How Much Does an LLC Cost in California
In California, forming an LLC requires a $70 filing fee. However, you should also consider the $800 annual franchise tax and various additional costs.
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Here are the following costs to consider:
- Domestic LLC Formation Fee: $70
- Foreign LLC Formation Fee: $70
- Statement of Information Fee: $20
- Operating Agreement Fee: $0 to $500+
- Business Permits and Licenses Fees: $0 to $500+
- Annual Franchise Tax: $800+
- Registered Agent: $0, or $100-$300/yr
- Employer Identification Number: $0, or $50 to $99
- BOI Report: $0, or $25 to $149
- Optional Fees: $0 to $2,000+
California is known for its entertainment industry and sunny coastlines. But beyond Hollywood, the Golden State is also a thriving place for businesses. Because of its startups and big corporates, California is the leading contributor to America's gross domestic product.
You might have been told that you'll only need $70 for the LLC filing fee. The bad news is, that's just the beginning of a long list of expenses you should plan for. Find out how much you'll have to put out to get an LLC up and running in California.
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No. All LLCs in California must pay the LLC formation filing fee. This costs $70 for domestic and foreign LLCs. You also need to pay the $20 Statement of Information filing fee and $800 annual franchise tax.
California LLC Articles of Organization Filing Fee
Cost: $70
In California, the Articles of Organization filing fee is paid to the California Secretary of State. Once the application is approved, your LLC will be recognized as legally separate from you.
The Articles of Organization should contain the following details:
- LLC business name and address
- Business purpose/description
- Service of process agent's name and address
- Management structure (member or manager-managed)
- Names of the LLC's members or managers
It usually takes 5 days to form an LLC in California, but processing time is subject to change. You can pay for expedited services if you need it faster. This costs an additional $350 for 24-hour turnover and $750 for same-day turnover.
California Foreign LLC Formation Filing Fee
Cost: $70
If your LLC is already established in a different state and you want to expand your business to California, you need to register it as a foreign LLC. This is called an Application to Register a Foreign Limited Liability Company. It's submitted to the California Secretary of State.
For foreign LLCs offering licensed professional services in California, it's necessary to get state licenses and permits first. Additionally, every member of your Professional Limited Liability Company (PLLC) must maintain an active professional license in good standing.
Yes. California recognizes series LLCs formed in other states. However, you must still submit an Application to Register a Foreign LLC to the Secretary of State.
California LLC Statement of Information Fee
Cost: $20
After your LLC Articles of Organization are approved, you must submit a Statement of Information to the Secretary of State. It must be filed within 90 days of the LLC's formation, along with the $20 filing fee.
The Statement of Information contains up-to-date information about the LLC. This includes the LLC's current service of process agent, business address, and email address.
You'll need to file an updated Statement of Information every two years. It's due at the end of your LLC's anniversary month. So if your LLC was formed on February 23, 2023, you'll need to file the updated Statement of Information on or before February 28, 2025.
In California, LLCs need to file the Statement of Information within 90 days after the Articles of Organization are approved by the Secretary of State.
The Articles of Organization are filed once to establish the LLC. Meanwhile, the Statement of Information is used to keep the LLC's public records up-to-date. There may be some overlap in the information provided in both documents.
California LLC Operating Agreement Fee
Cost: $0 - $1,000+
California is one of five states that require businesses to create an operating agreement.[1] You don't have to file the operating agreement with the state, but a copy must be available to all members or managers.
An operating document is a legally binding document that outlines the rules and procedures of the LLC. It's designed to prevent misunderstandings and solve business disputes that may arise later on.
An operating document includes but is not limited to the following information:
- The roles and duties of each member or manager
- Ownership percentages for each member
- How profits and losses are shared
- A plan for what happens if an owner leaves the business
The costs associated with the operating agreement come in the drafting of the document. You can create an operating agreement for free by using templates online. Alternatively, it could cost upwards of $1,000 if you hire an attorney.
Single-member LLCs in California are still required to have an operating agreement. This requirement is meant to provide an official structure to the LLC's operations.
