Since launching my notary business, Alexandra On The Go, small business owners have inquired about my experience registering as a limited liability company (LLC). Filing your company as an LLC in the state of California is a lengthy process that is accompanied with plenty of paperwork. Before a business owner begins the extensive registration, it is important for them to determine if an LLC matches their business goals. An LLC is not optimal for every business owner. For example, a small business in an e-commerce marketplace would not need an LLC as they are paid directly from the respective platform. However, if the business would like to scale up to have employees, payroll and more clients, an LLC would then be beneficial. As the name suggests, an LLC limits the liability of the business owner and protects the individual from a potential lawsuit or bankruptcy.
What is an LLC? According to LegalZoom, one of the main advantages of an LLC is it protects business owners by granting “limited liability” in the event of a lawsuit or debt. If an LLC must file for bankruptcy, the individual will not be legally required to pay the business debts with their own money. Additionally, an LLC will receive a tax identification number and the company can open bank accounts that will be in the name of the business, not the business owner(s). An LLC also enables business owners to create a personalized tax plan. An LLC provides flexibility and protection, making it a frequently used business entity among small businesses and startups. Once you have decided that an LLC is right for you, the next step is to register your business.
Registering as an LLC in California
In California there are several costs you should consider prior to beginning the process. LegalZoom offers a great summary of the fees associated with registering a business as an LLC in California. Once you have calculated the final costs, you are ready to register! The entire process should take about six to eight weeks.
Select your business name. I searched for my business name as a hashtag on social media to ensure its originality.
Once you have settled on the name, check that the business name is available in California.
After you select your official business name, you must file for the LLC with the California Secretary of State by completing a form called Articles of Information. Tip: I enlisted the help of my Certified Public Accountant (CPA), who coordinated all required signatures, documents, and checked the status of my documents with the state. I highly recommend having a professional agent assist you, as incorrect filings can cost time and money.
After filing, you are pending approval of the official Articles of Information to operate as a California registered business.
Once you receive your official Articles of Information, you will also notice your LLC’s employer identification number (EIN). This is your company’s tax identification number, similar to your social security number. You will receive an official summary once the LLC has been processed and approved.
Pop some champagne and celebrate, you are an official LLC owner!
As you embark on your entrepreneurial journey, it is crucial to have an honest conversation with yourself about the long-term goals of your business. If your dream is to operate a large corporation, consider an LLC. Connect with me on LinkedIn and subscribe to my monthly newsletters to receive more tips for small business owners.