California LLC Costs
A limited liability company (LLC) is a business structure that provides business owners and entrepreneurs with liability protection, specific tax breaks, and a workable management structure. Business owners often think forming an LLC is complicated and costly in California. But, the process is straightforward, and the California LLC costs are cost-effective in the long run.
Recommended LLC Services
Costs to start an LLC in California
File Articles of Organization ($70)
- You will file the Articles of Organization with the California Secretary of State.
- The filing fee for your Articles of Organization is $70.
- California does offer expedited services for an additional cost. 4-hour (Class A) – $500.00, Same-day (Class B) – $750.00, 24-hour (Class C) – $350.00
California Statement of Information ($20)
- The Secretary of State mandates that California LLCs file a biennial report.
- You will complete the Statement of Information No Change (Form LLC-12NC).
- The California Statement of Information filing fee is $20.
California annual tax ($800)
- LLCs in California must pay an annual tax of $800 to the Franchise Tax Board.
- If your tax year has less than 15 days and no business was conducted, you are exempt from paying the first year of the annual fee.
California LLC fee ($900+)
- California LLCs with annual revenue under $250,000 must pay an $800 franchise tax. The higher the total income, the higher the fee.
- You will file and pay your franchise tax online with the California Franchise Tax Board website.
California initial report fee ($20)
- The California Secretary of State requires LLCs to file an initial report within 90 days of the LLC registration date.
- You complete the State of Information form (Form LLC-12) and submit it to the Secretary of State along with the $20 processing fee.
Registered agent fee (varies between $50 to $300)
- In California, you can act as your own registered agent. However, you must list your personal name and address in the public record. It means that you may be subject to getting junk mail and unwanted phone calls.
- Professionals recommend that you appoint an experienced registered agent or service to avoid missing deadlines, essential documents, and late fees or penalties.
- An agent for service of process helps handle documents and legal papers for your California LLC, such as subpoenas, tax notices, and all correspondence.
- The cost of a registered agent varies depending on the registered agent or service you appoint, your business needs, and California state fees.
Fees to form a Foreign LLC in California ($70)
- In California, you must register your LLC as foreign if you have an existing LLC registered in another state.
- The California fee for registering an LLC in California is $70.
- You must complete and submit the Application to Register a Foreign Limited Liability Company form (Form LLC -5) to the California Secretary of State.
LLC name reservation ($10)
- California requires you to reserve your LLC name. You can research that name for up to 60 days before the LLC formation process.
- You will complete and submit the Name Reservation Request Form.
- The cost to reserve an LLC name in California is $10.
DBA filing fees (varies depending on the city/county)
- The acronym DBA is a shortened version of the business term’ doing business as.’ A DBA name is a registered name that an individual or company uses to conduct business that is not the legal name in California.
- You will need to contact your local city, county clerk, or recorder to inquire about the process, prices, and office hours.
Cost of certified document copies ($25)
- You must complete the California Business Entities Records – Order Form and submit it to the California Secretary of State.
- The cost of certified copies of your California business documents is $6 for the first page and .$50 for every additional page.
Certificate of Status ($5)
- Most banks and financial institutions require a Certificate of Status to open a business banking account.
- You must complete and submit the Business Entities Records form to obtain The Certificate of Status or a Certificate of Good Standing.
- The fee for a Certificate of Status is $5.
Steps to start an LLC in California
Choose a business name
When choosing a California LLC name, you will want to consider a few things.
Your company name must be unique in California.
- A California LLC name must meet the state naming requirements and must include the phrase limited liability company, or a version of the acronym (LLC, L.L.C.),
- Check for web domain availability to make branding seamless.
You will use the California Secretary of State name search for LLC name availability.
Find a complete list of LLC name restrictions on the Secretary of State’s website.
LLC name reservation fee
You will complete and submit the Name Reservation Request Form to the California Secretary of State.
The cost to reserve an California LLC name for up to 60 days is $10. Name reservation is mandatory in the state.
Appoint a California registered agent
You must appoint a California registered agent for LLC formation in California.
The cost for a registered agent in California varies between $50 to $300 per year depending on your California LLC needs.
A registered agent in California is an individual or business entity that receives tax forms, legal documents, lawsuit notices, service of process, and other official government communications on behalf of a sole proprietorship, limited partnership, corporation, or LLC.
The registered agent you choose must be a California resident or a registered agent service authorized to conduct business in the state.
- Starter Plan – $39 a year plus State Fees
- Pro Plan – $149 a year plus State Fees
- Premium Plan – $249 a year plus State Fees
ZenBusiness offers a stand-along registered agent service. The price is $99 per year.
- Total Out The Door California LLC Formation Package – $44 a month and includes:
- California State Fee
- California Filing Service Fee
- Registered Agent
- Tax ID
- Annual Plan – $225 plus State Fees a year
- Economy – $79 plus $153 California filing fees
- Standard – $329 plus $153 California filing fees
- Express Gold – $349 plus $255 California filing fees
File Articles of Organization
You will submit your LLC’s Articles of Organization to the California Secretary of State Business Entity Filings Unit.