California Business Permits and Licenses Fees
Cost: $0 - $500+
California has no general statewide license. However, local licenses are often required. For example, El Segundo has a $150.00 business license fee for LLCs with up to 5 employees.[2] In San Francisco, there's a $47 or $57 business license fee for LLCs that earn less than $100,000.[3]
Generally, you need to renew your business license every year. The renewal fee usually costs the same amount as the initial license fee.
Depending on your LLC's industry and location, you might need to get additional business licenses and permits. Check the California business site to check for what registrations, licenses, and permits your LLC needs.
You must obtain a seller's permit if your LLC sells a physical product that is subject to sales tax. You can register online for a seller's permit. This is free of charge.
California LLC Annual Franchise Tax
Cost: $800
The annual franchise tax is a mandatory fee for LLCs in California. You are required to pay this tax for the first time by the 15th day of the 4th month following the formation of your LLC. After this initial payment, the franchise tax is due every year on April 15th.[4]
For example, if your LLC was formed on February 23, 2023, your first franchise tax payment would be due by May 15, 2023. Subsequently, you will need to pay the franchise tax every year on April 15th, starting from April 15, 2024.
The franchise tax in California is due every year even if it's inactive or operating at a loss. However, your LLC may be exempted from paying the annual franchise tax on the first year if:
- The LLC's first tax year was fewer than 15 days and did not generate any income for the year[5]
- The LLC was formed on or after January 1, 2021, and before January 1, 2024 (California Assembly Bill 85)[6]
- The LLC owned by a deployed military member of the United States Armed Forces is operating at a loss[7]
The annual franchise tax is separate from any income taxes your LLC may owe. An LLC that earns $250,000 or more in gross income has to pay an additional annual fee at tax filing time, on top of the Franchise Tax. This fee increases depending on the amount of income:[8]
| Gross Annual Income | Annual LLC Fee |
|---|---|
| Less than 250,000 | $800 |
| $250,000–$499,999 | $900 + $800 Franchise Tax |
| $500,000–$999,999 | $2,500 + $800 Franchise Tax |
| $1 million–$4.99 million | $6,000 + $800 Franchise Tax |
| $5 million or more | $11,790 + $800 Franchise Tax |
In addition to the annual fee, you need to pay California's state income tax. As of 2023, the net income tax rate is 1% to 12.30%.[9] Speak to an accountant in California to make sure your LLC meets all federal, state, and local tax obligations.
If you do not pay the annual franchise tax and additional LLC taxes on time, you will be subject to penalties and interest.
Optional Fees for LLCs in California
While the LLC fees in California below are optional, you may need to pay for some of them depending on your business needs. For example, obtaining a Certificate of Good Standing is often necessary when opening a business bank account.
As you plan your budget for your new California LLC, remember to account for these potential additional expenses:[10]
| California LLC Add-on Fees | Cost |
|---|---|
| California LLC Service of Process Agent Fee | $0 - $300+ |
| California LLC Expedited Services Fee | $350 - $750 |
| California Employer Identification Number (EIN) | $0 - $99 |
| Beneficial Ownership Information (BOI) Report | $0 - $149 |
| California LLC Name Reservation Fee | $10 |
| California LLC Fictitious Business Name (FBN) Fee | $26 - $44+ |
| California LLC FBN Publication Fee | $50 - $65+ |
| California LLC Statement of Correction Fee | $30 |
| California LLC Statement of Amendment Fee | $30 |
| California LLC Certified Copy of Document Fee | $5+ |
| California LLC Certificate of Status Fee | $5 - $15 |
| California Business Website Domain Fee | $20 - $30 |
| California Business Insurance Premiums | $ - $$$ |
California LLC Service of Process Agent Fee
Cost: $0 - $300+
In California, every LLC must appoint an agent for service of process (also called a registered agent in other states). This agent, either a person or an entity, is authorized to accept official legal documents and notices for your LLC.
