How Much Does A California LLC Cost?

LLCs separate your business and personal assets. If you lack this protection, you become responsible for any liabilities or debts your company assumes, and if your company experiences hardship or you get sued, your personal assets, like your home and car, may be in trouble.

An LLC designation also lets you adopt the tax status of any other legal structure, including sole proprietorships, S corporations, and C corporations. The IRS will designate your business as a disregarded entity, unless you choose to be taxed as a corporation. In other words, you’ll share the same tax benefits as a sole proprietorship, while also enjoying liability protection.

Before you can become an official LLC, you need a business name that’s not already taken. Since California’s population is currently hovering at a little under 40 million people, and there’s been a substantial increase in entrepreneurs in the state, you can’t skip this step. 

Do a business entity name search on the State of California’s government website. Your business name is required when you fill out legal documents. Typically, business owners also use their LLC’s name to establish brand identity and name recognition. If it’s not a name you plan to use during everyday conversation, you can also get a “Doing Business As” (DBA) name. The cost for DBA designation depends on which municipality you live in. 

California LLCs require you to include either “Limited Liability Company,” “LLC,” “L.L.C.,” “LC,” or “L.C.” as part of your organization’s official name. You cannot include the following words:

You also cannot include anything that implies a government affiliation, like “bureau,” “commission,” or “agency.”

Once you’ve got your name, double-check with the Trademark Electronic Search System (TESS) database before applying for your LLC license. If another business entity uses your name, you risk infringing on their trademark. 

If you’re worried your business name may get taken while you’re still setting up, don’t be! In California, you can fill out a name reservation request form and reserve your name for up to 60 days for only $10. While not required, we also recommend looking up your business name’s URL availability. If your business name is “Carlton’s Pet Supplies” but www.carltonspetsupplies.com is already taken, you may confuse people trying to find you online.

The initial cost to start an LLC in California is a $70 filing fee, which is more affordable than most states. For example, Delaware LLC costs a $140 filing fee—double California's. If you want to learn how to start an LLC in NY, your filing fee troubles California, costing $210. Also, if you start an LLC between now and June 30, 2023, the filing fee is waived entirely! 

Total cost: $70

What Does the Filing Fee Entail?Your filing fee is for your Articles of Organization. Your articles of organization are a legal document that includes the basic information about your LLC, such as:

Double-check this document before submitting it. If you accidentally make a typo or leave something blank, you could face legal repercussions in the future. 

Mail your Articles of Organization to the Secretary of State at: Business Entities Filings, P.O. Box 944228, Sacramento, CA 94244.

A registered agent is someone who accepts all legal and government correspondence for your LLC. It can be you, one of your LLC members or partners, or a business entity authorized to conduct business in California. 

Your registered agent must also have a physical registered address in California, not just a P.O. Box. Their address becomes public record once your organization becomes an official LLC. For privacy protection, many LLC owners opt to use a business entity as their registered agent, or sites like California Registered Agents, where you can get a designated registered agent for $49/yr.

In California, you’re required to draft and maintain an operating agreement. This agreement is a legal document that outlines the ownership, rules, and regulations of your LLC. Think of it as your organization’s constitution. When your membership signs this document, they agree to the terms and conditions outlined in it. In California, your operating agreement should include:

Creating an operating agreement is free, and can save you from costly legal disputes your business may encounter down the road. If you end up in a legal or financial dispute without one, the courts may end up responsible for finding a viable solution, and their decision may not be in your or your LLC’s best interest.

Total cost: $0

For your last official setup cost, you need to get an EIN from the IRS by filling out an online EIN application. It’s free to do, and it’s essential. You can’t hire employees or open a business bank account without one. 

Depending on where you’re located and what industry you’re in, you may need to obtain local, state, and/or federal business licenses to operate in California. Check the Secretary of State’s website, as well as your local government’s website, to learn what licenses or permits you may require.

The majority of LLC fees you’ll incur will not be experienced until after your business is up and running. 

First off, all California LLCs pay an annual $800 tax. If you started your business during the last fifteen days of the tax year, you’re exempt from paying this tax during your first year in operation. 

In addition, California LLCs are required to file a biennial report, which you can do by filing either the Statement of Information or the Statement of Information No Change forms. The filing fee is $20. 

Finally, if your annual revenue exceeds $250,000, your business also has to pay a franchise tax of $900. The franchise tax fee swells to $2,500 if you make between $500,000 and $999,999, $6,000 if your revenue is between $1,000,000 and $4,999,999, and $11,790 if your revenue exceeds $5,000,000. 

To recap, here’s the total list of costs for forming an LLC in CA:

Your total cost to register LLCs in California can be as little as $70, and then $800 per year with a $20 fee due every other year. That’s not bad—especially when you think about all the benefits you’ll enjoy as an LLC!