Salinas, CA

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How to start your LLC in Salinas, CA

STEP-BY-STEP GUIDE by Michael Bradley Updated: January 3, 2023
STEP 1
Instant
Name your LLC
STEP 2
Instant
Appoint a Registered Agent
STEP 3
3-7 days
File Articles of Organization
STEP 4
Varies
Draft an Operating Agreement
STEP 5
< 7 days
File a Statement of Information
STEP 6
Instant
Get an EIN (Employer Identification Number)

Why form an LLC in Salinas, CA?

Located in a premier agricultural area, Salinas is known as the Salad Bowl of the World. The fresh produce, flowers, and vineyards serve as the heart of the City’s booming economy. But its central location near Silicon Valley and growing manufacturing sector fuel long-term growth.

Want to join the agricultural community or help Salinas branch in new directions? Creating a business entity is the first step in joining local commerce. The process can be intimidating. But after reading this, you’ll have everything you need to form an LLC in Salinas, California.

In this article, we’ll cover:

  • The six easy steps to form a Salinas, California LLC
  • Licenses and permits to consider before launching your new business
  • Steps to take after forming your Salinas LLC

LLC Formation Process in a Nutshell

1. Name your LLC

How to select a name for a California LLC? Get ready for a brainstorming session because the first step in forming an LLC is picking the name.

Before deciding, get familiar with California Corporations Code section 17701.08. This statute spells out what the name must include. For LLCs, this means that your business name must have one of the following:

  • Limited Liability Company
  • L.L.C.
  • LLC

Any business name must be distinguishable from other businesses. Use California’s online Business Search to verify the name doesn’t match an existing one. It’s best to avoid names that are closely related as well.

There are a few items that you cannot use in a business name. Corporations Code section 17701.04 helps navigate these limitations.

For the most part, you can’t hold yourself out as something you aren’t. Unless authorized, avoid anything that indicates you’re part of highly-regulated industries. These include things like legal, financial, or healthcare services.

Finding the right name can be a challenge. It can help to know that you can use doing-business-as (DBA) names. For example, “Salinas Fertilizer LLC” can operate under “Salinas Soil Health Pros.”

Review the available domain name (URL) options, even if you don’t want to launch a website immediately. It’s worthwhile to ensure you can get the rights to domain names that match your business.

Instant
Free

2. Appoint a Registered Agent

What is a registered agent? Under Corporations Code section 17701.13 (a)(2), each LLC needs to appoint a registered agent. This contact receives service of process and other mail.

If your LLC gets sued, the legal paperwork goes to this address. It’s also used for tax documents and other regulatory purposes. The registered agent is a vital part of operating any business.

Business owners may appoint themselves as registered agents. But many seasoned owners choose to hire a registered agent service instead.

Here are some advantages that come from appointing yourself:

  • It’s cheap: Save money by handling this duty by yourself.
  • It’s simple: You only need to keep one address updated.
  • It’s reliable: All essential documents come directly to you.

Appointing yourself registered agent also has various disadvantages, such as:

  • No privacy: The Secretary of State’s website lists the registered agent information. The address is public information.
  • Junk mail/spam: The address can be targeted by high-volume mail that you’ll have to sort through.
  • No breaks: Registered agents don’t get time off. They must be open during all business hours.
  • Business interruptions: Getting served with a lawsuit in front of clients can tarnish your reputation.
  • It’s your fault if you miss something: There is no one to blame but yourself if things go wrong. Failing to see a notice or making a mistake falls on your shoulders alone.

Because the registered agent is critical, we recommend using a registered agent service. Costing around $100-$150 per year, the service will sort your mail. It also keeps your address confidential. Attorneys can charge up to $500 per year to perform this role.

If you choose to start your LLC by using a business formation company, they often include a registered agent service in their packages. Feel free to take a look at our registered agent recommendations article for more information.

Instant
$0 - $100

3. File Articles of Organization

How to file the Articles of Organization for a California LLC? Now is a good time to stretch or grab a cup of coffee if you’re dozing off. This is the most important step to forming an LLC.

Filing the Articles of Organization with the California Secretary of State transforms your idea into a legal entity.

Some people have the impression that attorneys must complete this step. But in reality, it only requires basic information, and most people can complete it on their own. California provides an excellent fillable PDF to make it easier than ever to form an LLC.

You’ll need to pay a $70 filing fee to the California Secretary of State. And the State will have to process the application before your LLC exists. Here are some of the estimated processing times, depending on the method you use:

  • By mail: 5-9 business days
  • In-person filings: 5-9 business days
  • Online filings: 2-3 business days

You can receive faster processing through the preclearance service or expedited filing service. While extra fees apply, these can get you a quick response, sometimes the same day.

