California LLC Cost Guide (2024)

How much does an LLC cost in California?

The most essential cost to create a California limited liability company (LLC) is filing the Articles of Organization, which costs $70 to complete. This is the essential California LLC filing fee, as this form is what formally creates your LLC. Until this fee is paid, your LLC won’t exist. 

But it’s not the only cost you can expect; a California LLC has other essential costs and filing fees, like filing your Statement of information, annual franchise taxes, and more. In this guide, we’ll walk you through startup costs including:

• Common California LLC Fees
• Ongoing California LLC Fees
• Other California LLC Costs to Consider
• Calculating Your Total California LLC Cost

By appropriately anticipating and budgeting for these costs, you’ll be taking an important step toward giving your LLC a solid legal foundation. Let’s get started.

Common California LLC Fees

Here are some of the most common expenses you can expect when you start an LLC in California: 

Business Name Reservation Fee in California

Reserving a business name for an LLC in California involves a fee of $10. This fee holds the desired name for you for 60 days, preventing other entities from registering under that name while you prepare to file your Articles of Organization. This step is crucial for entrepreneurs who are not yet ready to fully establish their LLC but want to secure their business name.

Articles of Organization Filing Fee in California

To legally form an LLC in California, entrepreneurs must file the Articles of Organization with the California Secretary of State. This California LLC fee is $70. There are no circumstances under which this fee is waived, making it a mandatory cost for all new LLCs in the state.

Statement of Information Fee

California requires all LLCs to file a California statement of information within 90 days of forming the LLC, and then biennially thereafter. The filing fee for this statement is $20. This document keeps the state updated with the LLC’s current contact information and other pertinent details. It’s a unique requirement for California LLCs, so be sure not to overlook it. 

Registered Agent Fees

California law mandates that every LLC designate a California agent for service to handle important legal communications. If you hire a registered agent service, you’ll find that the fees typically range from $100 to $300 annually, depending on the provider and the specific services included.

EIN Fee

The Employer Identification Number (EIN) is necessary for an LLC to legally hire employees and open business bank accounts. The IRS issues EINs at no cost, making it one of the few aspects of LLC formation that doesn’t carry a direct fee. That said, you can hire a service to get your EIN if you’d like help with the paperwork. 

California DBA Name Fee

If an LLC in California operates under a name different from the one registered in the Articles of Organization, a California DBA (doing business as) must be filed. This is frequently referred to as a fictitious business name in California.

The filing fee for this varies pretty widely, though. That’s because California administers this filing at the county level, and every jurisdiction chooses its own filing fee. Typically, these costs range between $10-$100. We highly recommend checking your county’s website for a specific cost in your area.

Foreign LLC Formation in California

LLCs formed outside of California but looking to operate within the state must register as a California foreign LLC. The fee for this filing is the same as that for domestic LLCs, which is $70. This registration allows the foreign LLC to conduct business legally in California.

Certificate of Status in California

A Certificate of Status (sometimes called a Certificate of Good Standing) verifies that an LLC is compliant with state requirements and has met all its statutory obligations, such as filing the Statement of Information. The cost for obtaining this certificate in California is $5, and it is often required for financial and legal transactions like partnering with another business, getting business loans, and more. 

Operating Agreement

While California does not legally require an LLC to have an California operating agreement, it’s highly recommended. This internal document outlines the management structure and operational procedures of the LLC. Creating an LLC operating agreement can often be done without direct costs if you prepare it yourself, though some business owners may opt for legal assistance depending on the complexity of the business structure.

Even if you’re a single-member LLC, it’s recommended to create an operating agreement. You never know how your business will grow in the future, and an operating agreement can help set your California LLC up for success.

Ongoing California LLC Expenses

After you get up and running, it’s important to remember that you’ll have ongoing expenses to handle as an established LLC. These can be a little trickier to budget for, and they’ll vary significantly from one business to another. But here are some of the most common expenses California LLC owners can expect:

Annual Franchise Tax

In California, every LLC is required to pay an annual franchise tax. This tax has a minimum fee of $800, regardless of revenue or activity level (although it can be higher if your business revenue is higher). 

This tax is due by the 15th day of the 4th month after the beginning of the tax year, typically April 15 for most businesses. It’s one of the higher state franchise taxes in the U.S., and it’s mandatory from the first year of business. This tax is paid to the California Franchise Tax Board and is a significant consideration for anyone planning to form an LLC in California.

