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Limited Liability Company

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  • This form and your answers are used by Guideway to prepare the requested legal forms. Please use the information found in this form and, if applicable, in the appropriate overview on the subject or your own knowledge or independent research when deciding how to proceed in your legal matter. If you need additional resources, please do not hesitate to ask your representative for help in finding them.

    Please complete this form carefully. If an answer is left blank, we will assume the intended answer is “none” or “N/A”.

    WARNING: Certain professions are not permitted to operate as an LLC. If you provide a professional service and your industry is regulated by the Business and Professions Code, then it is very likely that you are required to incorporate instead. Examples of such professions include real estate agents, accountants, lawyers, and legal document assistants. The definition of “professional service” may be somewhat nebulous, so it is very important that you research whether you are permitted to do business as an LLC. You may wish to consult with an attorney, other members of your profession, or your state licensing board to check to see whether you are permitted to operate as an LLC.

  • SECTION A: OWNERSHIP AND MANAGEMENT OF THE LLC

    The Articles of Organization is the formation document of the company. California Document Preparers will file the Articles of Organization with the California Secretary of State.

    Every LLC has members and managers.

    A member is an individual who has been admitted to the LLC as a member in accordance with the Articles and the Operating Agreement who also has an economic interest in the company. If an LLC is "Member-Managed" then then owners take part in the daily management of the LLC.

    A manager is a person elected by the members of the LLC to manage the company. Managers have the authority to act for the company and to undertake or assume any obligation, debt, duty or responsibility on behalf of the company. If the LLC is a "manager-managed" LLC, then members may not act on behalf of the company or assume any responsibility on behalf of the company unless they are also appointed as managers.

  • Print the name of the LLC. The name must end with the words “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.” The words “Limited” and “Company” may be abbreviated to “Ltd.” and “Co.” respectively. The name of the LLC may not contain the words “bank”, “trust”, “trustee”, “incorporated”, “inc.”, “corporation”, or “corp.”, and must not contain the words “insurer” or “insurance company” or any other words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks.

    Note: Guideway Legal can do a preliminary search of business name availability based on your workbook entry. The business entity search is done directly through the Secretary or Department of State. It can be used to determine if an entity with the same name is currently registered with the State. However, Guideway cannot guarantee name availability. Let your representative know if you are interested in this service.

    The owners of LLCs are referred to as "members". How many members does the LLC have?

    Note: An LLC owned by two spouses is still a single-member LLC.

    The people who run the daily operations of the LLC are called the "managers". The managers may also be members, but they don't have to be. How is the LLC managed?

    Choose "member managed" for a single-member LLC that is managed by that member, or for a multi-member LLC that is managed by all of the members who share responsibility for the daily management of the business. For example, if all the members provide the service, assist the customers, or help make the products of the LLC, you should choose this option.

    Note: The Articles of Organization will state that the LLC will be managed by ALL LLC MEMBERS.

    Choose "manager managed" only if the LLC has multiple members who will not all be participating in the daily management of the LLC. This choice is appropriate when the LLC is large and management by all the members would be impractical or unwieldy. This choice is also common when some of the members prefer to be passive investors or are not skilled at managing the business.

    Note: Depending on how many Managers you list in Question 13 below The Articles of Organization will state that the LLC will be managed by ONE MANAGER or by MORE THAN ONE MANAGER.

  • NAME AND ADDRESS OF AGENT FOR SERVICE OF PROCESS

    Write the name and address of the agent for service of process in California. An agent is an individual, whether or not affiliated with the LLC, who resides in California or a corporation designated to accept service of process if the LLC is sued. The agent should agree to accept service of process on behalf of the LLC prior to designation. If a corporation is designated as agent, that corporation must have previously filed a certificate with the California Secretary of State.

    Note: An LLC cannot act as its own agent and the address must be a physical street address (no P.O. boxes or postal mailbox-rental stores).

  • List the name of the organizer who will sign the Articles. The LLC does not need more than one organizer.

  • SECTION B: OPERATING AGREEMENT

    The LLC will have an “Operating Agreement” which sets forth how the LLC is owned and managed. The Operating Agreement contains information about the rights and duties of the members and managers, if any, such as what happens if a member dies or becomes otherwise compromised, and how profits and losses are shared.

    The multi-member Operating Agreement provided in this package has a number of standard provisions. For example, the Operating Agreement restricts the right of a member in a multi-member LLC to transfer his or her shares to another individual without the consent of the other members (however transfers to a member’s own revocable living trust are permitted without such consent).

    Importantly, the Operating Agreement also sets forth that the LLC will dissolve if a member dies, becomes permanently incapacitated, goes bankrupt, retires, resigns, or is expelled from the LLC unless the other members purchase that member’s ownership interest in the LLC. In the event that the other members decide to purchase the exiting member’s share, the Operating Agreement establishes a method of valuing the exiting member’s interest in the LLC and sets forth the terms of the transaction.

    The Operating Agreement also provides rules governing membership interests that are the community property of married members. The non-member spouses of the members will need to sign the Operating Agreement.

    In order to avoid costly litigation in the event the members end up in a dispute with each other, the Operating Agreement requires the members to attend mediation in order to resolve disputes. If the dispute is not resolved in mediation, the members are required to submit to binding arbitration. The information presentable in the arbitration will be pursuant to simplified rules of evidence-collection in order to keep the proceeding straightforward and the costs low.

    Once you sign the Operating Agreement, it will be a binding and enforceable contract. You should read the Operating Agreement carefully before you sign it, and you should consider obtaining legal advice from a qualified attorney and tax advice from a qualified CPA in order to understand your rights and duties under the Operating Agreement.

  • Name of MemberForm of Contribution (i.e. Cash, Personal Property, Real Property, etc)Fair Market Value of ContributionPercentage interest in LLCMarried? 
    To add another entry, click the "+" at the end of the line.
  • MM slash DD slash YYYY

    Cash-Based accounting recognizes income when money is received. Accrual-Based accounting recognizes income when goods are shipped or services are rendered. Under the accrual method, an expense is recognized when the business is obligated to pay it. Under the Cash method, an expense is recognized when it's paid.

    When offering interests in the LLC to members, you must file your Limited Offering Exemption Notice at the California Department of Corporations website.

    Note: This question does not apply to member-managed LLCs because the members' say in business decisions is proportionate to his or her ownership interest in the LLC.
  • NameStreet AddressCityStateZip Code 
    To add another entry, click the "+" at the end of the line.
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    By submitting this form, I acknowledge that I understand that the person who helped me is not an attorney and I did not receive any legal advice in the selection or preparation of my forms.

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