How Much Does an LLC Cost in California? (CA Annual Filing Fees)

Do you know what it costs to start an LLC in California? Believe me, it’s not as pricey as you might think! The basic filing fee is just $70, but that’s only part of the story.

You’ll need to budget for an $800 annual franchise tax—paid every year—and a $20 fee for filing your Statement of Information every two years. Additionally, an operating agreement is mandatory, but you can get it free if you use Northwest Registered Agent’s services.

It’s pretty expensive, I agree.

Unfortunately, these are must-do steps and fees to keep your business compliant and avoid unnecessary penalties. Many new business owners don’t realize these extra costs exist until they’re hit with them—don’t let that be you!

Ready to dive into the details and get the real scoop? Let’s break down the exact costs of starting an LLC in California!

How Much Does an LLC Cost in California?

Establishing an LLC in California involves several costs.

• Filing Fee: The base fee to file your Articles of Organization is $70. This is a one-time cost when you first register your LLC.
• Annual Franchise Tax: You must pay an $800 annual franchise tax to keep your LLC in good standing with the state. This fee is mandatory yearly to know how much revenue your business generates.
• Certificate of Status: Do you need proof that your LLC is active and compliant? You can obtain a Certificate of Status for just $5.
• Additional Fees: If you use a registered agent service, expect to pay between $100 and $300 annually, depending on your chosen provider.
• Processing Options: Want your application processed faster? Expedited services are available for an extra $79, with processing typically completed within 2 to 3 days.
• Ongoing Costs: Additional fees may apply depending on your business structure, such as if you form a Series LLC or a Professional LLC.
• Tax Considerations: Remember that California LLCs are treated as pass-through entities by default. Profits flow directly to your income, affecting your tax obligations.

Understanding all these costs upfront can help you budget effectively and avoid any unexpected hits to your wallet.

Are you ready to examine each fee in more detail and see how it all adds up? Let’s break it down step-by-step!

LLC Costs in California (Formation Fees)

Here are the main costs and requirements when forming an LLC in California:

California LLC Requirements	Cost
Articles of Organization	$70
Operating Agreement	$0 (with Northwest)
EIN Number	$0 (free from IRS)
Statement of Information	$20/biennially
LLC Name Reservation (optional)	$10
Certificate of Status (optional)	$5
California Foreign LLC Registration (optional)	$70
Fictitious Name (DBA) (optional)	Varies depending on country, but often falls between $10-$100
California LLC Annual Franchise Tax	$800/annually
Taxes	varies
California Seller’s Permit	$0
Registered agent services	$0-$125 (Northwest)
LLC formation service	$39
Total LLC Costs in California	$890 – $1069

Total LLC costs in California range from $890 to $1,069. If you do everything yourself and skip the optional extras, you might only spend around $890. However, if you decide to pay for additional services and requirements, your costs could increase to between $900 and $1,000.

The first mandatory expense is the Articles of Organization, which cost $70. You’ll also need to pay an annual franchise tax of $800 to keep your LLC in good standing with the state.

Additionally, a $20 Statement of Information fee is required every two years. While an Operating Agreement is mandatory for clarity and protection, it can be obtained at no cost using services like Northwest.

Now, let’s discuss optional costs you might want to consider.

The IRS provides free assistance obtaining an Employer Identification Number (EIN). Regarding registered agent services, you can either act as your own agent at no cost or hire a professional service, which typically costs between $100 and $300.

For instance, if you wish to reserve your LLC name, that will cost $10. You may also want to obtain a Certificate of Status for $5, register a California foreign LLC for $70, or file for a fictitious name (DBA), which can vary in cost.

Taxes and state business license fees can also vary based on your specific business activities, so it’s important to remember these as your budget if you choose to use an LLC formation service that typically costs around $39.

Understanding these mandatory and optional costs will help you budget effectively as you embark on your business journey in California.

California LLC Business Name Cost ($0)

Choosing a business name for your LLC in California does not cost anything. You can select and use a name that complies with state requirements without paying a fee.

When selecting a name, keep these points in mind:

• Uniqueness: Your LLC name must be unique. It cannot be the same or too similar to an existing business name registered in California.
• Mandatory Elements: Include “Limited Liability Company” or abbreviations like “LLC” or “L.L.C.” in your name.
• Restricted Words: Avoid words that are confusing to government agencies, such as “FBI” or “Treasury.”

To check if your desired name is available, you can use the California Secretary of State’s online business name database. This resource lets you search for existing businesses in the state.

Remember, while the name is free, failing to meet naming rules can lead to problems. Ensure you follow all guidelines to make the process smoother.