You will file online using the California Secretary of State’s website.
Or, you can complete the Secretary of State Articles of Organization Limited Liability Company (LLC) form and submit it by mail.
The filing fee for your Articles of Organization in California is $70.
Form LLC-1 will ask for specific information about your LLC.
- LLC name and contact information
- Address of principal office
- Mailing address
- Registered agent information
- Management structure
California Secretary of State
Business Entities Filings
P.O. Box 944228
Sacramento, CA 94244
1500 11th St.
Sacramento, CA 95814
Mon-Fri. 8 a.m. to 5 p.m.
Get a California LLC EIN
An Employer Identification Number, or EIN, can also be referred to as a Federal Employer Identification Number (FEIN) or Federal Tax ID Number (FTIN).
It is a nine-digit number the Internal Revenue Service (IRS) gives for free. It helps identify companies for income tax purposes and acts as a Social Security number for a company.
The Internal Revenue Service mandates that you obtain an EIN for your California business if you convert a sole proprietorship into an LLC.
The process is simple and can be done online using the IRS website.
Business banking for a California LLC
You will want to keep your personal and business banking accounts separate. It protects your credit scores and assets.
You will need a copy of your Articles of Organization, Certificate of Status, and the LLC’s EIN to open a business bank account in California.
A business banking account is typically free and does not come with any additional cost or fees.
Business attorney fees in California
Hiring a business attorney to handle LLC formation in California and business-related issues makes the process easier and frees up time so that you could focus on something more important than paperwork.
Most attorneys do offer free consultations for first-time clients.
Professional services like LegalZoom and Rocket Lawyer offer LLC formation packages that include comprehensive legal services.
On average, a professional business lawyer will cost $300 per hour.
LLC taxes in California
LLCs are pass-through entities. It means that the LLC members must file their personal taxes rather than the LLC state filing a tax return with the California Department of Revenue.
- California has a mandatory annual franchise tax fee of $800 that must be paid annually until you cancel your LLC.
- If you are a seller in the state of California, you will want to review your permit and tax requirements.
- California requires you to pay a fee if your LLC makes more than $250,000. You will have to estimate and pay according to due dates.
- A California LLC will also have various taxes, such as incoming withholding tax depending on the type of business.
- You will submit a sales tax return to the California Department of Revenue annually. You will want to consult a business attorney or tax consultant to avoid penalties or missing vital deadlines for state taxes and federal taxes.
- You must register for California Employer Taxes, including Employee Withholding Tax, Unemployment Insurance Tax, and Disability Insurance if you hire employees.
Business licenses and permits in California
Permits and business licenses depend on the business’s jurisdiction and what your company does.
You will need to apply for a business license through the Department of Tax and Fee Administration (CDTFA) website.
The average cost for a business license in California is between $50 and $100.
California counties and cities have different laws and rules for business permits and licenses.
You will need to check with local and federal government offices to inquire about the process and price.
You may find that a California business document or form may require the services of a notary public.
Most California government offices have one on staff if you cannot find a notary public.
Per California law, a notary public can charge up to $15 max for a notorial act.
Benefits of a California LLC
- Business banking is made more accessible by forming an LLC. Most banks and lending institutions require that an LLC open a business account separate from the owner’s personal banking account. You reduce your liability when it comes to business debt and future lawsuits.
- In California, LLCs and corporations have different compliance requirements. LLCs don’t have shareholders and stock owners to answer to as incorporations do.
- With LLC formation, you are not subject to double taxation. Certain business entities such as C-corporations are double taxed.
- LLCs can choose to be taxed as a pass-through entity in California. Forming an LLC in California ensures that business earnings are taxed once through the members’ personal tax returns.
- Forming an LLC gives you more credibility. The LLC business structure is more formal than a sole proprietor and brings more creditability to even a small business.
How long does it take to register an LLC in California?
It takes approximately 3 to 5 days to register your LLC online. For those that file by mail, expect a 2 to 3-week processing time that includes returning the documents.
California does offer expedited services for an additional fee.
Do I need an LLC operating agreement for my LLC in California?
California does require you to have a business operating agreement. The state does not require you to send it to them, nor do they keep a copy.
According to California state law, it can be written or oral and in your company’s records.
Do I need to publish my LLC in California?
You must file the biennial report, or Statement of Information, with the California Secretary of State and file it every two years according to the due date schedule.
How do I dissolve my California LLC?
You can dissolve your California LLC online using the Secretary of State’s website. Or, you can complete and submit the Certificate of Dissolution Limited Liability Company (LLC) by mail or in person.
The filing fee for canceling your LLC is $15 in person. The state does not charge if filed by mail or in person.
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