Starting an LLC and the BAR STAR Program


Information about our LLC Letter

We have seen a dramatic increase in the number of citations issued by the BAR.  Due to:

1) the structure of the STAR Program regarding directed vehicles;

2) the fact that a citation will forbid stations from participating in STAR for one year; and

3) the fact that the BAR started significantly increasing the number of citations issued exactly one year prior to the January 1, 2013 start date, we can easily deduce that the BAR is trying to put as many smog stations out business as possible, most likely to make it easier for them to regulate the industry.

Due to the severe impact that a single citation can have on a smog station, the main purpose of restructuring your business under an LLC would be to protect the business from the actions of an individual (i.e. the technician).  By forming an LLC with all persons involved in the business (owners, managers, technicians, etc.) named as members, along with an Operating Agreement that specifically insulates each member from the actions of the others, the business can be protected from the impact of a citation upon its STAR eligibility.  Smog technicians are independently licensed by the state, so if they perform an inspection on a BAR undercover car that results in a citation, it can be shown that the business would not be liable for the technician’s actions due to the structure of the LLC.

The service being offered by our firm is to assist businesses with virtually all the paperwork and legwork involved with forming the LLC and obtaining the requisite licenses and permits required to operate. The $1,475.00 flat fee would cover all filing and application fees, as well as all labor for researching, preparing and reviewing the forms and applications.  The first step would be to form the LLC itself by filing the necessary forms with the Secretary of State.  This must be done in person in Sacramento in order to utilize the SOS’s 24-hour expedited filing service, as the standard method can take 4 months or longer to process (the expedited service alone costs $350.00 in addition to the $70.00 LLC filing fee).  Once this is done, we can begin preparing the Operating Agreement (required for all LLC’s in California) and completing the various applications. The BAR’s applications fees for ARD and TC license applications for LLC’s would cost $300.00, plus all city/county application fees for business permits.  All of these fees would be included in the flat fee.

This entire process would most likely take anywhere from 6 to 8 weeks to complete, mostly due to the 4-6 weeks it takes the BAR to process and approve ARD applications.  We need a fair amount of information before we could begin the process; Here is an incomplete list below (each city/county asks for different information for business permits, so we would need to research your area to determine all needed information):

— Business location, mailing address, phone, fax and email address

— Date business started

— Date that business activities for the LLC began or will begin

— % of business that is professional services and % that is retail sales (if any)

— Number of part-time and full-time employees

— Full name, SSN, date of birth, address, phone number, driver’s license number, and title for the person that will be the manager and responsible party for the LLC

— Full name, address, driver’s license number, and title for all members of the LLC

— Copies of driver’s licenses for all members of the LLC

— Name, address and phone number of a personal reference for each member (must live at a different address)

— Have any members been issued a license by the BAR?

— Current and previous automotive repair registration numbers for all members (if any)

— Have any members ever had any BAR license denied, suspended, revoked, or placed on probation, been issued a citation?

— Do members have any criminal convictions, other than minor traffic violations?

— Business email and/or website

— General list of items sold at the shop, and monthly gross sales

— Names and addresses of any California-based suppliers

— Landlord’s name, address and phone

— Name, address and phone of person maintaining business records

— Business’ bank and branch location

— Merchant account processor and account number (if available)

— Previous Seller’s Permit number (if you have one)

— Will you be doing any auto painting?  If so, will you need a Hazardous Waste ID? We would also need the Spray Booth number

— Will you be doing any structural repair?

We hope this information outlines some of the questions regarding starting an LLC to protect a facility and ensure STAR certification in the event of technician error.


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