If you run a crypto trade or business, you may want to enjoy the benefits that an LLC structure provides. Starting a crypto LLC (limited liability company) in California offers limited liability protection. This implies that if your business cannot pay its debts or is sued, your personal assets are safe, as you can’t be held responsible for the business’s losses.
Creating a California LLC adds more credibility to your business because LLCs are recognized as more formal structures than partnerships and sole proprietorships. Establishing and maintaining a limited liability company in California is relatively easy. Discussed below is how to start an LLC in California in 2024.
1) Pick an LLC Business Name
A business name gives an identity to your LLC, so the best name for your company should appeal to your target market and be memorable. It should also represent your services or products best.
Pick a unique LLC name, then conduct a California Secretary of State business search to ensure your preferred name isn’t being used by any other company. If the name is available, register your business, and if you aren’t ready to form the LLC immediately, reserve it. Ensure the LLC name you pick isn’t similar to another LLC’s to avoid confusion. Your LLC name must have Limited Liability Company, LLC, or L.L.C. at the end.
2) Select a Registered Agent
A registered agent or agent for service of process is a company or an individual who accepts government or legal documents on your LLC’s behalf. If your registered agent is a company, it should legally be able to do business in California. The right registered agent for your LLC should have a physical address in California and be available during business hours.
Can I be the Registered Agent for my California LLC? This is a common question among those starting an LLC, and the simple is yes. You can learn more on the California Secretary of State website.
3) File the Articles of Organization
Forming an LLC in California involves filing Form LLC-1, Articles of Organization, with the Secretary of State office. Your articles should contain:
- The LLC’s name
- The purpose of the LLC
- Details regarding how it’ll be managed
- The LLC’s address
- The registered agent’s name and address
The Articles of Organization or Form LLC-1 can be filed online, mailed, or hand-delivered to the California Secretary of State office. Filing the Articles of Organization online costs $70 in fees.
4) Get your LLC’s EIN
An EIN (employer identification number) is used by various government agencies to recognize your LLC. Also, the business’s tax obligations are linked to this number. Your California LLC’s EIN allows you to:
- Open a bank account for the company
- File local, state, and federal tax returns
- Get business loans or lines of credit
- File income tax
- Apply for business permits/licenses
- Obtain a business credit card
- Deal with employee payroll where applicable
Getting an EIN for your California LLC is free, and you should only apply for one once the LLC is approved.
5) Establish an Operating Agreement
An operating agreement for your California LLC is a written contract among the company owners or members. It’s a legal document containing:
- Basic information, including LLC name, purpose of the LLC, the LLC’s effective date, California registered agent, how the company will be taxed, and the LLC’s duration
- Initial capital contributions
- Tax statements
- LLC members’ voting rights
Endnote
Establishing a crypto LLC in California comes with multiple rewards. Consider following these steps to start an LLC in California in 2024.