A single-member limited liability company (abbreviated as either “single-member LLC” or “SMLLC”) is in most cases simply a sole proprietorship that has organized as an LLC under state law. In California, the same statutory protections and advantages enjoyed by a multiple-member LLC apply to an SMLLC as well.
SINGLE-MEMBER LLC PACKAGE: $350 total
($245.00 for legal fees + California state filing fees for Name Reservation $10, Articles of Organization $70, Certificate of Filing $5, and LLC SOI $20)
SINGLE-MEMBER LLC PACKAGES INCLUDE:
- A 30-minute consultation to assess the legal needs of your business.
- Preliminary business name search of California Secretary of State online records.
- Completion and filing of all necessary business formation documents including name reservation, Articles of Organization, and SOI (“Statement of Information”).
- A customized operating agreement based on your client portal questionnaire answers and initial consultation.
- A post-formation memo of important tasks for your business to complete.
- A 30-minute consultation approximately one year after formation to assess the progress of your LLC.
- DOES NOT include IRS S-corp. election filing, EIN filing, Ca. FTB minimum tax filing, or local FBN or business license filings.
- All work, including consultations and drafting of documents, is performed by the firm's business formation lawyer.
SMLLCs Offer Limited Liability Protection to Sole Proprietors
A business owner operating as a sole proprietorship can be personally liable for the debts and liabilities of the business. In contrast, a business owner that forms a single-member LLC (thereafter known as the "sole member" of the LLC) shields his or her personal assets from the debts and liabilities of the business because the SMLLC is a separate legal entity that is afforded the benefits of the law authorizing its formation and governing its operation. In California, the law is called the “Revised Uniform Limited Liability Company Act”, or “RULLCA”.
Tax & Management Flexibility of SMLLCs
A single member LLC also offers a similar level of flexibility as LLCs with two or more members. Regarding income taxation, the SMLLC can affirmatively choose to be taxed as a corporation, or by default accept taxation as a “disregarded entity” where all income “passes through” directly to the owner for reporting on a personal income tax return. Likewise, multiple-member LLCs can be treated as “pass through” partnerships for income tax purposes.
Similarly, single-member LLCs enjoy the same level of management flexibility as other LLCs. The “single member LLC operating agreement” governs the manner in which a single-member LLC is operated, and can be written, within certain statutory guidelines, with whatever level of specificity the sole member desires. For instance, the single member LLC operating agreement may be written to allow distributions whenever the sole member deems them appropriate, or it may authorize the creation of officers such as President or Chief Executive Officer.
Setting up an SMLLC is Straightforward
The same ease with which multiple-member LLCs can be formed applies to single-member LLCs. Additionally, depending on the chosen financial institution, an SMLLC may need to obtain a federal EIN in order to open an LLC bank account. Otherwise, if a single-member LLC with no employees chooses to be treated as a disregarded entity, in most cases it will not need a separate EIN and would instead use its sole member’s Social Security number for tax identification purposes.