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
Secretary
of State
Document Filing Support Unit
1500 11th Street, 3rd Floor
Sacramento, CA
Tel: 916-657-5448
www.ss.ca.gov/business/business.htm
Check Name Availability
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
The
California Beverly-Killea Limited Liability Company Act
is contained in the California Corporations Code, title
2.5
The California Beverly-Killea Limited Liability Company
Act
Important Statutory Rules
LLC Management
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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