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.
Creating a California LLC can be a good business move for some. However, there are a number of costs involved. These costs may include the formation of an LLC and the fees associated with establishing a business bank account. You may also have to pay additional fees in order to obtain certain licenses and permits. You will also need to pay the California State Annual Franchise Tax. However, you may also be required to pay additional fees based on the type of business you operate.
The California Secretary of State provides a list of the fees and forms you will need to register your California LLC. The fees vary based on the type of business you operate and how much revenue you generate. The fees can be as low as $20 to as high as $100. These fees are paid to the state of California, and are usually one-time fees. These fees may be tax-deductible at the federal level. If you’re unsure about the fees, you can get more information by visiting the California Secretary of State’s Business Entities FAQ page.
California LLCs must also file a Statement of Information with the state. This form is similar to a Statement of Information form in other states. It requires the information of the registered agent for your LLC. It also requires a filing fee of $70. There is a $5 fee for certified copies of the document. It is important to file your statement of information in a timely manner in order to avoid a fine.
California businesses may also need to pay certain business licenses and permits. Some of these licenses are industry-specific, while others are municipal licenses. In addition, you may need to pay for unemployment insurance and sales tax. Some businesses may need to pay a professional license, and others may need to apply for a building permit. These licenses and permits vary greatly from business to business.
Another important cost is the California LLC annual tax. This fee is due every April 15th. If you do not pay this tax, the state can dissolve your LLC. However, you can renew your license if you pay the tax in a timely manner. You can also get a Certificate of Good Standing from the state if you pay the tax on time.
If you want to change your registered agent, you will need to fill out Form LLC-12. There is also a fee for this change, which is $20. If you want to get a certified document copy, it is usually priced based on the number of pages copied. You will also have to pay the fee for the copy and order a copy of the document.
Some California LLCs may also have to pay fees to obtain certain business licenses. This is important to keep your business up-to-date on all of the information that is necessary to conduct business in California. These fees may vary by county, city, or region. You can find the list of fees for each county and city on the California Secretary of State’s website.
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.