California Single-Member LLC
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Just like its title implies, a single-member LLC is a limited liability company with just one member. The single-member LLC is one of the most popular business structures in California.
Single-Member LLC vs Sole Proprietorship
Both a sole proprietorship and a single-member LLC are owned by one person. By default, each are taxed the same way — both a single-member LLC and a sole proprietorship pay self-employment taxes on income. However, a single-member LLC has more obligations to the state of California than a sole proprietorship. For example, a single-member LLC must register with the Secretary of State, file biennial reports, maintain a registered agent, list a California business address, and pay the annual $800 Franchise Tax. A sole proprietorship is free from all of these obligations.
While a single-member LLC in California may be more expensive to form and maintain, it also comes with a serious perk: liability protection. A single-member LLC is afforded limited liability, which means that the single-member LLC and its owner enjoy separate liabilities. The single-member LLC member is not held personally responsible for the debts of the business. In a sole proprietorship, however, there is no legal distinction between the business and its owner. If a sole proprietorship is sued, the owner’s personal assets are at stake. The sole proprietor may be held personally accountable for all debts.
How to Form a Single-Member LLC in California
File Articles of Organization
A California single-member LLC is formed the same way a traditional, multi-member California LLC: by filing Articles of Organization with the CA Secretary of State and paying the filing fee ($70). You can file Articles of Organization by mail or in-person. You can also hire California Registered Agent to form your California LLC for you — it’s a huge time-saver.
How Do I Name My California LLC?
Your California LLC’s name must be unique. Many filings are rejected by the California Secretary of State simply because the LLC name either violates California’s rules or because the name is taken by another company. You can do a quick business name search on California’s business database to see if any other businesses are using your desired name.
Your company name must include one of the following:
- Limited Liability Company
- Limited Liability Co.
- Ltd. Liability Company
- Ltd. Liability Co.
You can file a California name reservation for $10. Company names can be reserved for 60 days.
Do I Need a California Registered Agent?
Yes. Every LLC in California is required to appoint a California registered agent. Your registered agent accepts service of process (notice of a lawsuit) on behalf of your SMLLC and ensures that such notices are forwarded to you in a timely manner. You can hire California Registered Agent for $50/year and we’ll serve as your registered agent. As soon as your legal mail shows up in our office, we’ll scan it and upload it to your secure account.
Submit Initial Statement of Information
When you form a single-member LLC in California, you must submit an initial Statement of Information within 90 days of formation. After this initial filing, LLCs must submit a Statement of Information every two years.
You can file a Statement of Information online.
Statement of Information Filing Window
An LLC Statement of Information is due by the final day of the month in which your LLC was formed. Your filing window extends from this deadline through the previous six months.
California Single-Member LLC Taxation
The California Franchise Tax Board states that a single-member LLC will be treated as a disregarded entity, unless it elects to be taxed as a corporation.
Every single-member LLC must pay the $800 Franchise Tax fee each year to the Franchise Tax Board. In this way, it must pay the same LLC taxes as any other limited liability company.