LLC Cost in California – How Much to Pay for an LLC

california_state_seal

Perhaps you are hoping to form a California LLC. People assume how to start an LLC is difficult and costly. However, it’s generally not difficult, and the cost would vary across states. We have all the info you need to know about the cost of forming an LLC, particularly the LLC cost in California.

California LLC Cost of Filing

Here are the costs involved in forming an LLC in California.

Cost of Filing Formation Certificates

The California Certificate of Formation is responsible for the majority of the cost, which could also vary depending on whether you’re forming a domestic LLC or a foreign LLC. Still, you can file both at the California Secretary of State

California Domestic LLC

  • Online Filing costs $70 + $800 Franchise Tax.
  • Filing Statement of Information within 90 days of registration costs $20.
  • By Mail: Fill out the application form, and send it to Secretary of State Business Services, 1500 11th Street, Sacramento, CA 95814.  Costs $70 + $15 for counter drop off (non-refundable).

California Foreign LLC

  • Online Filing costs $70 + $800 Franchise Tax.
  • Filing Statement of Information within 90 days of registration costs $20
  • By Mail: Fill out the application form, and send it to Secretary of State Business Services, 1500 11th Street, Sacramento, CA 95814. Costs $70.

Note that filing online is ideal, not only because you need to go to the Secretary of State office, but also it would be faster. You won’t have to wait in a queue in doing so.

California LLC Formation Service or Registered Agent Fee

You need a registered agent to form an LLC in California, hence, added costs for service fees. Here are three of the best LLC services on our list that will provide you with registered agents to ease your worries.

LLC Service

Our Rating & Pricing

Top Features

Learn More

#1 TOP PICK

$49 + State Fees

  • 1 year free agent service

  • Multiple options available

  • CPA assessment records

FAST SERVICE

$299 + State Fees

  • Fast service

  • Resource center

  • Flat Rate for all services

$399 + State Fees

  • 1 year free agent service

  • Digital storage

  • Different types of plans

Business Permits and Licenses 

The business licenses depend on your business’s activity and location and are renewed yearly. As such, the cost will vary. Check the California Department of Tax and Fee Administration for regulatory boards or agencies requiring licensing. 

Taxes Paid By The LLC in California

Any business in California has three types of taxes to be paid. Income Tax, Corporate Tax, and Franchise Tax. LLCs are exempted from the Corporate Taxes due to the pass-through taxes. The LLC members are liable to pay income taxes and Franchise tax. Apart from these three taxes, every LLC in California has to obtain EIN, there is no fee for obtaining EIN in California. On the other, a certain amount of Sales Tax has to be paid by the LLCs. 

Franchise Tax

Franchise Tax is a minimum mandatory tax paid by the LLCs. Any LLC (domestic or foreign) registered with California state has to pay $800 whether it is running or inactive. As long as the LLC is registered it has to bear the Franchise Tax. 

According to the Franchise Tax Board of California, this is a privilege tax for running a business in California and has to be paid by the LLCs following some terms and conditions. 

Franchise Tax According to Income Tier

Following are the different income tiers based on which the amount of tax amount is calculated. 

  • Income from $0 to $250,000: $800 Franchise tax + $0 LLC Fee > Total $800
  • Income from $250,000 to $499,999: $800 Franchise tax + $900 LLC Fee > Total $1700
  • Income from $500,000 to $999,999: $800 Franchise tax + $2500 LLC fee > Total $3300
  • Income from $1,000,000 to $4,999,999: $800 Franchise tax + $6000 LLC Fee > Total $6800
  • Income above $5,000,000: $800 Franchise tax + $11,790 LLC fee > Total $12,590

Federal Tax

Apart from these above-mentioned state taxes, California LLCs have to pay a Federal Tax of 15.3% on the total income generated by the LLC. 

Cost Comparison Among States

California is one of the best states to start an LLC. The state is bounded by Arizona, Nevada, Colorado, and Oregon. Here’s the cost comparison among the neighboring states of California.

StateFiling FeeAnnual Fee/Biennial Fee
California LLC$70$800 + $20 (every 2 years)
Oregon LLC$100$100 (Annual)
Nevada LLC$425 $350 (Annual)
Arizona$50$0
Colorado$50$10 (Annual)

Comparing the neighboring states, we can say Arizona has the least LLC fees, however, California is the most favorable among all for the businesses as it has immense tax advantages. Apart from that, the state has massive business opportunities.

Other Costs

F.A.Qs

Can I start an LLC for free?

It is possible to form an LLC without professional help, but forms still have associated costs, regardless of where your LLC is formed. 

Is an LLC expensive?

It is difficult to say whether forming an LLC is expensive. Nevertheless, the cost could be anywhere from $40 to $500. If you refuse to hire professionals, you’ll still have expenses like form fees to cover.

Does an LLC need a bank account?

The need to separate personal money from business funds, thus necessitating the creation of a business bank account for your LLC.

Leave a Comment