California Limited Liability Company

Forming A California Limited Liability Company

A limited liability company can be defined as a company, which combines the traditional partnership and corporate features. A California Limited Liability Company has members who have the same advantage related to limited liability as the shareholders of a corporation have. These members are taxed at a lower rate, similar to a partner in a partnership. Generally, a limited liability company is taxed either as a C corporation or an S corporation. But, a California Limited Liability Company is treated as corporation and is subject to each and every corporation tax law, by the California and federal laws. The LLC's that are categorized as a C corporation are bounded to file the Form 100, Income Tax Return or California Corporation Franchise. And the LLC's categorized as an S corporation are required to file Form 100S, Income Tax Return or California S Corporation Franchise.

There exist two types of limited liability companies, domestic LLC's and foreign LLC's in California. It is very important for these companies to get themselves registered with the California Secretary of State. Those domestic limited liability companies that are not registered with the California Secretary of State are not treated as the limited liability company. There also exist member-managed LLC and manager-managed LLC in California. A member managed limited liability company is very similar to the general partnership in which each and every member can tie the entity. It means that on behalf of the limited liability company, each member can sign the binding contracts. However, in a manager-managed LLC, it is only the designated manager or managers, who have the authority of signing the binding contracts.

In order to organize a California Limited Liability Company, some procedures have to be followed and some points have to be kept in mind. A brief introduction of setting up a California Limited Liability Company is given here. First of all select the type of LLC you want i.e., member managed or manager managed. Next comes the step of filing the Articles of Organization and Operating Agreement. All these documents have to be filed with the Secretary of State (under section 17050(a)). An additional fee of $80 has to be paid as a filing fee. Generally, no operating agreement is needed. But, in case it is required, it can be entered into before or after filing all the Articles of Organization. The operating agreement should only be amended with the complete permission of each and every member.

However, there also exist some problems with the California Limited Liability Company. On the one hand where a manager-managed LLC has a registration process requiring a security, a member managed LLC does not have any such requirement.