Although a legally separate entity, an LLC cannot act as its own registered agent. A registered agent must be over the age of 18 and have a physical address (not a P.O. box) in California.
To save money, either you or a relative can serve as the service of process agent for your LLC. However, the name and address of the person you select as your service of process agent will be publicly accessible. This may lead to privacy concerns.
You can change your LLC's service of process agent at any time. However, you must submit a new Statement of Information to update the name and address of your LLC's service of process agent. This costs $20
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California Employer Identification Number
Cost: $0, or $50 to $99
Any LLC with more than one member or with employees must have an EIN, regardless of how it's taxed. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business entity for tax-related purposes.
You can just apply for an EIN for free on the IRS website. But if you'd like an LLC service to process it for you, you can do so for a small fee. Here are some providers that do this and their pricing:
- Northwest Registered Agent: $50
- Bizee: $70
- ZenBusiness: $99
Single-member LLCs in California don't require an EIN, but it's almost essential in practice. For instance, you'll need one if you hire employees or want to open a business bank account.
Yes. Separating your LLC's finances from personal assets is a requirement of liability shielding. Use a separate bank account to accept payments and pay business expenses to prevent piercing the corporate veil .
BOI Report
One-Time Cost: $0, or up to $149
The Beneficial Ownership Information (BOI) is a one-time report that must be submitted to the Financial Crimes Enforcement Network (FinCEN) within 90 calendar days of your LLC's formation.
[11]
It includes information about the LLC's beneficial owners, including name, birth date, and address.
FinCEN doesn't charge a fee to submit your BOI report. But you can pay an LLC service to process it for you and save yourself the hassle:
- Northwest Registered Agent: $25
- LegalZoom: $149
- ZenBusiness: $149
You're considered a beneficial owner if you own 25% or more of the ownership interests in your LLC. Or if you exercise substantial control over the LLC.
California Business Name Reservation Fee
Cost: $10
Before you register a business in California, check whether or not the business name you want is already taken. This is a free service offered by the California Secretary of State. If your preferred business name is available, write it in your Articles of Organization.
If you're not ready to file the Articles of Organization but want to secure your desired name, you can pay for a name reservation. This reservation holds the name exclusively for you for 60 days.
Don't forget to review California's detailed list of naming regulations to prevent your Articles of Organization from getting rejected.
Even if you don't plan to make a business website today, you may want to buy the URL to prevent others from acquiring it.
California LLC Fictitious Business Name Fee
Cost: $26 - $44+
A Fictitious Business Name (FBN) allows your LLC to operate under a name different from its legal name registered with the state. Some LLCs in California use an FBN for branding purposes. It's also ideal if you want to use a name that doesn't have an "LLC" at the end.
An FBN for businesses in California is valid for up to 5 years. You will need to renew it so that your LLC's alternate name can be retained. The filing fee varies by location. It costs $26 in Los Angeles[12] and $44 in Sacramento County[13].
Aside from the FBN filing fee, you'll also need to publish a copy of your FBN application in a county newspaper where your LLC is doing business. This must be done within 30 days of filing the FBN statement with the county clerk.
California LLC Statement of Correction Fee
Cost: $30
After your California LLC application is approved, your next focus should be on maintaining its good standing over the long term.
Get a copy of the approved Articles of Organization and review all the details carefully. If there are errors, like a misspelled business name or incorrect address, correct them as soon as possible by filing a Certificate of Correction.
California LLC Statement of Amendment Fee
Cost: $30
You might need to make certain changes to your LLC over time. Some of these changes could mean that the details in the LLC's Articles of Organization are no longer true.
Significant changes include a different LLC name or management structure. These need to be documented by filing an Amendment to the Articles of Organization.
A Certificate of Correction is for fixing mistakes in initial filings. Meanwhile, a Certificate of Amendment is for updating or changing key details as the LLC evolves.
California LLC Certified Copy of Document Fee
Cost: $5+
Certified Copies of California business documents obtained from the state validate that the documents are true and correct.
