Forming a California LLC Does Not Have To Take Forever

One of STARTright’s first LLCs that it helped business owners form back in August of 2008 was the California LLC.  When we developed our service using the California LLC we realized how many of the other services out there were not being honest.  We wanted setting up a California LLC, and later LLCs in other states to be affordable and teach the owner something as they formed their LLC.   With LLCs available in six states, and many more scheduled to become available in February, we feel we have met the users need for an affordable “forming an LLC” solution at a low cost.  STARTright costs $129 for an annual membership.  For those who either prefer to pay by the month, or just need a one time setup solution to form one LLC, STARTright’s monthly membership at $9.99 fits the bill.   

Today I want to write a quick note about California filings as the California LLC is one of the few LLC’s we offer a submission service for.  The business model for STARTright was to make forming an LLC yourself so easy that you would not need to pay extra costs except for the State LLC filing fees.  

If you are going to form a California LLC, here are some things about the submission process that you should understand. California has some interesting rules for the California LLC formation process. When forming a California LLC, you need to create the Articles of Organization for a California LLC. That is the easy part. California LLCs have the most basic and easy to fill out Articles of Organization in use. Next, you have to submit the Articles to the California Secretary of State who will stamp the files as received one they determine the LLC name is distinguishable from other LLC names in use by California LLCs.   Once the Articles are stamped as received, the California LLC is alive and well and can be used to do business from.

Now the tricky part is this. The California submission process allows for two ways of submitting the California LLC Articles of Organization. The first method is by mail. Though it may not take this long to actually have the Articles of Organization for the California LLC stamped as filed, the Office of the Secretary of State claims that they will not ensure any faster filing than that of 30 to 45 days.  This depends upon the volume of all filings received, not just California LLC filings.  That is a very long time to wait to start doing business in a California LLC.

The second option is to hand deliver the California LLC Articles of Organization. This is done by actually walking the California Articles of Organization in the front door of the Secretary of State office in Sacramento California. They want you to do this because they charge up to $15 for entrance. It is like a cover charge just to get your California LLC Articles of Organization in the door. This is by far the fasted method to get your California LLC formed. The California Secretary of State claims that they will do a standard processing for a walk-in during a 5 to 10 business day window. Unlike a California LLC that mails in the Articles, expedited filing is available to all California LLCs that walk the Articles through the door. With expedited filing, you can get the California LLC Articles stamped in either 24 hours ($250) or 4 hours ($400). This is not a cheap option, but it can be done fast.

The following is an email that we received from a user who went with the submissions service.  Their experience has been typical of many, but we cannot make any promises that turn around times will always be this fast.

I used your website to form a California LLC. I paid the $49 for the membership. I then decided to use the STARTright Submission Service to have my California LLC Articles of Organization delivered to the California Secretary of State. They told me it would take between 10 and 15 business days and I had to pay $100 for the submission service.  I also had to pay a $70 fee that would be taken to the secretary of state as the filing fee. Thus I paid: $49 membership fee to STARTrightllc.com, $100 STARTright submission service fee, and $70 state fee for filing. All this adds up to about $119.  Not bad, but I was not excited to wait half a month to get my business started.  I have seen other services that do a lot less in a lot longer time.  [Competitor's name removed] will do a California LLC for around $500 and I still would have had to pay the $70 state filing fee. They promise it to be done in 15 days.  Yikes!   Anyway, the STARTright service somehow got my California LLC Articles of Organization finished in less than 24 hours and had sent me an email with scanned in copies of all the documents.  This was a very good experience.

We hope the STARTright submission service can wow the socks off more of you.  Keep in mind that we do not get any of the $100.  We continue to pay a service in Sacramento to ensure fast and quality care of our customers’ California LLC filing documents.

Follow Up To LLC Part 1: Getting that other LLC Member

Last week one of the readers left me a comment asking me whether or not he could use his spouse as the minority partner.  Here was my comment:

Generally the best way to avoid losing charging order protection is to get another member.  Because you do not want to lose control, it is best that you give that member a very small portion of the LLC.   I will write a post on this later, but most states give the LLC members a great deal of flexibility.  The California LLC Act allows members to break free from the California LLC Act’s standards by writing into an operating agreement the way the members want the LLC to operate.  This means you can make the call.  You get to write this operating agreement in a way that benefits you as the primary member.   If the other member has 5% or less, and decisions are made by a 65% member or manager vote, (corporate super majority) then you really can run the LLC on your own terms. You need to make sure you address two things however.  

1. Either you need to also write into the operating agreement that the members holding 65% or more do not need to notify the other members to make these decisions, or you need to always call some sort of phone or other meeting when you are making decisions that would generally require a meeting of the members or managers.  It is always good to show that you are following what is in the operating agreement.
2. Second, if you have another member, the money has to be split their way also.  Make sure you assess the tax consequences and necessity of giving that member his portion of distributions if you distribute money out.

A spouse is not a good option for a junior member. The point is to distribute the injury of having an unwanted member in a bankruptcy suit. You and your wife are considered one.