Perhaps you are hoping to form a California LLC. People assume how to start an LLC is difficult and costly. However, it’s generally not difficult, and the cost would vary across states. We have all the info you need to know about the cost of forming an LLC, particularly the LLC cost in California.
On this page, you’ll learn about the following:
California LLC Cost of Filing
Here are the costs involved in forming an LLC in California.
Cost of Filing Formation Certificates
The California Certificate of Formation is responsible for the majority of the cost, which could also vary depending on whether you’re forming a domestic LLC or a foreign LLC. Still, you can file both at the California Secretary of State.
California Domestic LLC
- Online Filing costs $70 + $800 Franchise Tax.
- Filing Statement of Information within 90 days of registration costs $20.
- By Mail: Fill out the application form, and send it to Secretary of State Business Services, 1500 11th Street, Sacramento, CA 95814. Costs $70 + $15 for counter drop off (non-refundable).
California Foreign LLC
- Online Filing costs $70 + $800 Franchise Tax.
- Filing Statement of Information within 90 days of registration costs $20
- By Mail: Fill out the application form, and send it to Secretary of State Business Services, 1500 11th Street, Sacramento, CA 95814. Costs $70.
Note that filing online is ideal, not only because you need to go to the Secretary of State office, but also it would be faster. You won’t have to wait in a queue in doing so.
California LLC Formation Service or Registered Agent Fee
You need a registered agent to form an LLC in California, hence, added costs for service fees. Here are three of the best LLC services on our list that will provide you with registered agents to ease your worries.
Business Permits and Licenses
The business licenses depend on your business’s activity and location and are renewed yearly. As such, the cost will vary. Check the California Department of Tax and Fee Administration for regulatory boards or agencies requiring licensing.
Taxes Paid By The LLC in California
Any business in California has three types of taxes to be paid. Income Tax, Corporate Tax, and Franchise Tax. LLCs are exempted from the Corporate Taxes due to the pass-through taxes. The LLC members are liable to pay income taxes and Franchise tax. Apart from these three taxes, every LLC in California has to obtain EIN, there is no fee for obtaining EIN in California. On the other, a certain amount of Sales Tax has to be paid by the LLCs.
Franchise Tax is a minimum mandatory tax paid by the LLCs. Any LLC (domestic or foreign) registered with California state has to pay $800 whether it is running or inactive. As long as the LLC is registered it has to bear the Franchise Tax.
According to the Franchise Tax Board of California, this is a privilege tax for running a business in California and has to be paid by the LLCs following some terms and conditions.
Franchise Tax According to Income Tier
Following are the different income tiers based on which the amount of tax amount is calculated.
- Income from $0 to $250,000: $800 Franchise tax + $0 LLC Fee > Total $800
- Income from $250,000 to $499,999: $800 Franchise tax + $900 LLC Fee > Total $1700
- Income from $500,000 to $999,999: $800 Franchise tax + $2500 LLC fee > Total $3300
- Income from $1,000,000 to $4,999,999: $800 Franchise tax + $6000 LLC Fee > Total $6800
- Income above $5,000,000: $800 Franchise tax + $11,790 LLC fee > Total $12,590
Apart from these above-mentioned state taxes, California LLCs have to pay a Federal Tax of 15.3% on the total income generated by the LLC.
Cost Comparison Among States
California is one of the best states to start an LLC. The state is bounded by Arizona, Nevada, Colorado, and Oregon. Here’s the cost comparison among the neighboring states of California.
|State||Filing Fee||Annual Fee/Biennial Fee|
|California LLC||$70||$800 + $20 (every 2 years)|
|Oregon LLC||$100||$100 (Annual)|
|Nevada LLC||$425||$350 (Annual)|
Comparing the neighboring states, we can say Arizona has the least LLC fees, however, California is the most favorable among all for the businesses as it has immense tax advantages. Apart from that, the state has massive business opportunities.
- California Name Reservation: $10 for online filing or by mail; $20 for drop off requests
- Doing Business As (DBA): Cost varies between counties for both online filing and by mail
- Certified Document Copies: $5 + $1 for 1st page and $0.50 for succeeding pages.
- Certificate of Good Standing: $5 per entity
- Business Domain Name and Website: depend on your preference, but domain name could be as low as $2.99/yr at NameCheap, and web hosting is at least $30/mo at Kinsta.
- Online workspace: at least $4.20/mo for GSuite.
- Business Insurance: would vary depending on insurance type–whether general liability insurance or professional liability insurance–and coverage.
- Dissolution of California LLC: $0 filing fee; $15 for faster service
How Much Does It Cost to Maintain an LLC in California
To maintain an LLC in California you will need to pay a biennial fee of $800 + $20 along with Income tax, Franchise tax and federal taxes.
If you’re wondering How Much Does It Cost to Maintain an LLC, you’ve come to the right place. Here are some tips to help you get started. First, you’ll need to secure a name for your business. Once you’ve got the name, you’ll need to register your company and pay the filing fee. You’ll also need to pay the operating agreement fees, which may be tax deductible.
Using a registered agent service is a must for any LLC in California. You’ll need to hire someone who can serve as your registered agent. Most state laws require you to have a registered agent for your LLC. This can be done yourself or through a professional registered agent service. However, you should remember that hiring a registered agent can cost you a few hundred dollars a year.
Another essential part of running a successful LLC is keeping detailed financial records. This includes invoices for every purchase and information on employees and contractors. Another essential part of LLC maintenance in California is biennial reports of information. Failure to submit these reports on time will result in harsh financial penalties. Lastly, you should hold an annual meeting for your business. The annual meeting is optional but can help you clarify your business goals.
There are several other costs to consider when setting up an LLC in California. One of these is the annual franchise tax. Most businesses in California must pay this tax every year. The amount is about $800 per year, though some may pay more than this. Another common cost is the annual license fee, which is paid to the California Secretary of State every year. Franchise taxes range from one percent to eight percent of profits.
Besides the annual filing fee, you’ll also need to apply for various licenses and permits. In California, there is no statewide business license; you must get each license separately. You can look up your business licenses at CalGold. These licenses cost $50 to $100 and must be renewed annually. Some business types require specialized licenses, so be sure to research these before you register.
Despite the high costs, starting a business with an LLC is one of the smartest decisions you can make for your business. With the proper steps, you’ll save time and effort on paperwork, and start building your business. There are several California LLC formation websites available. These websites offer basic or premium services, depending on the type of service you choose. You can also look into the Premium services, which provide more extensive assistance.
Although the start-up costs of forming an LLC in California are higher than in other states, the cost to operate and maintain an LLC is still well worth it in the long run. Not only does an LLC protect the business owner from liability, but it also lowers the taxes paid by the business. A good service should offer a quote on the fees required to form an LLC. In addition to the initial fees, you’ll also pay annual filing fees to the state and federal governments.
It is possible to form an LLC without professional help, but forms still have associated costs, regardless of where your LLC is formed.
It is difficult to say whether forming an LLC is expensive. Nevertheless, the cost could be anywhere from $40 to $500. If you refuse to hire professionals, you’ll still have expenses like form fees to cover.
The need to separate personal money from business funds, thus necessitating the creation of a business bank account for your LLC.
The cost of California is much lower compared to other forms of business. Apart from the state filing fees and annual taxes, you might bear the cost of the registered agent. Compare the price of professional LLC services and choose the most affordable one.