How Much Does an LLC Cost in California? (2024 Costs) (2024)

To form an LLC in California, the two primary costs to consider are the state filing fees for the Articles of Organization and Statement of Information. The state filing fee, paid to the California Secretary of State, are $70 and $20 respectively.

If you choose to use a filling company to assist with setting up your LLC, you’ll find various rates and services. Some companies offer basic filing services at a lower cost, while others provide more comprehensive packages, including registered agent services, assistance with operating agreements and help with additional filings.

It’s crucial to compare these options based on your business needs, budget and the level of support you require.

Below is a table summarizing the costs for each step of forming and maintaining an LLC in California based on the cheapest options available:

This table provides a concise overview of the initial costs of establishing an LLC in California, helping you budget and plan effectively for your new business venture.

A critical step in forming an LLC in California is the submission of the Articles of Organization to the California Secretary of State. This legal document formally establishes your business as an LLC in the state. The standard filing fee for this document is $70, a one-time charge that’s essential for officially registering your LLC.

California offers a faster processing option for entrepreneurs eager to expedite the process. For an additional $350, you can have your Articles of Organization processed within 24 hours. There’s also a same-day option for $750 and a four-hour option for $500. The first two options can be done online or in person, but the four-hour service must be in person. This expedited service benefits those needing to quickly establish their business entity, though it comes at a higher cost.

Overall, the cost of filing the Articles of Organization, whether standard or expedited, is an initial investment in legally setting up your LLC in California.

In California, appointing a registered agent is mandatory for all LLCs. A registered agent in California is responsible for receiving important legal documents, including lawsuits and government correspondences, on behalf of your company. This role is crucial for ensuring your business remains informed about legal actions and compliance matters.

The cost for a registered agent service in California typically ranges from $100 to $150 annually. These fees vary based on the provider and the range of services offered. Some businesses may opt to act as their own registered agent to save on LLC pricing, but this choice involves making your address public and being consistently available to receive legal documents.

A professional registered agent service can offer peace of mind and ensure that important legal notices are handled responsibly and promptly. These services manage the receipt and forwarding of legal documents and often provide additional support for maintaining compliance with state regulations.

A “Doing Business As” (DBA) is an official registration of your business under a name different from your legal business name. In California, a DBA is not a requirement for all businesses, but it is often used when a company wants to operate under a name other than its legal name registered with the state.

The cost of registering a DBA in California varies by county. For example, in San Francisco, the fee starts at around $63, while in San Diego, it begins at approximately $54.

The process involves filing with the county clerk’s office in the county or counties where you conduct business. This fee is generally a one-time cost, but remember that DBA renewals may incur additional fees in the future.

An LLC Operating Agreement is a vital document for any LLC in California, detailing the ownership structure and operational procedures of the business.

While it is a state-mandated requirement, having a well-drafted Operating Agreement is also crucial for clarifying the roles, responsibilities and financial arrangements among members. You can technically have a solely oral agreement, but it’s in your best interest to prove that you’ve complied with the law by creating a written agreement. Keep in mind that it can also help protect the business in case of disputes.

The cost of drafting an Operating Agreement can vary but starts as low $0 if you choose to draft it yourself. There are also formation services that offer budget options for as low as $39. If you seek legal assistance to ensure the document is comprehensive and tailored to your specific needs, budgeting around $500 to $2,000 for attorney fees is a reasonable estimate. This range depends on your LLC’s complexity and the attorney rates you choose.

Key sections of an Operating Agreement should always include:

• Ownership percentages among members
• Voting rights and decision-making processes
• Distribution of profits and losses
• Procedures for adding or removing members
• Guidelines for resolving disputes
• Dissolution terms

Investing in professional legal help for drafting this document can provide long-term benefits by establishing clear guidelines and reducing potential internal conflicts within your LLC.

After the initial setup of an LLC in California, there are several ongoing costs to keep in mind for annual compliance and maintenance:

• Annual franchise tax: All LLCs in California must pay an annual franchise tax of $800. This fee is due each year to maintain good standing with the state.
• Annual LLC fee: If your LLC makes more than $250,000 in a year, then you’ll need to pay a fee. The cost of this fee varies based on how much you make.
• Statement of information fee: All LLCs in California file an initial statement of information within the first 90 days of LLC formation and pay a $20 filing fee. This statement must be renewed every two years to maintain good standing with the state.