California LLC Articles of Organization Cost ($70)

Starting your LLC in California begins with filing the Articles of Organization—a crucial step that makes your business official. The filing fee is $70, a one-time cost when you submit your paperwork to the California Secretary of State.

Once you’ve paid this fee and filed the documents, your LLC is officially formed, and you’ll receive confirmation from the state. For a quicker process, you can file online or by mail, but just be sure to include the $70 payment.

The California LLC processing time may vary. Standard processing takes 2 to 3 weeks, but if you need things to move faster, you can opt for expedited processing for $79, which cuts the wait time down to 2 to 3 days. This straightforward step sets the foundation for your business in California.

LLC Operating Agreement Cost in California ($0)

Creating an LLC operating agreement in California is mandatory, but there’s no state-mandated cost—you can draft this document for free.

However, it’s a crucial part of how your LLC will be run, and it covers important details such as:

• Ownership distribution: Who owns what percentage of the LLC?
• Management structure: Will it be member-managed or manager-managed?
• Voting rights: How will decisions be made?
• Duties and responsibilities: What are the roles and obligations of each member?
• Profit and loss allocation: How will profits and losses be shared among members?
• Dispute resolution: What process will be used to handle conflicts among members?

Even though you can create this agreement at no cost, hiring a lawyer might be beneficial to ensure that it meets all legal requirements and is tailored to your specific needs. Alternatively, some online services offer templates for a fee, typically ranging from $50 to $200.

California Registered Agent Fee ($0-$300/year)

When setting up your LLC in California, you might wonder about registered agent fees and options. While you can act as your registered agent and avoid fees, it’s worth considering the benefits of hiring a California registered agent.

Northwest Registered Agent offers a great deal for a competitive choice: their service is free for the first year if you use them to form your LLC and $125 annually afterward. Alternatively, LegalZoom charges around $249 annually, while ZenBusiness offers its service for $199 annually.

Choosing the right registered agent is crucial since they handle important legal documents and ensure you stay compliant with state requirements.

When picking a service, consider your budget and any extra features you might need, like document storage or compliance reminders. Each provider offers different service levels, so weigh your options carefully to find the best fit for your business.

EIN Cost in California ($0 from the IRS website)

When starting an LLC in California, you’ll need an Employer Identification Number (EIN) for tax purposes and other business activities. The great news? Obtaining an EIN from the IRS is completely free!

You have a few easy options for applying:

• Online: The most straightforward way is to apply directly on the IRS website.
• By Mail: Fill out Form SS-4 and send it to the IRS.
• By Phone: If you’re applying outside the U.S., call 267-941-1099 for assistance.

Remember, you need to be authorized for your business to apply for the EIN. While the IRS doesn’t charge a fee, some third-party services offer to handle the application for you, usually charging between $50 and $100.

California Statement of Information ($20/biennially)

If you have an LLC in California, you must file a Statement of Information within 90 days of forming your LLC and every two years after that. Each filing costs $20, so staying on top of these deadlines is important to avoid any penalties.

Here’s a quick tip: file during the correct six-month window following your registration date. Filing late can lead to extra fees. The good news is that you can handle this easily online through the California Secretary of State’s website, which is quick and straightforward.

Keep track of your filings and save records as proof of compliance. Setting reminders for these due dates will help you stay organized and keep your LLC in good standing.

Fictitious Name/DBA Cost in California (Varies depending on the country, but often falls between $10-$100)

If you want your LLC to operate under a different name, you must file for a Fictitious Business Name (DBA). The cost for this varies depending on the county where you’re filing in California.

Typically, you can expect to pay between $10 and $100 in filing fees. If you need an Employer Identification Number (EIN), you can get it directly from the IRS. Additionally, reserving your LLC name will cost you around $10.

Each county has fees and requirements, so checking with your local county clerk’s office is a good idea. After you file your Fictitious Business Name Statement, you might also need to publish your DBA in a local newspaper.

Remember, you can register multiple DBAs if needed, but each will involve its own filing process. Follow your local guidelines to ensure everything is in order!

California Certificate of Status ($5)

Need to prove your LLC is in good standing? A Certificate of Status, also known as a Certificate of Good Standing, is just what you need. It confirms that your LLC is legally registered and meets all state requirements, which can be crucial for securing loans or business contracts.

The best part? This certificate costs just $5—a small fee compared to the other expenses of maintaining your LLC.

To get your hands on this document, you have a couple of options. You can request it online through the California Secretary of State’s website, or if you prefer, you can mail in a written request. Just make sure to provide your LLC’s name, the Secretary of State’s file number, and the payment for the fee.

