LIMITED LIABILITY COMPANIES (LLCs)
Limited Liability Companies ("LLCs") have become popular over the years because of their flexibility and pass-through taxation properties. The flexibility is akin to a partnership where a partnership agreement can determine the rights and liabilities of the partners. In LLCs, this agreement is called an operating agreement.
With LLCs, California charges an annual tax fee and an annual company fee. The annual tax fee is set (currently, $800), but the annual company fee depends on how much "total income" the company has.
Forming and operating an LLC, although extremely popular in recent times, is not always the best choice. Facts, circumstances, and goals vary with each case and choosing an appropriate entity requires analysis of those.