Are you the type of person who takes the DIY approach to a lot of things in life? Then you might be thinking about forming an LLC all on your own. And the great news is that you can save quite a bit of money by doing it all yourself, rather than hiring the services of a lawyer, so this might be a smart move.
What steps do you need to take to form your single member LLC and officially register your freelance business? Well, it could be fairly easy to set up your LLC yourself, but you do need to be prepared to put some time, effort, and money into the process.
The information below is an overview of the process of forming an LLC yourself in California. Just keep in mind that, while we’ve made every effort to ensure this information is up-to-date and accurate, it does not constitute legal advice, and it should not be used as a substitute for legal advice. When in doubt, consulting with an attorney is always best.
What You Have to Do to Form a Single Member LLC in California
Here’s a basic outline of the main steps that you’ll need to take when you begin forming your LLC by yourself. Remember, because you’re taking this DIY approach, you’ll be in control the whole way through. But it also means that you’ll need to keep an eye out for errors, and you’ll need to be super diligent to check off all the boxes on your to-do list so that you can properly register your business with the state.
So, without further ado, here we go.
Step 1: Choose a Name for Your LLC
First thing’s first, you need to know what legal name you’d like to use for your LLC. Before you get ahead of yourself, bear in mind that this can be harder than it sounds.
Your LLC’s name can’t be the same as the name of another LLC on file with the California Secretary of State’s office. This means that you’ll need to check the Secretary of State’s online records to see if the name you wish to use is available. If not, it’s back to the drawing board, so it might be a good idea to have a list of potential names to start with.
In addition to ensuring no one else has the same name, there are also some restrictions on the format of your LLC’s name. We’ve covered all of these details in our “Freelancer’s Guide to Naming an LLC in California,” so click here to check it out.
Finally, if you’re thinking about using your LLC’s name to market your products or services, you’ll also need to do a trademark search in order to be absolutely sure the name won’t conflict with another company’s trademark. We have an article to cover those details as well, so click here to read through our “Freelancer’s Guide to Trademark Research.”
Sound too tedious? When you sign up for an account with Hyke, we’ll help you make your way through the naming process with greater ease. You’ll still be able to say you took a DIY approach, but it’ll be much smoother, trust us.
Step 2: Choose a Registered Agent
Next up: designating a registered agent for your LLC. What’s a registered agent? Put simply, this will be an individual or a corporation that will serve as your LLC’s legal agent. They’ll be entrusted with accepting court papers and other important documents on your behalf, so they’ll play an important role once your business is up and running.
You or any other adult who lives in California can serve as your LLC’s registered agent. How easy is that?! As an alternative, you could pay a subscription fee of anywhere from $75 to $150 per year to use the services of a professional registered agent company.
Read through our “Freelancer’s Guide to Registered Agents” here.
Pro tip: signing up for an account with Hyke will also give you access to our recommendations for some registered agents who could work for your business. Nice, right?
Step 3: Complete and File Articles of Organization
To actually form your LLC, you have to complete and file what are known as Articles of Organization with the California Secretary of State. Thankfully, the Secretary has made this pretty easy to do all on your own.
There’s a standard fill-in-the-blanks form called Form LLC-1 at the Secretary’s website that you can complete by providing your LLC’s name, address, and purpose, along with information on how it will be managed, and the name and address of your registered agent. Once it’s all filled out, file the articles online or by postal mail, and be sure to pay the $70 filing fee.
Need some extra help to be certain you’re doing it right? You guessed it: signing up with Hyke could be just what you need to be sure you submit all of the right documents. Doing so can help ensure your LLC will be registered and ready to get down to business in no time.
Step 4: File Statement of Information
Within 90 days after you file your Articles of Organization, you’re required to file a Statement of Information, or SOI. This is Form LLC-12, and it needs to be filed with the California Secretary of State. Expect to also pay a $20 fee.
The SOI, which will include your LLC’s address, your registered agent’s name and address, and the names and addresses of any members, can be filed online.