Biennial Statement of Information

California limited liability companies are required to file a California statement of information every two years with the Secretary of State. This requirement builds on the same filing that occurs within 90 days of forming your LLC. The statement lets the state know that you’re still in business, and it helps ensure that the information on file is accurate and current.

The fee for this filing is $20, and it must include updates on the LLC’s addresses, management, and any changes in the registered agent or office locations. Failing to file this statement can result in penalties and potential suspension of the business.

Registered Agent Renewal Fees

A California LLC’s registered agent is essential to help ensure that the business always receives its important legal documents. The annual fee for most registered agent services ranges from $100 to $300. It’s important for LLCs to ensure their registered agent is reliable and available during all business hours to meet state compliance requirements.

License and Permit Renewals

The costs associated with renewing licenses and permits in California vary significantly depending on your exact business activities and location. While there isn’t a statewide business license in California, you might need city-specific business licenses, professional licenses, or industry-specific permits. Regular renewals are essential to remain compliant with local and state regulations, and fees can vary widely based on the specifics of each license or permit.

DBA Renewals

If a California LLC operates under a name different from the one registered with the state (a DBA), it must renew this registration. However, since these registrations are handled at the county level, the exact fees and requirements will vary. Often, the renewal fee is similar to the initial registration fee. By keeping your registration up-to-date, you’ll help keep your business in compliance.

Operational Costs

Operational costs for an LLC in California can include a wide array of expenses such as rent, utilities, salaries, equipment, insurance, and marketing. These costs vary greatly depending on the nature and scale of the business. Effective management of these expenses is crucial for maintaining the profitability and sustainability of the business. Planning for these costs should be an integral part of any business budgeting process.

Other California LLC Costs to Consider

When establishing an LLC in California, small business owners need to account for a variety of costs, including those related to their industry, location, and unique business needs. These expenses are vital to consider when planning your own budget. 

Specific Licenses and Permits

The requirement for specific licenses and permits in California varies significantly depending on the type of business and its location. For example, a restaurant in California may need health permits, a liquor license, and a city business license, while a construction company would require different state and local building permits as well as professional licenses. The costs associated with obtaining these licenses and permits can also vary widely. 

It’s ultimately your responsibility to find out what your specific license requirements are. Our business license report can help with this step, too. Whether you handle it on your own or enlist our help, these licenses will be crucial for legal operation and to avoid potential fines.

Certified Documents

At various stages of business operations, an LLC in California might need certified copies of official documents such as the Articles of Organization or amendments to them. Situations requiring these certified documents often include registering for licenses, opening bank accounts, or conducting significant financial transactions like entering a crucial contract with a new business partner. 

The process for obtaining certified copies in California involves requesting them from the California Secretary of State, and the cost is typically $5 per document. This is a straightforward process that can usually be handled online or by mail, and having these documents certified helps ensure their acceptance in legal and official business matters.

Professional Services

For ongoing compliance with legal and financial regulations, LLCs often need the services of professionals such as lawyers or accountants. The costs for these services in California can vary greatly depending on the complexity of the services provided and the professional’s expertise. For example, routine accounting services might cost a few hundred dollars per year, but complex legal counsel, especially in specialized fields or litigation, can rise into the hundreds per hour and total thousands of dollars. 

Hiring these professionals is often essential for ensuring that the business meets all regulatory requirements, handles tax filings correctly, and navigates legal challenges effectively. When selecting professionals, LLCs should consider not only cost but also the professional’s familiarity with their specific industry and business size.

Calculating Your Total California LLC Cost

We can’t tell you exactly how much your individual California LLC will cost because every LLC is a little different. But we can tell you that no matter what, you should expect these costs in your first year: 

• $70 for your Articles of Organization
• $20 for your first Statement of Information
• $800 minimum franchise tax even in the first year

At minimum, then, you’ll have to pay at least $890 in filing fees and taxes within your first year of business. Beyond that, you’ll want to budget for your expenses like rent, utilities, building a business website, and so on. If you’d like help getting a more specific number, consider using a free cost calculator. With this information, you’ll be able to build a budget that’s reasonably prepared for both expected and unexpected expenses.