Thread: Anyone have advice on setting up an LLC in California

Originally Posted by brumaire

Is legalzoom a good route? MyCorporation? Doing it myself? Getting an attorney?

I need it fast
I need it to be structured so me and my partner split profits 50/50, but if possible I have 60% ownership or something like that. I want to own more
It's just me and my partner

Let me google that for you

First unsponsored link.
Click Limited Liability Corporation
Click the link to the form required
Fill out form
Mail / Email / Complete registration with payment

I did google it. I've seen all the links.

I am asking for advice on courses of action, I understand how to do it. I want to know what fastlaners experiences have been.


It's always funny when someone is condescending but in reality they are totally off what they are talking about. It betrays the persons eagerness to be rude.

Originally Posted by brumaire

I did google it. I've seen all the links.

I am asking for advice on courses of action, I understand how to do it. I want to know what fastlaners experiences have been.

Have you looked at the form to fill out? In Washington it's 2 pages. If you have another company do it for you, they're going to be requesting all of the same information and are going to use that same government form to complete the task, you're just going to be paying them for it.

You'll have a lot of legal documentation to fill out with the state over time. I'm not sure if California has one, but some states have user logins to go online and manage your company with the state. That's useful in changing membership to an LLC or adding "doing business as" names to your documentation. If you hire someone to do it, you most likely won't have access to those nifty tools.

IMHO... it's a quick form... just fill it out.

For instance, has anyone filed their own and regretted not using an attorney? Anyone have negative experiences with legalzoom?

Originally Posted by dknise

Have you looked at the form to fill out? In Washington it's 2 pages. If you have another company do it for you, they're going to be requesting all of the same information and are going to use that same government form to complete the task, you're just going to be paying them for it.

You'll have a lot of legal documentation to fill out with the state over time. I'm not sure if California has one, but some states have user logins to go online and manage your company with the state. That's useful in changing membership to an LLC or adding "doing business as" names to your documentation. If you hire someone to do it, you most likely won't have access to those nifty tools.

IMHO... it's a quick form... just fill it out.

Thank you

A caution: A California LLC will cost you $800/year just to file returns, and it doesn't matter if that LLC takes a $1M gain, or $1M loss, or does nothing for the year.

I saw that. Its so crazy. I wonder if I could file in another state or something.

Pardon my ignorance, this is my first time, the first hour of me doing this ever. I know nothing about incorporation.

S corp is the way to go apparently

Originally Posted by brumaire

S corp is the way to go apparently

You should talk to both a lawyer AND and a CPA about this, as the best decision for legal purposes may or may not be the best decision from a tax filing perspective. Like for example, an LLC can file as an S Corp... they are not mutually exclusive in that sense. This subject is way too complicated and dependent on your personal situation to base off of advice from an internet message board --- there's a big chance you will likely end up regretting it.

Originally Posted by brumaire

I wonder if I could file in another state or something

Yes, you can file in another state that doesn't require you to be a resident. I did a lot of research on this before I decided to stick with my home state of Kentucky. Most people who choose to file for out of state corps tend to go with the more business and tax friendly states like Nevada, Delaware, etc. Just remember that if you are planning to have some type of physical presence for your business such as a brick and mortar store, you usually still have to file as a foreign business entity in the state you are doing business. Some times this will negate any advantage that you gained by filing out of state since you still have to deal with paperwork and laws locally anyway.

If your state is LLC friendly and has any tax breaks for residents, it's usually better to just stick with your state. If it's not as clear cut, which I hear California can be tricky, it may be worth filing elsewhere.

Having an attorney can help you if your situation is unique. What kind of business are you running? What are you selling? Where will the business be located? Are you going to be operating on the Internet?

The attorney can also help you with business license procedures.

In most cases, you don't need one, though. I didn't need one and I'm not even out of college yet. (Granted, I was running an Internet business based out of Delaware which I happen to be a resident of)

There's a story from Derek Siver's great book "Anything You Want" that I always think about, when it comes to basing legal/accounting decisions based on tips and advice. Derek is the guy who built CDBaby into a multimillion dollar operation. Before he started CDBaby, he had a small business that was partially funded by his father. When Derek got CDBaby going, he needed to create a separate business bank account, so he went to the local bank, and asked how to go about setting this up. The friendly bank teller told him that he could just create the new account as part of his existing business account. "That was easy" as the slogan goes.

Well, months and years later, after Derek worked and struggled to make CDBaby a massive success, he got a call from his lawyer. Because of the way the accounts were setup according to the friendly bank teller's advice, it turned out that Derek's father owned the company, not him! Oops.

Originally Posted by MJ DeMarco

A caution: A California LLC will cost you $800/year just to file returns, and it doesn't matter if that LLC takes a $1M gain, or $1M loss, or does nothing for the year.

There is also now a revenue tax in CA.

without knowing what your business is the best out of state filing is new Mexico. The rules are very linient. No annual reports, Low fees, Least maintence. however you will have to hire a registered agent if you do not live there which increases costs. If your state is LLC friendly < Mine in Florida is except for the annual report, the fees are less than filing in new Mexico Plus a registered agent.

But if your business is more complex you might want to consider other options. simple businesses usually can get by with an LLC but the more complex it gets the more you need to consult an attorney and aCPA.

Originally Posted by GlobalWealth

There is also now a revenue tax in CA.

Revenue tax?

Originally Posted by Twiki

You should talk to both a lawyer AND and a CPA about this, as the best decision for legal purposes may or may not be the best decision from a tax filing perspective. Like for example, an LLC can file as an S Corp... they are not mutually exclusive in that sense. This subject is way too complicated and dependent on your personal situation to base off of advice from an internet message board --- there's a big chance you will likely end up regretting it.

This.

Also, if you are in California, you have to pay CA corp fees & taxes even if you incorporate in another state; otherwise no one would incorporate in California.

BTW, LegalZoom is awesome for people whose businesses never amount to much.

But if your business turns into a screaming success, you can bet that you will have made at least one crushingly expensive mistake as you clicked your way through LegalZoom's checklists.

One way or another, you are going to pay for a good attorney. Paying now can mean paying much less later.

A possible intermediate step is to contact your local SCORE office and schedule a free consultation with one of the retired lawyers who's signed up to offer free coaching. If you're in L.A., Score has an office in Glendale office. Give them a call; I bet they'll help you.

Finally -- don't let random forum smartasses bully you out of getting real legal advice.

They have no skin in the game.

CA is probably the worst state to incorporate in.

Originally Posted by tamo42

CA is probably the worst state to incorporate in.

For non-Californians, that might be true.