You often need certified copies of your LLC's documents to open new bank accounts, apply for loans, or demonstrate to investors that your LLC is legitimate and properly managed.
The California Secretary of State doesn't explicitly state the regular processing time for certified copies of LLC documents. If you need the documents quickly, you can pay for expedited services:[14]
- 24-hour expedite - $350 + $5 certification fee
- Same-day expedite - $750 + $5 certification fee
California LLC Certificate of Status Fee
Cost: $5 (via mail) | $15 (in-person)[15]
A Certificate of Status, also known as a Certificate of Good Standing, is a document that verifies that your LLC is legally registered and compliant with state regulations. You may need this certificate when dealing with banks, lenders, or other business entities.
Head over to bizfileOnline.sos.ca.gov to verify the current legal status of your LLC (active, suspended, etc.)
California Business Website Domain Fee
Annual Fee: $10 to $20
A website domain and social media presence provide dedicated online spaces for your business. It's essential for marketing, customer engagement, and brand visibility in today's digital world.
Even if you aren't planning to build a business website now, you could still buy the domain name. This will prevent others from using your LLC's name as a web address.
Domain squatters often monitor newly registered LLC names. They purchase corresponding website domains and then resell them at significantly higher prices.
California Business Insurance Premiums
Cost: $ - $$$
If your LLC in California has at least one employee, state law mandates you get workers' compensation insurance. This insurance is available through a private company or the California state fund.
The cost of this insurance depends on factors like the number of employees, the risk level of your industry, and your past insurance claims. For instance, a large-scale industrial manufacturer typically incurs higher insurance premiums compared to a smaller graphic design studio.
Failure to have the required business insurance can lead to fines. The Secretary of State can also move to shut down your LLC.
Bottom Line
It isn't cheap to start an LLC in California for startup businesses. It also isn't the simplest process. Aside from the $70 one-time filing fee, you will have to pay at least $800 annual franchise tax on top of ongoing expenses.
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Most states require you to file one document, which is the Articles of Organization. But in California, LLCs must file two documents at two different times.
The Articles of Organization are submitted to the Secretary of State first. Once it is approved, you will need to submit the Statement of Information within 90 days of the LLC's formation.
Before starting an LLC in California, review the estimated total cost that you need to prepare for. It's always a good idea to budget more than you think you'll need.
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References
- ^ California Secretary of State. Starting a Business - Entity Types, Retrieved 01/27/2024
- ^ City of El Segundo. Business Tax Registration, Retrieved 01/27/2024
- ^ San Francisco Treasurer & Tax Collector. Register a Business, Retrieved 01/27/2024
- ^ California Franchise Tax Board. Limited Liability Company, Retrieved 12/06/2023
- ^ California Franchise Tax Board. 15-Day Exception, Retrieved 12/06/2023
- ^ California Franchise Tax Board. Annual Tax, Retrieved 12/06/2023
- ^ California Franchise Tax Board. Deployed Military Exception, Retrieved 12/06/2023
- ^ California Franchise Tax Board. LLC Fee, Retrieved 12/06/2023
- ^ California Franchise Tax Board. Tax Calculator, Tables, and Rates, Retrieved 12/06/2023
- ^ California Secretary of State. Limited Liability Companies - California (Domestic), Retrieved 01/27/2024
- ^ Financial Crimes Enforcement Network. Beneficial Ownership Information, Retrieved 10/02/2024
- ^ Los Angeles County Registrar-Recorder/County Clerk. Fictitious Business Names - Fees, Retrieved 12/06/2023
- ^ Sacramento County Department of Finance. Fictitious Business Name Statement, Retrieved 01/27/2024
- ^ California Secretary of State. Service Options - Business Entities: Expedite Services , Retrieved 01/27/2024
- ^ California Secretary of State. Business Entities Records - Order Form , Retrieved 01/27/2024
- ^ California Secretary of State. Business Entities Information Requests, Retrieved 12/06/2023
Nicole King is a research analyst at CreditDonkey, a business formation services comparison and reviews website. Write to Nicole King at nicole.king@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.
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