Starting an LLC in California comes with more costs than just filing the initial paperwork. But it doesn’t have to be as expensive as you think.
We explain all of the initial and ongoing California LLC cost details below, as well as give you tips on how to save money.
How much does an LLC cost in California?
It costs $70 to form an LLC in California. This is an LLC fee paid for the Articles of Organization.
You’ll file this form with the California Secretary of State. And once approved, your LLC will go into existence.
In addition to this LLC filing fee, there are other costs to be aware of when forming a California LLC (Limited Liability Company).
Costs to forming a California LLC
There is a $70 one-time state filing fee to form a California LLC.
There are also ongoing fees (like a $800 Annual Franchise Tax fee), which we discuss below.
LLC Costs in California
|Registered Agent||$0 – $125|
|Articles of Organization||$70|
|Federal Tax ID Number (EIN)||$0|
|Statement of Information||$20|
|LLC Annual Franchise Tax||$800|
|Estimated Fee for LLCs||see table below|
|LLC Return of Income||based on LLC's gross receipts|
California LLC Articles of Organization Filing Fee ($70)
Starting an LLC costs $70 in California.
This is the state filing fee for a document called the California Articles of Organization. The Articles of Organization are filed with the California Secretary of State. And once approved, this is what creates your LLC.
The $70 fee is a one-time LLC fee. You don’t have to pay any monthly (or annual) fees to start your California LLC.
Note: LLCs are the most common business structure used in California. They are the most popular business entity because they offer liability protection for the LLC owners.
Depending on the state, the Articles of Organization form is sometimes called a Certificate of Organization or Certificate of Formation. Articles of Organization is the most common name – but they all mean the same thing: the form used to create your LLC.
California business name cost ($0)
Naming your Limited Liability Company doesn’t cost anything. Your California LLC Name is approved (at no extra cost) when your Articles of Organization filing is approved by the state.
You may have read online that LLC Name Reservations are required. However, this is not true in most states. Most states don’t require a Name Reservation to form an LLC, so there’s no LLC fee for a business name.
How much does a DBA cost? (varies)
A DBA is filed with the city or county in California. So the cost of a DBA for your LLC will vary, depending on where you do business. DBA filing costs aren’t required California LLC fees, though, because a DBA isn’t required.
Note: A DBA is sometimes called a Trade Name, Fictitious Name, Assumed Name or Fictitious Business Name. They all mean the same thing.
Tip: You aren’t required to get a DBA for your LLC. It’s optional. For more information, read our article: Do I need a DBA?
California Registered Agent Fee ($0 or $125/year)
California law requires that you designate a Registered Agent when forming your LLC.
A California Registered Agent is a person or company who receives legal documents and state notices for your LLC (called “service of process”). A Registered Agent needs a street address in the state and should generally be available during normal business hours.
There is no additional cost if you will be your own Registered Agent, or have someone you know be your LLC’s Registered Agent. There is no California LLC fee for these Registered Agent choices.
However, you have the option of hiring a Registered Agent service. This will cost you between $100 to $300 per year. But Registered Agent service companies offer other helpful business services and can protect your privacy.
Hiring a Registered Agent service is a good idea if:
- You don’t have an address in the state (California law requires Registered Agents to have a physical address in the state
- You want to keep your address off public record (depending on which company you hire, you may be able to use their address to keep your address private)
LLC Operating Agreement Fee ($0)
A California LLC Operating Agreement is a written contract between the LLC Members. Operating Agreements include detailed information about LLC ownership, how the LLC is managed, and how profits are distributed.
Single-Member LLCs and Multi-Member LLCs should draft an Operating Agreement, keep it with their business records, and give a copy to each Member.
Most websites charge $50 to $200 for LLC Operating Agreements.
Here at LLC University®, we offer free LLC Operating Agreement templates for all types of LLCs.
LLC EIN Number Fee ($0)
An EIN Number is also known as an Employer Identification Number (EIN) or a Federal Employer Identification Number (FEIN).
This number is used to file income taxes, to open an LLC bank account, and to hire employees (if applicable).
Although many websites charge a service fee to get an EIN for your LLC, it can actually be done for free.
You can obtain an EIN for your LLC from the Internal Revenue Service (IRS) at no cost. The online filing can be completed in a few minutes.
California LLC Ongoing Fees
California LLC Annual Franchise Tax ($800/year)
California requires your LLC to pay an Annual Franchise Tax every year. This keeps your California LLC in good standing and in compliance with state law so it can continue operating. You will file a few forms with the Franchise Tax Board and pay the tax.
The Annual Franchise fee is $800 and is paid every year for the life of your LLC. This California LLC fee is required every year.
California LLC Statement of Information ($20 every 2 years)
And every 2 years, California requires you to keep your LLC’s information up to date by filing a Statement of Information.
You simply confirm the information on the Statement of Information, file it with the California Secretary of State, and pay the $20 fee. This fee is paid every other year (every 2 years) for the life of your LLC.
California Business License and Permit Fees (varies)
Depending on where your LLC does business in California and the industry you’re in, you may need to obtain additional Business Licenses or Permits. For example, you may need to get a City Business Permit.
The costs for these other business licenses or permits will vary depending on location and industry, but usually the fees are not very high. Some business licenses and permits are issued at the state level, and others are issued by a municipality (the town, city, or county).
LLC Taxes (varies)
There are many different types of California LLC taxes that owners must pay, so this annual cost varies widely. These are taxes based on what your LLC makes (profit), not the “flat” tax that you pay every year (Annual Franchise Tax).