To save time and avoid the hassle of LLC filings, all seasoned entrepreneurs use LLC formation services. For recommendations, check out our article on the best LLC services.

3-7 days
$70

4. Draft an Operating Agreement

Should I create an operating agreement? In California, there is no choice about it. The State requires all LLCs have an operating agreement.

An operating agreement is a contract between the members. It provides the rules under which the LLC operates, such as the rights and responsibilities of the members.

The best operating agreements cover any situation the LLC could find itself in. It also provides the methods for adding or removing members and the duties of the members and managers.

You can tailor the agreement to serve your best interests, including:

  • They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
  • They say whether the LLC has a member or non-member manager and what the manager has the right to do. Managers also have special duties to the company and its members. The operating agreement should state these.
  • They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
  • They say how new members can join the company. They also have rules about how exiting members can leave.
  • They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
  • They say whether members or managers are in charge. They also say how to hire and fire managers.
  • They say how and under what circumstances the LLC should end. You might not want to dissolve your business now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
  • They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.

Taking the time to draft an airtight operating agreement prevents future headaches. Protect yourself and your business by completing this step. The best LLC formation services make it easier than ever by offering templates for as little as $50.

Varies
Varies

5. File a Statement of Information

What is a Statement of Information? In California, LLCs must also file a Statement of Information. You need to do this within 90 days of filing the Articles of Organization, then every two years after that.

The Statement of Information provides the most updated information about your company. It also verifies you’re following state law. It has a few more details as compared to the Articles of Organization.

Review California Corporations Code section 17702.09 to see what’s included. A $20 filing fee applies.

Your Statement of Information will contain contact information about your business, its registered agent, and any managers or elected CEO. To make things easier, California provides a fillable form that covers all you need.

< 7 days
$20

6. Get an EIN (Employer Identification Number)

Do I need an EIN for my California LLC? Employer Identification Numbers (EINs) are like Social Security Numbers for businesses. The primary function is for the IRS to track your tax information.

The IRS requires a business gets an EIN if any of the following apply:

  • the LLC has more than one member,
  • it hires any employees,
  • or it follows C-corporation or S-corporation taxation.

Even if your business doesn’t fall under the IRS requirements, it’s still a good idea to get an EIN. Banks need them to open a business account and some states use them for tax purposes as well.

The process is quick and easy. To get an EIN, go to the IRS’s website. It only takes around five minutes to compete. There is no reason to pay a third party to get one for you unless it is part of a wider LLC formation package.

Read More: How to get an Employer Identification Number in California

Instant
Free

Cheapest way to start your LLC

Do it Yourself
Gain personal knowledge
Lower upfront cost
You're losing money when you consider how much time it takes
There's the risk of making a mistake
It's a headache
Potential price
$0
Potential time
5+ days
Formation Service
Very easy to use
Affordable ($39 for an LLC)
Same-day filing
Highly reliable
Not ideal for complex LLCs
Potential price
$39
Potential time
30 min
Attorney
A lawyer can help you manage risk
Offers more customization when you need it
Costs more than any other method
Finding one takes time
Slower compared to formation services
Potential price
> $400
Potential time
5+ days

Licenses and Permits in Salinas, CA

Launching a business involves working with local authorities to get the necessary approval. Licenses and permits can be issued at the state, county, and city levels. Make sure to get what your business needs before starting operations.

State

California does not require all businesses to get a general license or permit. But they have an extensive list of commercial activities that need extra approval.

Review California’s Professional Licensure Guide. It can help you find out if your business needs a State license or permit before operating.

Local

If you want to join Salinas’ booming commerce scene, it is crucial to follow local regulations. Every business in the area needs to get a City of Salinas Business License. This is a necessary component of conducting operations. It also involves paying a Business Tax.

The City of Salinas also offers a variety of permits. Many apply to building changes and real estate development. It’s best to obtain the permits before getting too far ahead of yourself.

Besides the City’s needs, you’ll also need to meet the Monterey County requirements. The County also issues Business Licenses. But they only apply to organizations in unincorporated areas.

Monterey County offers permits for specific business activities as well. These depend on the type of business engaged but apply to many different industries, such as:

  • bingo halls,
  • dance studios,
  • and sewer services.

To avoid future headaches, ensure your business gets the approval it needs. Complete this step before you open the doors to your new operation.

