Cost Breakdown of an LLC in California
For more detailed information on starting an LLC check out Forming an LLC in California
A Limited Liability Company is an accessible business structure for new businesses. It offers many liability protections and tax advantages to owners. Business owners should account for the various costs associated with forming an LLC in the State of California.
Articles of Organization and Statement of Information
The first step to starting an LLC in California is to file for the Articles of Organization. The required filing fee is $70.00. plus the completion of the Statement of Information required by the state and its $20 filing fee. These costs also apply to companies registering as a foreign LLC to conduct business in the State of California.
After the LLC formation, the business must pay an $800 annual tax within four months of registering the LLC. There are some exceptions to the first year of the annual tax:
- An LLC has conducted no business in California during the tax year it is exempt.
- The tax year was less than 15 days then it is except
If the LLC is going to earn $250,000 or more that upcoming tax year, then it must estimate the earnings on Form 3536 for the forthcoming year and pay an extra fee. That fee is due the 15th day of the sixth month of the current tax year. The current LLC fees according to the LLC's California income are as follows:
- $250,000 – 499,999 = $900 fee
- $500,000 - $999,999 = $2,500 fee
- $1,000,000 - $4,999,999 = $6,000 fee
- $5,000,000 + = $11,790 fee
There are several costs in the continued maintenance of an LLC in the State of California.
Statement of Information
Every two years, an LLC must file a Statement of Information with the Secretary of State and pay a $20 filing fee. Any LLC that fails to file a timely statement of information incurs a $250 penalty.
Each year the LLC must pay an $800 annual tax to the State of California. Depending on the LLC's yearly income, an extra fee may apply.
Changes to LLC
It is essential to keep all records about an LLC with the state current and updated. Any changes made to an LLC's statement of information will incur an extra $30 fee.
Other Costs to Consider
The costs described above refer to the filing fees and taxes required by the State of California. They do not include any fees by service providers that will assist a business owner in the formation of the LLC. These services come at an extra cost to the business for guidance through the process.
Registered Agent Service
A requirement of having an LLC in California is for the company to have a registered agent. Some companies provide registered agents for LLCs. Utilizing one of these providers costs around $100-$300 per year.
Creation of an LLC Operating Agreement
An operating agreement is a document that includes the foundation of a business's operations. This document can be complicated, and some owners will outsource the creation for a fee that can cost between $50 - $200.
Certified Copy of an LLC Operating Agreement
To set up a bank account for business and seek other financings, LLCs often need to provide a certified copy of their operating agreement. A certified copy is a state-issued copy of the original business documents and costs an extra $5 to receive one.
Total Cost of an LLC
To form an LLC in California the minimum cost of getting up and running is around $890. Every year after that the minimum cost is an $800 franchise tax.
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