Why is this certificate important? It helps you validate your LLC’s existence to banks and investors and ensures you’re in good standing to avoid penalties. Even though it’s a simple document, it can make a big difference in your business transactions.

Foreign LLC Registration Fee ($70)

When registering a foreign LLC in California, there’s a standard fee of $70 for the application. This is the basic charge to get your registration processed.

If you need things to move along faster, expedited options are available. For 24-hour processing, it’ll cost you $350; for same-day processing, the fee jumps to $750. These options can be a lifesaver if you’re on a tight timeline and need to get your business up and running quickly.

In addition to the registration fee, you’ll need to file an initial Statement of Information, which costs $20. This document is essential to getting everything in order.

Remember that if you need any documents certified, there’s an additional $5 fee per certified copy. And don’t forget to check if you might qualify for any fee waivers or reductions—there were some fee waivers available before June 30, 2023, for instance.

Understanding these costs upfront will help you plan and budget effectively for registering your foreign LLC in California.

California Seller’s Permit ($0)

In California, a Seller’s Permit is required for businesses that sell goods or services subject to sales tax. This permit allows you to collect and remit sales tax to the California Department of Tax and Fee Administration (CDTFA).

To obtain a Seller’s Permit, you must register with the CDTFA. The registration process can be completed online through the CDTFA’s website, by mail, or in person at a local CDTFA office. There is no fee to apply for the permit.

Once you have the Seller’s Permit, you are responsible for collecting sales tax from your customers on taxable transactions and filing periodic sales tax returns—either monthly, quarterly, or annually—based on your sales volume.

Maintaining compliance with sales tax regulations is crucial for avoiding penalties and ensuring your business operates smoothly in California.

California LLC Annual Franchise Tax ($800/year)

In California, every LLC is required to pay an annual franchise tax of $800. This tax is a crucial part of keeping your business in good standing with the state, so it’s something you’ll need to budget for each year.

The annual franchise tax is due on the 15th day of the fourth month after the end of your tax year. For example, if your tax year ends on December 31, your payment will be due on April 15. Remember that starting in 2024, all new LLCs will need to pay this fee in their first year—previously, there was a temporary waiver, but that’s no longer in effect.

This franchise tax is a flat fee, which doesn’t vary based on your LLC’s income or business activities. However, if your LLC earns more than $250,000, you might face additional fees based on your income.

Remembering these tax requirements will help you keep your LLC in good shape and meet all state obligations.

California LLC Taxes (varies)

When you operate an LLC in California, you must be aware of several taxes that may apply to your business.

• Federal Taxes: Your LLC must pay federal income taxes. This depends on how you choose to structure your LLC for tax purposes.
• State Income Tax: California LLCs must pay state income taxes. The rates vary based on your revenue and specific tax structure.
• Local Income Tax: Some cities charge a local income tax. Check local regulations to see if this applies to you.
• Business Taxes: Additional business taxes may be needed based on your industry or location.
• Self-Employment Taxes: If you are the owner and an active member of the LLC, you must pay self-employment taxes. This includes Social Security and Medicare taxes.
• Sales and Use Tax: If your LLC sells goods or services, you are responsible for collecting sales tax. Use tax applies to items purchased without sales tax.
• Payroll Tax: If you hire employees, you must pay payroll taxes. This includes withholding for state and federal taxes and contributions to unemployment insurance.
• Property Tax: Property taxes will apply if your LLC owns real estate. This varies by county and property value.

Be sure to consult with a tax professional to understand how these taxes impact your specific LLC situation.

California LLC reinstatement fee ($20)

If your LLC in California has been suspended, you must pay a reinstatement fee to restore its good standing. The base fee for reinstating your LLC is $20. However, knowing that this fee is just the beginning is important. If your LLC was suspended due to tax issues or other compliance problems, there’s an additional $250 penalty on top of the $20 reinstatement fee.

You must file a missing Statement of Information with the Secretary of State to get your LLC back in business. This document is crucial for resolving any issues that led to the suspension in the first place. If you file in person, be aware that there might be an extra handling fee.

Addressing these fees and paperwork promptly is essential. Delaying can lead to additional penalties or further complications with your LLC’s status. So, gather your payment and necessary documents to ensure a smooth reinstatement process and get your business back on track.

California LLC dissolution fee ($0)

Dissolving your LLC in California does not incur a direct fee. This means you can officially close your business without paying the state a dissolution fee.

While there are no costs for dissolution itself, you should consider these factors:

• Filing Requirements: You must file the necessary forms with the Secretary of State.
• Taxes: Ensure all taxes are paid before dissolution. This includes any outstanding state taxes.
• Final Tax Return: You must file a final tax return for your LLC.

