This LLC corpus contains informational documentation provided as a service to help people understand California LLCs.
Forms and instructions for many of the matters discussed on this page can be obtained by downloading the documents at the California Secretary of States’ website
Formation & Operation of an LLC in California
This article provides an outline of key considerations with respect to forming and operating a limited liability company in California. Features are similar in other states.
The limited liability company entity is a relatively new form of business organization in California. The authorization of the LLC form of business in California is intended to provide flexibility to businesses for meeting their objectives.
A limited liability company combines some of the best characteristics of the partnership and corporation while eliminating some of their less desirable characteristics. The owners (called “members”) of a limited liability company, like shareholders of a corporation, are not generally liable for the debts of the business. Yet, like a partnership, double taxation is avoided because the profits of the company are not subject to income tax liability imposed upon the company (unlike corporations). Furthermore, unlike limited partners in a limited partnership, members of a limited liability company may actively participate in management without becoming subject to unlimited personal liability. The members of an LLC enjoy significant freedom under California law to fix their rights and obligations by agreement as to most matters.