Starting a business in the state of California? If you plan to set up an LLC or a corporation, you’ll also need to select a registered agent. The term registered agent isn’t widely known, but it’s fairly simple to understand.
A registered agent is a point of contact for a business and is listed on official paperwork when a new business, specifically an LLC or a corporation, is formed.
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How is an LLC formed in California?
To set up an LLC in California, you must fill out and submit paperwork to the state. Specifically, you need to file Articles of Organization with the California Secretary of State. This paperwork will require you to work through several steps to submit the paperwork. These steps include:
1. Select a company name
Do you have a company name in mind? If so, check the name’s availability first. In California, and in most states, no two companies can have the same name. If a name is already in use, you’ll have to create a new name.
California requires entrepreneurs to follow a few rules when creating a company name. The rules are:
- The phrase “limited liability company” or “LLC” must be in the name
- The name can’t refer to any government agencies (like FBI) that might confuse customers
- A name that refers to education or finances might require additional approvals. Words like “academy” or “bank” will prompt additional approval processes.
Business owners should also check the availability of a domain name so the company name and its website URL match. If the domain name is already taken, it may influence the name of your company. Check on domain availability before registering a business in California.
2. Select a registered agent
Every business that’s set up in The Golden State must list a registered agent. A registered agent is an official contact for your business. This person will receive important documentation on the company’s behalf, like tax documents or paperwork associated with lawsuits known as service of process documents.
In California, a registered agent can be a person or company, but there are some requirements that must be met. More about these rules and who can serve as a registered agent is explained later on.
3. File Articles of Organization
To form a California LLC, official paperwork called Articles of Organization must be filled out and filed with the California Secretary of State. This paperwork will require the following information:
- The company name
- Its purpose
- How the company will be managed
- The company address
- The name, address, and signature of the registered agent
The process may be completed online and will cost $70. The charge is a filing fee issued by the state of California. An expedited service is available if paperwork is dropped off at the Sacramento Secretary of State Office for an additional fee.
When the paperwork is approved, the information becomes public record.
4. Create an operating agreement
California doesn’t require new businesses to file an operating agreement, but many entrepreneurs create one after setting up an LLC to provide structure and limit problems.
The operating agreement explains how the company will operate and includes specifics like who the investors are, who’s responsible for day-to-day operations, how profits are doled out, and how investors are included.
Again, it doesn’t have to be filed with the state, but it’s a good idea to have one.
5. Get an EIN
Once you’ve filed the Articles of Organization paperwork and created an operating agreement, you’ll need an EIN or an employer identification number. This number isn’t issued by the state, it’s issued by the IRS. By answering a few questions on the IRS website, this number is given to business owners instantly. An EIN is needed to:
- Open business bank accounts
- Hire employees
- File taxes
6. File a Statement of Information
Within 90 days of filing an LLC, a business must file a Statement of Information as well with the Secretary of State. After that, this document must be filed every two years. This form asks for the following information:
- The company name and the secretary of state file number
- The name and address of the LLC’s organizer
- The street address of the LLC and its mailing address
- The name and address of all managers
- An email address
- A description of the LLC’s purpose
For a business entity to file this paperwork it costs $20.
What is a California registered agent?
A registered agent is responsible for receiving important documents on your company’s behalf. This point of contact will receive official documents, which could include tax notifications and legal documents. Should your company be sued, service of process papers, for example, are delivered to a company’s registered agent.
Do I really need a registered agent in California?
Yes. The state of California requires your LLC or corporation to list a registered agent. Without a registered agent listed on your Articles of Organization, your company won’t be in good standing with the state. Penalties and state fees could be levied as a result.
Can I be my own registered agent in California?
Yes. The person setting up the LLC can serve as the registered agent. By doing so, the LLC organizer agrees to be the contact person who will receive official documents on the company’s behalf.
While the LLC organizer is a viable choice as a registered agent, others can fill this role as well.
Who can be a registered agent in California?
In addition to the person setting up the company, a California business can pick another person or a company to serve as a registered agent. A trusted friend, family member, or a neighboring business can be your registered agent. Your company may also decide to pay for a registered agent service to fill this role as well.
Whether you opt for a person or a company, the state does have some criteria that registered agents must meet. A registered agent must:
- Be 18 years old or older
- Have a physical address in California, not a P.O. box
- Be available to receive documents during normal business hours on your behalf
Why would a company choose to work with a registered agent service?
A new business can work with a registered agent service. This service becomes responsible for accepting documents for your company and notifying you.
Why would a company work with a registered agent service? Reasons include:
- Convenience. To minimize administrative chores, entrepreneurs like working with a registered agent service as it can ease the workload.
- Multi-state company. To make sure official documents aren’t missed, entrepreneurs with multiple companies in multiple states like having a service as their registered agent.
- Privacy. A registered agent service gives a small business additional privacy, particularly if they’re being sued. If a company gets sued the papers are served to the registered agent service, not to the owner who may be working with customers at the time.
List of California registered agent services
There are many registered agent services available in the state. A quick Google search will provide a list of choices, but here’s a quick look at a few possible companies to work with:
- California Registered Agent Inc. – This company offers basic services with real-time document delivery via an online portal. The cost is $39 a year.
- Northwest Registered Agent – This company offers registered agent services in several states, including California. It’s easy to sign up, has a registered office address, and an online portal to access scanned mail. Should your company grow to include multiple locations in the nation, it’s possible this company can serve as a registered agent for both. The cost of registered agent services for one company is $125 a year.
- California Corporate Agents – This company can serve as your company’s registered agent and also offers LLC formation services, so if you need help with the entire process this may be a great choice. It’s $50 a year for registered agent services and additional costs for formation services.
How much does a registered agent service cost in California?
Entrepreneurs interested in working with a registered agent service are likely curious about the cost. A registered agent service with mail forwarding is inexpensive compared to one with more extensive services like scanning your mail or delivering reminders about annual reports.
While costs vary, you can expect the price to range between $50-$300 a year.
How does an owner select a registered agent in California?
A registered agent is listed on the LLC formation papers known as the Articles of Organization. When a person sets up an LLC or a corporation, the paperwork will ask who will serve as the company’s registered agent. The name of the person is added to the form and a signature is required as well.
Can a company change its registered agent?
Yes. A registered agent can be changed. In California, the change is made by filing a Statement of Information form with the state. There is a $20 fee to do so.
What’s a statutory agent?
While researching what a registered agent is, you may have come across the term statutory agent. A statutory agent and a registered agent are the same things. A registered agent is also called a resident agent or a service of process agent in some states.
What’s a commercial registered agent?
When forming an LLC, you might be asked if your registered agent is commercial or non-commercial. If the registered agent is a person or a company it’s considered a non-commercial agent. If you’re working with a registered agent service, your company has a commercial registered agent.