Act (§§ 17701.01 — 17713.13)
