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How do you form a limited liability company?

There are many different types of businesses you can start in California, and all involve their own strengths and weaknesses. If you would like to take advantage of pass-through taxation while protecting your personal assets from business creditors, a limited liability company may be a good option. According to FindLaw, there is no minimum number of people required to form an LLC, which means you can form one yourself and enjoy some advantages of both a corporation and a sole proprietorship.

Forming an LLC is a relatively simple process consisting of at least three steps. If you are starting your business in California, you must have an operating agreement, and even if you start your business somewhere else that does not require it, having an operating agreement is still a good idea, because then you can set your own rules rather than having the state impose default rules that may not be a good fit for your business. If a court should have to consider your limited personal liability, an operating agreement can add legitimacy to your LLC business status. The purpose of the operating agreement is to outline the responsibilities and rights of all the members of your LLC, as well as dictating how they will run the business.

You will also need a name for your LLC, and you must make sure beforehand that the appellation you have chosen is not already in use by another organization. Once you have a business name and an operating agreement in place, the next step is to file your paperwork. Another name for the paperwork involved is "Articles of Organization," and there is usually a filing fee due.

In California, there is no requirement to publish a notice in a local newspaper to make your intent to form an LLC official. However, there is also nothing preventing you from doing so if you wish. 

The information in this article is not intended as legal advice but provided for educational purposes only.

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Lawrence R. Jensen & Associates
95 S. Market St.
Ste. 550
San Jose, CA 95113

Phone: 408-465-0293
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