Although the LLC has many desirable features, it is not suitable for every business. In CA, the following businesses may NOT form and operate as LLCs.

Professional Practices. The practices of specially licensed California professions, such as lawyers, accountants, doctors and other health professionals (the same professions which, if they are incorporated, must be set up as special California professional corporations), may NOT be organized as LLCs. The following professionals, in an individual capacity, can only form a professional corporation:

• Accountants
• Acupuncturists
• Architects
• Attorneys
• Barbers
• Chiropractors
• Clinical Social Workers (Licensed)
• Dentists
• Doctors
• Marriage and Family Therapists
• Naturopathic Doctors
• Nurses
• Optometrists
• Osteopaths
• Pest control
• Pharmacists
• Physical Therapists
• Physician Assistants
• Podiatrists
• Psychologists
• Shorthand Reporters
• Speech-Language Pathologists and Audiologists
• Veterinarians

Certain Regulated Businesses. It is important to note that businesses requiring a license, certification, or registration under the California Business and Professions Code may NOT form a California LLC. The following is a list of some of the businesses that may NOT form a California LLC:

• Automotive repair facilities
• Adult Day Health Center
• Advertising, outdoor
• Agricultural chemicals
• Agricultural pest control
• Apiaries
• Artists' managers
• Automotive repair dealers
• Bail bondsmen
• Barbers
• Beauticians
• Boats
• Boxing, wrestling
• Building and loans
• Canneries
• Cattle slaughtering
• Cemetery brokers, sales
• Check sellers and cashers
• Child care centers
• Cleaning, dyeing, pressing
• Clinical laboratories
• Cold storage warehouses
• Collection agencies
• Community care facilities
• Contractors
• Cosmetologists
• Detectives, private
• Egg and dairy producers
• Employment agencies
• Engineers
• Escrow agencies
• Estheticians
• Farm labor contractors
• Fireworks
• Fish breeders
• Fish brokers and importers
• Fish packing and reduction
• Fish (shellfish cultivation)
• Fishing, commercial
• Fishing craft and gear
• Franchise investments
• Funeral establishments
• Furniture and bedding
• Game breeders
• Geologists and geophysicists
• Health centers, clinics, dispensaries
• Health facility
• Hearing aid dispensers
• Horse racing
• Hospitals
• Industrial homework
• Insurance agents, brokers
• Investment advisers
• Itinerant merchants
• Land and photogrammetric surveyors
• Landscape architects
• Liquid waste haulers
• Loans, small
• Locksmiths
• Manicurists
• Meat inspection
• Milk products, imitation
• Mineral, oil and gas brokerage
• Mobile homes and parks
• Mortgage brokers
• Motels
• Motor transportation brokers and agents
• Motor vehicle dealers, manufacturers,
• Motor vehicle dismantlers
• Motor vehicle driving schools
• Motor vehicle salesmen
• Nursery stock
• Nurses' registry
• Nursing home administrators
• Oil and Gas Well Drilling
• Optometrists
• Personal property brokers
• Pest control
• Poultry
• Private Investigators
• Process servers
• Processors of farm products
• Produce dealers
• Real estate brokers
• Real estate appraisers
• Real property securities dealers
• Security guards
• Securities agents and broker-dealers
• Securities depositories
• Shorthand reporters
• Structural pest control
• Surveyors
• Talent agencies
• Tax preparers
• Teachers
• Trading stamp companies
• Vehicle verifiers
• Vessel operators
• Veterinarians
• Warehouses, agricultural
• Warehouses, grain
• Weighmasters
• Wharves
• Yacht and ship brokers

Yes. An LLC can have only one owner.

Yes. A non-resident alien (a person who is not a citizen or national of the United States and who is in this country on a visa or temporary basis and does not have the right to remain indefinitely) can be an owner of a LLC. An S-corporation cannot have a non-resident as a shareholder.

Yes. Changing a sole proprietorship or a partnership to an LLC is a simple method for sole proprietors and partners to protect their personal assets without changing the way their business income is taxed.

Articles of organization must be prepared and filed with the Secretary of State and filing fees and other initial fees must be paid. An Operating Agreement must also be prepared.

With an LLC, Articles of Organization are filed with the state rather than Articles of Incorporation. Additionally, instead of bylaws, LLCs generally utilize an Operating Agreement to set forth the organizational structure of the entity.

Articles of Organization are equivalent in general form to a corporation's articles of incorporation. The Articles must be filed with the Secretary of State to begin existence.

To validly complete the formation of the LLC, members must enter into a written Operating Agreement which sets out rules for the ownership and operation of the business (much like a partnership agreement or stockholder agreement). An operating agreement usually includes:

• The members' percentage interests in the business
• The capital contributions to be made by each member
• The members' rights and responsibilities
• The members' voting power
• How profits and losses will be allocated among the members
• How the LLC will be managed
• Rules for holding meetings and taking votes, and
• "Buy-sell" provisions, which establish rules for what happens if a member wants to sell his interest, dies or becomes disabled.

An operating agreement is necessary to:

• Help ensure that courts will respect your personal liability protection by showing that you have been diligent about organizing your LLC. Failure to draft an operating agreement could be used by a plaintiff to pierce the veil of limited liability. This could lead to unlimited, personal liability for the business debts.
• Govern how profits will be split, how major business decisions will be made, and dictate procedures for handling the addition and departure of members.
• Help to prevent disputes among members and provide methods to resolve disputes without the need for costly and emotionally draining litigation.

Members are considered the owners of the LLC, just as shareholders are the owners of a corporation.

An LLC may have one or more managers who are responsible for managing the LLC on a daily basis. When one manager is appointed, he/she effectively holds the same role as the President of a corporation. When two or more managers are appointed to manage an LLC, the structure likens that of a board of directors in a corporation.

State law requires that a corporation or LLC designate an agent responsible for receiving important legal and tax documents on behalf of the company. The registered agent should be generally available at the address during standard business hours. Please note that a corporation or LLC cannot be its own Registered Agent.