California LLC Operating Agreement
The California LLC Operating Agreement is the core document that is referred to when issues concerning a California limited liability company (“LLC”) need to be resolved.
The LLC Operating Agreement is the most important document for your California LLC.
In the case of a single member LLC, without the formality of an LLC Operating Agreement, the LLC can closely resemble a sole proprietorship, which does not limit your personal liability for business debts of the LLC.
With respect to a multi-member LLC, the LLC Operating Agreement reflects the agreement among the members with respect to the affairs and management of the LLC and governs the relationship amongst the members of the LLC. By having an LLC Operating Agreement, the members will be provided with a clear set of rules that all members have agreed upon greatly reducing the likelihood of disagreement between them in the future. A LLC Operating Agreement will also greatly reduce financial and management misunderstandings, and make sure your business is governed by your own rules -- not default rules created by the state of California.
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The LLC operating agreement does not have to be filed with any state agency. All states, including the state of California will enforce valid operating agreements entered into among LLC members. The operating agreement will only be enforced against the persons who are parties to the agreement. Therefore, it is extremely important that all members of an LLC sign the operating agreement.
Your California Limited Liability Company
LLC Filing Office
Entity or Franchise Level Tax
California follows the federal tax treatment of partnerships, and partnerships are not subject to tax on their income.
LLCs taxed as partnerships are not subject to franchise or income tax in California. Like limited partnerships, LLCs, including single-member LLCs disregarded for federal income tax purposes, are subject to the minimum franchise fee of $800.
In addition to the minimum franchise fee, LLCs are subject to a gross receipts based annual fee, regardless of their federal entity classification. The gross receipts based fee is based on a graduated scale and ranges from $900 for LLCs with receipts from California between $250,000 and $500,000 to $11,790 for LLCs with California receipts in excess of $5 million.
State LLC Act
California Beverly-Killea Limited Liability Company Act
is contained in the California Corporations Code, title
The California Beverly-Killea Limited Liability Company Act
Important Statutory Rules
An LLC is managed by its members unless the Articles of Organization states that the LLC is to be managed by one or more managers.
Admission of Members
Unless the Operating Agreement states otherwise, new membership must be issued with the consent of a majority-in-interest of the members, and only after the new member signs the LLC Operating Agreement.
Amending the Operating Agreement
Unless the Operating Agreement states otherwise, the Operating Agreement must be amended by the written consent of all the members. Note: The Operating Agreement cannot reduce the membership vote required to amend the Articles of Organization below a majority-in-interest of members.
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