If you’re looking for an excellent California LLC service then choose ZenBusiness. We’ve already formed 500,000+ businesses since 2015!
If you want a socially conscious California LLC service with excellent overall value, choose ZenBusiness.
Northwest Registered Agent charges $225 (plus state fee) for LLC filing services. That said, Northwest’s personalized customer support is a feature that could make their prices worth paying for some entrepreneurs.
Overall, Northwest does have some points in its favor. However, keep in mind that it charges $225 (plus your state’s required fee) for its LLC filing services.
Want to learn more? See this Northwest LLC review.
LegalZoom is one of the biggest names in the industry, with millions of customers served and frequent advertising efforts. LegalZoom provides an LLC filing package for free (plus the state’s fee).
LegalZoom is a huge company, so while it offers extended support hours, the quality of its customer support may vary a bit from representative to representative.
Want to learn more? See this LegalZoom LLC review.
Incfile offers LLC formations for free, as long as you pay your state’s fee. Incfile and ZenBusiness have some similar characteristics, but there are also some significant differences that set the two apart.
If you’re looking for a cheap LLC formation service in California and ZenBusiness doesn’t feel right for some reason, Incfile could be worth a closer look.
Want to learn more? See this Incfile LLC review.
SunDoc Filings isn’t among the most popular LLC formation services in most states, but its home state of California is an exception. That’s because the SunDoc Filings offices are in Sacramento, and they hand-deliver documents to the Secretary of State’s office three times per day.
This enables SunDoc Filings to form California LLCs faster than any competitor we’re aware of. This company also receives strong customer feedback, with around 3,000 positive reviews and very few examples of negative feedback.
However, SunDoc Filings also has some drawbacks, including pricing. The cheapest package they offer costs $79, but it doesn’t even include the preparation of your Articles of Organization — it only provides document filing. You’ll need to spend at least $99 to have SunDoc Filings prepare and file your documents, while ZenBusiness will do it for free.
There really isn’t much of a reason to use SunDoc Filings in other states, but if you need your California LLC formed in a hurry, they’re worth considering.
Identify the LLC package and services that fit your needs and then get started.
LLCs are formal legal entities that are typically taxed similarly to sole proprietorships and general partnerships, in that the owners include any company profits or losses into their personal returns — the LLC itself does not owe income taxes. An LLC may also elect to be taxed like a corporation, although this is not a very common option.
There are similarities to corporations too, especially when it comes to financial responsibilities. In an LLC, the owners or members are not usually personally accountable for the financial status of the business. This means that if someone sues your LLC, your personal assets are not at risk.
While California does not legally require LLCs to create an operating agreement, it’s still strongly recommended. This document can help clear up any disagreements between your owners, and it’s also just generally convenient to have a roadmap of your LLC’s operational aspects.
We have good news and bad news regarding the affordability of LLCs in California. The good news is that California charges a very reasonable $70 filing fee to form your LLC, which is cheaper than many other states. However, the negative side of the coin is the fact that California charges an annual franchise tax with a minimum $800 fee, which is much higher than nearly every other state’s maintenance fees.
One other interesting note about the LLC in California is that this state does not allow entrepreneurs to form series LLCs, they do allow you to expand an existing series LLC into their state. The series LLC is a group of LLCs that fall under the umbrella of one parent LLC.
The big advantage of series LLCs is that each LLC in the series is shielded from the liability of each other LLC, and you only need to form one entity instead of several separate LLCs or a corporation with subsidiaries. For more information on expanding a series LLC into California, check out the California Franchise Tax Board website.
In addition to the costs of a business formation service or hiring an attorney (which are optional, as we’ve discussed), there are quite a few other required and optional expenses when forming and maintaining a California business. You cannot form an LLC in California without filing the Articles of Organization, the document that officially registers your business within the state. The filing fee for this is free unless you want additional certified copies (you get one free copy) for $5 per copy.
Within the first 90 days of forming your LLC, you will need to submit an Initial Report for $20. This acts as a precursor to the Statement of Information, which you’ll file every other year — also for $20. These reports keep the state up-to-date about some basic but vital information about your business.
Those expenses are pretty minimal but don’t think that you won’t have to pay any substantial expenses because the state charges a hefty Annual Franchise Tax. For an LLC, this tax is levied regardless of how much income you make, and it costs a hefty $800 each year. Then there are income taxes to consider. And to top it off, you’ll have to pay federal taxes, along with several others.
For instance, if you have employees, you’ll pay unemployment insurance tax. If you sell goods or services, you’ll pay sales and use tax. Depending on the nature of your business, there could be other taxes required, so check with the California Department of Tax and Fee Administration to make sure.
Other than that, the other potential expenses only apply to certain businesses. These include things like professional or industry-specific business licenses and business insurance.
An LLC is one of the most popular entity types nationwide. But it isn’t the right type for everyone.
Only you can pick which entity type best fits you and your business; after all, you understand your business idea better than anyone. You have a clear vision for your products and services, both present and future.
To truly determine whether an LLC is right for you, it’s helpful to consider the advantages and disadvantages of LLCs.
There are some common aspects of the LLC and the corporation, starting with the personal asset protection they both provide. Also known as limited liability, this personal asset protection ensures that if your business is sued, only the business assets are at risk. Meanwhile, your personal assets — like your house, car, personal bank accounts, investments, etc. — are protected by your LLC or corporation’s business structure.
In addition, LLCs and corporations both provide their owners with business name exclusivity. If you own and operate a sole proprietorship or general partnership, you will not have exclusive rights to your business name. Instead, if another company decides to use your name as its own, you won’t be able to stop them. In fact, they could even register your business name and gain exclusive rights to it, forcing you to come up with a new one.