• Registered agent fee: If you’ve hired a registered agent service, expect to pay an annual fee ranging from $100 to $300, depending on the service provider.

• Business license renewal: Depending on your location and industry, you may need to renew business licenses or permits annually, with costs varying by city and type of business.

• Compliance filings: Depending on your business’s specifics, other annual filings may be required, each potentially carrying its own fee.

These recurring costs are essential for keeping your LLC compliant with state laws and regulations, ensuring the continued legal operation of your business in California.

Unlike many other states with annual reporting requirements, California only requires LLCs to renew a statement of information every two years. To renew your statement of information, file Form LLC-12, and pay the $20 filing fee. You can submit this form by mail, in person or online through bizfile Online.

Every LLC in California must pay an annual franchise tax to maintain its active status and good standing, unless it qualifies for an exception. The tax is a flat fee of $800.

Your first tax is due by the 15th day of the fourth month after you form you LLC. For example, if you form your LLC on June 18, 2024, your first annual LLC tax is due on Sept. 15, 2024. For most LLCs, subsequent franchise taxes continue to be due on the 15th day of the fourth month of your taxable year.

California LLC Annual Fee

If your LLC makes more than $250,000 in annual income, you need to pay an additional fee by the 15th day of the sixth month of the tax year. The fee is based on the amount of money your company makes:

This fee schedule is accurate as of 2024 and is subject to change.

Depending on the type of business and its location, California LLCs may need to obtain various state or local permits and licenses. The cost of these licenses varies based on the specific business activities and the city or county in which the business operates.

For example, a restaurant in Los Angeles may have different licensing costs and requirements compared to a retail store in San Francisco.

LLC owners should consult local government websites or offices for specific information related to their business type and location.

Ultimately, the decision depends on your comfort with legal paperwork and your budget. While DIY can save money upfront, the accuracy and support offered by a professional service can be crucial for correctly setting up and maintaining your company, ensuring compliance and safeguarding against future legal or financial issues.

Forming an LLC in California on your own involves several key steps:

• Gather your company name and registered agent information: Choose a unique name for your LLC and decide on your registered agent.

• File your Articles of Organization: File your Articles of Organization with the California Secretary of State and pay the $70 filing fee.

• Obtain an EIN after approval: Once your LLC is approved, apply for an Employer Identification Number (EIN) from the IRS for free.
• File your initial Statement of Information: File Form LLC-12 within 90 days of forming your LLC, and pay the $20 filing fee.

Common mistakes to avoid:

• Failing to adhere to naming guidelines
• Incorrectly filling out forms
• Missing deadlines for submissions

California LLCs must comply with various tax requirements:

• Federal Employer ID Number (EIN): Obtained from the IRS

• Sales tax permit: Required if selling taxable goods

• Payroll taxes: Applicable if you have employees
• Franchise tax report: Must be filed with the $800 fee by the 15th day of the fourth month of your tax year

Maintaining your LLC in California involves a few key ongoing compliance tasks:

• Franchise tax: Pay the annual $800 franchise tax fee to the California Franchise Tax Board.
• Annual LLC fee: If your LLC makes more than $250,000, pay the appropriate fee amount by the 15th day of the sixth month of the current tax year.

• Registered agent: Keep your registered agent information up-to-date.

• Business licenses and permits: Renew any necessary local or state licenses.

• Tax obligations: Comply with state and federal tax filing requirements.
• Biennial Statement of Information: Renew our LLC’s Statement of Information every two years with a $20 filing fee.

Maintaining these aspects is critical to preserve your LLC’s liability protection. Neglecting these responsibilities can lead to penalties, legal issues or the dissolution of your LLC.

The primary recurring LLC costs in California include the annual franchise tax, registered agent fees and any applicable license renewals. It’s essential to thoroughly research all requirements and stay compliant to avoid penalties or operational lapses.

Budgeting for legal or accounting assistance is also advisable, as professionals can provide valuable guidance and ensure adherence to all state and federal regulations, helping maintain your LLC’s integrity and legal standing.