Once again, by hiring Hyke to help you with the LLC registration process, you can leave it all up to us to ensure this form is completed and filed correctly. No stress!
Step 5: Complete the LLC Operating Agreement
Although not absolutely required, it’s highly advisable to draft and sign a single member LLC operating agreement. This is a legal document that establishes how your LLC will be run, and having it in place will help preserve your limited liability because it helps show that your LLC is a separately business entity.
You don’t need to file your operating agreement with the Secretary of State. All you have to do is complete it, sign it, and keep it securely stored with the rest of your LLC records.
Still not sure you need an operating agreement after all? Read through our “[Freelancer’s Guide to LLC Operating Agreements]”(https://www.hyke.me/resources/formation/freelancers-guide-to-llc-operating-agreements/) to discover more of the benefits that it can provide.
Another perk of signing up with Hyke: we can provide you with a free operating agreement that was drafted by an expert attorney. No searching needed. Just sign the agreement and off you go!
Step 6 (Optional): File Fictitious Business Name Statement
Did you know that you don’t have to operate your LLC under the legal name listed in your Articles of Organization? Instead, you’re also allowed to use a different name, referred to as an assumed name, fictitious name, or “DBA,” which stands for “doing business as.”
In order to do this, you must file a fictitious business name application in the California county where your LLC’s main office is located. And, just as you did with your business’s legal name, you need to make sure that the name you want to use isn’t already taken.
Once you know that the fictitious name you plan on using is up for grabs, you’ll just need to file the form and pay a fee. To learn more, check your county’s website for details.
Step 7: Obtain Business Licenses
Depending on where your LLC is located and the kind of work that you do, you might have to obtain a local business license from your city or county. Thankfully, this is also easy to do, so there’s no need to feel frazzled if you have to get a license to operate your business.
To get the business license you need, fill out the appropriate form and pay the required fee. Your city or county government website should have all of the details you need, so take the time to do your research to cover all your bases.
Want to learn more about business licenses for LLCs? Check out our “Freelancer’s Guide to Business Licenses in California” here.
Step 8: Obtain EIN
Next up: obtain your EIN (employer identification number). This 9-digit number is issued by the IRS and it’s used to identify your LLC for tax purposes.
Most single member LLCs are taxed like sole proprietorships, and the IRS doesn’t require those LLCs to have an EIN. Instead, you can use your personal Social Security number when you file your taxes..
When will your LLC need an EIN? If you end up hiring employees or you elect to be taxed like a corporation. Also, companies with which you do business might require an EIN to process payments. And, beyond all that, banks may require your LLC to have an EIN in order to open a business account.
There aren’t any fees associated with obtaining your EIN. While you could do it yourself online at the IRS.gov website, or by completing and filing IRS Form SS-4, if you sign up with Hyke, we’ll take care of this for you as well so it’s one less thing you need to worry about.
Step 9: Obtain Sales Tax Permit
Almost there. Just a couple more steps and you’ll be well on your way towards operating your freelance business as an LLC.
Will your LLC sell goods to customers in California? If so, you need to collect and pay sales tax. To do that, you have to register with the California Department of Tax and Fee Administration (CDTFA) on their website, or in person at one of their field offices. Doing so will give you a seller’s permit so you can do business right.
10. Open LLC Bank Account
Yay, you’ve reached the last step!
Finally, you should open a bank account in your LLC’s name. Doing so will help preserve your limited liability status, and it will also make business recordkeeping easier than if you were to use your personal bank account for your business. Plus, when you open a business bank account, you could also get a credit card in your LLC’s name. Hooray for buying power!
Stephen has dedicated his career as an attorney and author to writing useful, authoritative and recognized guides on taxes and business law for small businesses, entrepreneurs, independent contractors, and freelancers. He is the author of over 20 books and hundreds of articles and has been quoted in The New York Times, Wall Street Journal, Chicago Tribune, and many other publications. Among his books are Deduct It! Lower Your Small Business Taxes, Working with Independent Contractors, and Working for Yourself: Law and Taxes for Independent Contractors, Freelancers & Consultants.