In general, an LLC is quicker and easier to form than a corporation. LLCs usually need to provide less information for their formation documents than corporations do, and there are fewer steps in the process as well. For instance, LLCs don’t need to draft corporate bylaws, name officers or board members, hold initial board meetings, or issue stock. On the other hand, corporations need to do all of these things and more.
The LLC is also a less rigid business structure that allows its owners greater flexibility. The business structure of a corporation is inflexible, with many regulations dictating how the business should look and function. Meanwhile, LLCs have options for business management structure and ownership responsibilities that corporations simply don’t have.
Another even more valuable option LLCs have is that they can choose how they want to be taxed. Most LLCs are taxed as pass-through entities, which means the business itself does not pay taxes, but the profits are passed through the LLC itself to its owners, who pay taxes on this money on their personal returns. However, LLCs can also opt to be taxed like corporations (either as a C corporation or an S corporation), giving them more options for taxation than a corporation has.
Corporations have some advantages too, like the ability to sell stock. It’s quite difficult for an LLC to attract outside investments because it cannot issue stock. The vast majority of investors prefer stock as their investment medium, and it’s also very rare to see venture capitalists investing in LLCs. For these reasons, the corporation is a much better option for businesses looking to attract investments.
In addition, the corporation has been around for hundreds of years, while the LLC is a newer addition to the American business landscape. This means that the corporation has more established legalities and also that it’s easier to expand into other states because the corporation’s structure is essentially the same no matter where you form it.
Technically speaking, you don’t have to use an LLC formation service like Zen Business or LegalZoom. These services are incredibly helpful, but you can save money by completing the process yourself.
You can read our complete guide to DIY an LLC setup in California, but here’s a quick look at the process:
Every LLC in California needs a name that’s memorable and gives potential clients a good idea of what goods or services are available. The name also needs to be unique — both for legal reasons and so your business stands out from the competition.
As we’ve mentioned in this guide, every LLC needs an agent who can accept service of process on your behalf. In all states, you can act as your own registered agent as long as you have a physical address in the state. That said, we generally recommend that you appoint someone else (like an online service) to act as your agent.
This document, once filled out and filed, officially forms your business in the state of California. You’ll need to provide some important information, including your contact information, your business address, signatures for your LLC’s members, and more. California has a $70 filing fee.
Setting up the LLC is as easy as 1-2-3; it’s the maintenance requirements that are a bit more complicated:
If you have employees, you’ll need to get an Employer Identification Number from the IRS. Then there are state-specific taxes, too. California has pretty heavy taxes. For LLCs taxed as corporations, there is a flat rate of 8.84%. The individual rate ranges between 1% and 13.3%. You will also need to account for sales taxes (7.25% plus local fees) and other miscellaneous taxes. More information can be found at the California Department of Tax and Fee Administration.
There’s no general state business license in California, but that doesn’t mean you won’t need to get professional licenses. California offers a nearly comprehensive resource for business licensing: CalGold.
Even single-member LLCs should create a “master document” that sets out how the business will operate, both now and in the future.
Every other year, your LLC will need to file an annual report to update the state about the standing of your business. California has a $20 filing fee for this document.
Every business with employees needs to maintain workers’ compensation insurance and a commercial vehicle policy for company-owned vehicles. You may also want to get a general business liability policy, too.
You should sign up for a business bank account so you can write checks and make purchases in the name of the business instead of pulling from your personal accounts (a legal no-no).
This is just the tip of the iceberg, though. For more detailed guidance, we recommend contacting an attorney or checking out the full California LLC Formation Guide.
We invite you to take a look at our comprehensive guide to forming a limited liability company in California. This article walks you through the LLC formation process in this state step by step, ensuring that you don’t miss any crucial elements.
One of the most important steps in forming a California LLC is choosing a business name. Once you come up with ideas for your name, you should do a preliminary search through the state’s business search database to make sure your desired name is available. However, it’s important to note that this tool is unofficial.
Once you’ve verified that your name is available using the business search database, you’ll need to mail a Name Availability Inquiry Letter to make this process official. For more information on conducting a business name search in California, check out our full article on the topic.
You can file your Articles of Organization online through the California Secretary of State’s BizFile tool, or you can print off a paper form and mail it to the Secretary of State’s office.
All California LLCs are required to file a Statement of Information every two years. This filing costs $20, and you can file it online. In addition, each LLC must pay the state’s annual LLC tax with Form 3522, which costs $800 each year.
To find out which permits and licenses are applicable to your business, head on over to the state’s “CalGold” permit and license website, where you can find extensive information about licensing requirements in this state.
The California Secretary of State has a handy page on their website where they display current turnaround times for LLC formations in real time. At the time of this writing, online filings were taking around three business days, while in-person filings took five business days.
Do you need your business formed in a hurry? California has a few options, but they’re very expensive. They will form your LLC in 24 hours for $350, four hours for $500, or same day for $750. We will note that to qualify for the four-hour service, your documents must be precleared and approved by the state.
If you want more details about what these companies can offer in this state, or you’d like to take a look at some other options, check out our complete guide to California registered agents.
Unfortunately, not all businesses last forever. If the time comes when you need to close your LLC’s doors, you’ll need to do so in a manner consistent with the state’s regulations. That’s why we wrote our guide to California LLC dissolutions, so you can complete the process in a compliant manner.
If your LLC already exists in another state, you don’t actually need to “form” it in California. Instead, you’ll need to foreign qualify the business in this state. This process is somewhat similar to LLC formation, but there are some crucial differences as well. Take a look at our guide to foreign qualifications in California for more information.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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