New LLC Law in California
The California Revised Uniform Limited Liability Company Act (RULLCA) replaces the previous LLC law. Signed into law in 2012, RULLCA comes into effect January 2014. RULLCA applies to existing California LLCs, rewriting operating agreements. Under RULLCA, LLCs must now indemnify managers, members, agents, and employees. However, LLCs may modify these obligations. RULLCA also provides remedies for minority member oppression, like dissolution. Existing LLCs cannot opt out of RULLCA. So current operating agreements need review for compliance. RULLCA governs some aspects of existing LLCs. But prior law still applies to pre-2014 consents and contracts.
Starting an LLC in California
- An LLC that registers or organizes to do business in California is exempt from the $800 minimum annual franchise tax for its first taxable year. In the second taxable year, the LLC must pay the $800 fee.
- This article provides a guide on starting an LLC in California in 2023, including legal requirements, forms to file, and compliance obligations. Following this guide ensures entrepreneurs comply with requirements to protect their business.
Options for Lawyers in California
- Lawyers in California, along with other professionals, can’t form California LLCs. As an attorney looking to start your practice, you have two options – a Professional Corporation or Registered Limited Liability Partnership.
Benefits of an LLC in California
- An LLC combines limited liability protection of a corporation with pass-through taxation of a partnership or sole proprietorship. Owners of an LLC are not personally liable for the company’s debts and obligations. The company’s profits and losses are reported on the owners’ tax returns, avoiding double taxation.