Support for Small Businesses in Salinas, CA

Seasoned entrepreneurs understand the importance of connecting with others. While it’s tempting to handle everything on your own, opening up can help you discover the path to success. The local business community can provide valuable advice.

Here is a list of organizations dedicated to helping businesses thrive:

Next Steps After you Register your LLC

Once you’re at this point, take a moment to celebrate because you’ve formed your Salinas LLC. But there are a few steps that you should consider doing right away.

  • Register a Matching Domain

    Even if you aren’t planning on launching a website immediately, getting the rights to a domain name (URL) is worth it.

    If you don’t buy the domain name that matches your business, others can do so. Domain squatters can beat you to the punch so they can resell them at much higher prices in the future. Others will do it to stifle competition.

    Most domain names are affordable, costing around $20-$50 per year. And the process is as easy as searching for the name you want and buying it. Take note from seasoned business owners and get the rights to your domain name.

  • File for a DBA (Doing Business As)

    Many businesses operate under a name different from the entity’s legal name. This is often known as a doing-business-as name. California calls it a fictitious business name.

    The State of California provides the legal requirements for fictitious names. This provides a lot of flexibility when choosing an LLC name. For example, “Salinas Agriculture Consulting LLC” could use “Salinas Crop Cohort.”

    To use one for a Salinas LLC, file a Fictitious Business Name Statement with Monterey County. A $40 fee applies, along with an extra $7 for each additional owner or fictitious name.

  • Stay Compliant

    Forming your Salinas, California LLC serves as the foundation for your business. But like most things in life, you’ll have to keep up with regular maintenance and compliance needs.

    California requires each LLC to file a Statement of Information every two years. These serve as the annual report for your California LLC.

    Some businesses have other compliance concerns. This includes Employer Services for LLCs that hire any employees. And Sales and Use Tax applies to all retailers.

    Additionally, the California Franchise Tax Board places an $800 tax on all LLCs. The fee increases for LLCs making more than $250,000.

LLC Formation FAQs

What are the benefits of an LLC?

Most importantly, having an LLC will ensure your personal assets are protected if your business cannot pay its debts. Running your business through an LLC can also provide you with better tax treatment. In addition, LLCs have fewer and less complicated reporting requirements compared to other types of businesses, making them particularly suitable for smaller businesses.

Do I have to form an LLC to start a business?

It is not strictly necessary to form an LLC in order to start a business. You can engage in business as a sole proprietorship instead. However, in that case, your personal assets may be at risk if your business takes on too much debt or loses a lawsuit in court.

How much does it generally cost to form an LLC?

It doesn’t cost much to set up an LLC for your business. In most states, you will need to pay less than $150 to register your new LLC with the local state authorities. In some states, you may need to pay some additional costs later on, for example, when filing an annual report or filing for a DBA.

How long does it take to form an LLC?

The time it takes to have your LLC approved can vary wildly depending on the state, the filing method you used and if you opted for expedited filing. In some states, you can have your LLC approved in as little as one day, while in others, it may take weeks or even months.

If you want the fastest possible turnaround time, you should consider using online filing and pay for expedited service, if available.

How will my LLC be taxed?

The IRS and most state tax authorities treat LLCs as “pass-through” entities. This means that your LLC does not pay taxes directly (as corporations do). Instead, the tax burden is passed through to the members of your LLC. The members will then include profits and losses from the LLC’s business on their personal income tax returns.

In what state should I form my LLC?

It is generally best to form your LLC in your home state, where you will actually carry out your business. Some people believe that it is advantageous to form your LLC in Delaware or Nevada. In reality, you would then have to register with the authorities in your home state as a foreign LLC and pay additional fees – without much benefit in return.

Do I need to file for a DBA?

You are not generally required to file for a DBA (“Doing-Business-As”). However, most business owners choose to do so anyway. Getting a DBA will allow you to omit the letters LLC from your customer-facing business name. You can also have multiple names for your LLC if you want to run more than one business through your LLC.

Can I form an LLC if I am not a US citizen or US resident?

Yes, you can form an LLC for your business in any US state. There is no requirement for you to be a US citizen in order to form an LLC, nor do you need the right to reside in the US. If your business is going to own physical property in a given state, you may want to form your LLC in that state.

Do I need to hire an attorney to form an LLC for my business?

No, you don’t need to hire an attorney to form an LLC for you. It is generally much cheaper and straightforward to file the necessary paperwork yourself or to hire an affordable LLC formation service to handle the work on your behalf. However, you may want to consider hiring an attorney if your business is very complex.