Legal Question in Business Law in California

Re: LLC Formulation

Forming an LLC requires filing a one-page form (LLC-1) with the California Secretary of State and payment of a $70 filing fee. You can easily do this yourself by mail, and the form can be downloaded from the SS's Web site.

The downside is that it will take several weeks to more than a month (typically) to get paperwork turn-around to/from Sacramento, and filing the LLC-1 is only the tiniest part of setting up a functioning LLC.

Every LLC needs to have an operating agreement, which functions as its "bylaws" and also contains the essence of the agreement between the LLC's members. Writing a suitable LLC operating agreement is NOT a task for a non-lawyer.

Since you already have assets (the income property) and operations (the tenant agreements, etc.), you'll need professional assistance in transferring those assets and operations from what is currently probably a partnership, although possibly it is something else. If the property is financed, you'll probably also need lender approval to transfer title into the LLC.

The LLC will need to obtain a taxpayer identification number from the IRS, and may need to do other filings and registrations.

Lawyers who do LLCs and incorporations generally are set up with courier services and can get papers processed at the Secretary of State on a much faster basis.

A full-service LLC formation using courier services and including proper handling of the side issues might cost $1,000 to $1,500 in attorney fees, mainly depending upon how complex the operating agreement needs to be to meet the owners' needs.