You can complete the dissolution process by submitting the Certificate of Dissolution form. This form is essential to officially end your LLC status.

Though the dissolution fee is $0, staying organized and thorough will simplify your process.

California LLC Change of Registered Agent fee ($20)

Changing your registered agent in California is straightforward, costing just $20. This fee is payable to the California Secretary of State, and you can settle it with a check or credit card when you submit your application.

To get started, you’ll first need to obtain the correct form to change your registered agent. Make sure you get the form that’s specific to your business structure. Once you have the form, fill it out with your business details and the information for your new registered agent.

You can then submit your application either online or by mail. If you choose to mail it in, send your completed form to:

Secretary of State
P.O. Box 944228
Sacramento, CA 94244

Don’t forget to keep a copy of your submission for your records. While processing times can vary, planning ahead is a good idea.

What is the Cheapest Way to Start a California LLC?

Starting an LLC in California? You’ve got a few different ways to tackle it, each with pros and cons.

First up, there’s the DIY method. If you’re up for it, you can handle everything yourself. You must file the Articles of Organization online, which costs $70. Don’t forget the Statement of Information—that’s another $20. So, the total cost comes to $90. It’s the most budget-friendly option, but it requires getting a bit hands-on.

You can use an online service if you prefer a more hands-off approach. Many of these services will guide you through filing and handling everything. However, convenience comes at a price, typically ranging from $150 to $500. This is easier, but it’s a bit pricier.

Then, there’s the option of getting legal assistance. Hiring an attorney can provide expert advice and ensure everything’s done right. This route starts at around $300 or more, making it the most expensive choice. But if you want professional help, this is the way to go.

The DIY method is the cheapest option if you’re comfortable handling the paperwork yourself. But keep in mind that there are some trade-offs. Learning the process and filling out the forms takes time and effort. Plus, you might overlook important details without expert guidance, leading to delays or rejections.

Weighing these options will help you find the best fit for your budget and comfort level.

Should You Use an LLC Formation Service in California? (here’s why)

Starting an LLC in California can be straightforward, but using a formation service might simplify things even more. These services can save you time and reduce stress.

Here are some benefits of using an LLC formation service:

• Peace of Mind: Using an LLC formation service, such as Northwest Registered Agent, ensures that experts handle your paperwork, which can help you avoid costly mistakes and delays.
• Privacy Benefits: Many formation services offer privacy protection, keeping your personal information confidential and your business address shielded from public records.
• Compliance Tools: These services often provide valuable tools and reminders to help you comply with California’s regulations and meet important deadlines.
• Cost Considerations: While formation services can streamline the process and reduce stress, they come with a fee. It’s important to weigh these costs against the convenience and support provided.
• DIY Option: If you prefer a hands-on approach and are confident in managing the process, you might form your LLC without a service.
• Expert Support: For those busy or unsure about the process, the professional support from attorneys and experts provided by these services can be incredibly helpful.
• Evaluate Your Needs: Assess the pros and cons based on your comfort level and specific situation to determine whether using a formation service or handling it yourself is the best choice for your business.

Ultimately, whether to use a service depends on your situation and comfort level with the process. Consider what makes the most sense for you and your business goals.

Frequently Asked Questions

What Are The Ongoing LLC Operational Costs in California?

Running an LLC in California involves several annual costs: a $800 franchise tax, potential business license fees, and optional expenses like operating agreements and insurance. If you make over $250,000, the franchise tax increases. Additional costs may include accountant fees for managing finances.

Should I hire an LLC formation service in California?

Hiring an LLC formation service can simplify the process. These services often handle paperwork and make sure everything is filed correctly. This option may be worth considering if you prefer guidance and want to save time.

Are there penalties for paying my fees late in California?

Yes, there are penalties for late payments. You may face fines if you do not pay your annual franchise tax or any applicable fees on time. Additionally, late payments can result in your LLC being suspended or forfeited.

Is California an excellent state in which to start an LLC?

California offers many benefits, such as a large market and resource access. However, remember that it also has higher taxes and fees than some other states. Weigh the pros and cons based on your business goals.

What happens if I do not file my California LLC Annual Franchise Tax?

Failing to file can result in penalties and suspension of your LLC. Filing within the required time frame is important to maintain good standing with the state.

How long does it take to get my LLC approved in California?

Typically, getting your LLC approved in California takes about 2 to 4 weeks. The processing time can vary based on the workload of the Secretary of State’s office. You can expedite the process for an additional fee if needed.