Some of the taxes LLC owners pay include:
- Federal taxes
- State income tax
- Local income tax
- Business taxes
- Self-employment taxes
- Sales and use tax
- Payroll tax (if you have employees)
- Property tax (if the LLC owns property)
Your California LLC taxes depend on your industry and amount of business activity, so we’re not able to provide an estimate. Every business is different, and your specific circumstances determine what taxes apply to your LLC.
Hiring an Accountant
How much your small business pays in taxes is best determined by working with a qualified accountant in California.
The amount you’ll pay your accountant will vary. However, most accountants will charge $300 per year for a simple tax return, or up to $900 for more detailed filings.
Note: We recommend speaking with a few accountants in California to make sure they can help you meet all of your federal, state, and local tax obligations.
California Secretary of State
If you have any questions about the cost of opening a California LLC, you can contact the Business Entities Division of the California Secretary of State.
California LLC Costs FAQs
How much does it cost to open an LLC in California?
It costs $70 to start a California LLC. This LLC fee is a one-time filing fee for the LLC Articles of Organization.
Some LLCs may need a business license in California. This depends on your industry and where your LLC is located. The cost of local business permits varies.
How much does an LLC in California cost per year?
All California LLCs need to pay $800 per year for the Annual Franchise Tax. These state fees are paid to the California Franchise Tax Board. You have to pay this annual tax to keep your LLC in good standing.
And every 2 years, all California LLCs need to pay $20 for the Statement of Information. This state fee is paid to the Secretary of State, and you have to pay this to keep your LLC in good standing.
If you hired a Registered Agent service, you’ll have an annual subscription fee to pay each year. This is usually about $125 per year.
Some LLCs may need a business license in California. This depends on your industry and where your LLC is located. You’ll need to check with your municipality to see if there are any annual renewal fees for the business permit.
Should I hire an LLC formation service?
You aren’t required to hire a professional service company to form your California LLC. You’re allowed to form your LLC yourself if you’d like.
However, if you want to save time and make sure your LLC is filed correctly, we recommend hiring Northwest Registered Agent.
Northwest Registered Agent has excellent customer service and they include Registered Agent services free for the 1st year. They also offer other services, like an Operating Agreement and filing your Annual Report.
Check out Best LLC Services for more suggestions.
Do I need to hire an attorney to form an LLC?
No, you aren’t required to hire an attorney to form your LLC in California. You’re allowed to form your LLC yourself if you’d like.
However, some people may want to hire an attorney if their LLC has a complex ownership or management structure, has investors, or requires industry-specific documentation.
A business attorney usually charges between $800 and $2,500 to form an LLC.
How do I start an LLC in California?
Here are the steps to starting an LLC in California:
- Choose an LLC business name and make sure it’s available
- Choose who will be your California Registered Agent
- File the California Articles of Organization
- Complete and sign an LLC Operating Agreement
- Get a Tax ID Number (EIN) from the IRS
- Open an LLC bank account
- Check whether you need a business or sales tax license in California
What’s the cheapest way to start an LLC?
The cheapest way to start Limited Liability Companies is to file the formation documents yourself. You’ll also save money by being your own Registered Agent, and using our free LLC Operating Agreement template.
By forming your LLC yourself, being your own Registered Agent, and using our Operating Agreement template you can save over $400.
How long does it take to get an LLC in California?
How long it takes to get an LLC in California depends on how you file your Articles of Organization.
You can get an LLC in California approved in 8 business days if you file online. On the other hand, filing by mail takes about 8 business days (plus mail time).
How much does a California business bank account cost?
It varies. Some banks charge monthly fees ($10 to $20 per month), but these can sometimes be avoided by meeting certain requirements. For example, if you make a certain number of direct deposits or maintain a specified minimum balance, then they’ll waive the monthly fees.
And you might be able to find a bank that doesn’t charge any monthly fees.
Before you open your LLC business bank account, we recommend calling and asking if there are ways to avoid the monthly maintenance fees.
How much is a Foreign LLC in California?
A Foreign LLC is an LLC formed in another state that must register (aka Foreign Qualify) in California. This is because the LLC is doing business in both states.
The California Foreign LLC cost is $70.
If you form an LLC in California, it is called a “Domestic LLC“. If you formed your LLC in another state, it would be a “Foreign LLC” once you register it in California.
Is California a good state for an LLC?
Yes, California is a great state to start a business. California doesn’t charge a state business license fee, has quick approval times and helpful representatives at the Secretary of State if you have questions.
However, the most important factors in deciding where to start a business are where you live and where you’re doing business.
Meaning, if you live in or do business in California, then you should start your business in California. While many websites talk about tax rates and advantages of certain states, none of that applies if it’s not the state where you live and do business. And just because a certain state has cheaper LLC fees doesn’t mean it’s a good idea to form your LLC there.
For example, if you form an LLC in Wyoming, but live in and conduct business in California, you’ll also need to register your Wyoming LLC in California (and pay fees). And you’ll end up paying California taxes anyway. This ends up leading to more costs and more headaches with no advantages.
In summary, if you are a California resident, then yes, California is the best state to form an LLC. If you don’t live in and do business in California, then no, California probably isn’t a good state to start an LLC.
California Secretary of State: Business Entities
California Secretary of State: Starting a Business Checklist
California Secretary of State: Domestic LLC Forms and Fees
California Secretary of State: Business Programs Contact Info