how much does it cost to be an llc in california [Must-Know Tips]

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Last updated : Aug 29, 2022
Written by : Lily Yannucci
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how much does it cost to be an llc in california

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how much does it cost to be an llc in california

Comment by Sheldon Branscome

hey what's up everybody this is attorney dan nguyen and today i want to talk to you about how much does it cost to form an llc in the state of california today i'm going to talk about only the hard costs or the filing fees that you must pay directly to the california secretary of state or other agencies for your california llc now if you are using an attorney or another third party service this does not account for their particular fees okay so the first thing uh the first fee is actually the filing fee for the llc dash one uh form which is the form that you file either online or or by mail to form your california llc and that is 75 70 plus a five dollars a certification certified copy fee uh now you pay that uh again directly to the secretary of state and this is to get your uh uh llc filed with with the california secretary of state okay so 70 dollars plus five dollar certification fee okay so 75 dollars your first fee now with the 90 days you do have to file a statement of information now this list uh basically confirms your address maybe you've changed addresses between the 90 days maybe you change registered agents so you have to do registered agent update if necessary and then obviously your members or your managers now this form is 25 so 25 for the first one and then obviously uh this is a bi-annual filing requirement so you need to file this every every other year if there are no changes now there are changes you need to file those uh whenever there are changes as well so uh 75 plus 25 so now we're in it for 100 okay now the the third fee is that something that a lot of people who especially do it yourselves um don't uh don't don't file this okay it's actually the 2510f limited offering exemption notice fee now in the state of california um llcs and corporations uh are the the units or membership interests are essentially securities right so you have for the mo you do have to file an exemption unless you are required to file some other registration but for for uh the majority of uh small businesses they just need to file this 251 of 25102 f limited offering exemption notice okay so depending on how much you're capitalizing the company right so essentially how much are the owners the initial owners exchanging in exchange exchanging um money or goods or services for the um for the ownership agent so let's just say there's one owner and they're putting a thousand dollars into the company right so the one o is exchanging one thousand dollars for 100 ownership of the company all right so that one one thousand dollars is considered capital contribution right and so that will be need to be filled out on the um 25102f uh exemption notice right and so uh the filing fee for this one be uh i believe 25 okay so now um so it's uh what 75 plus 25 plus 25 so now we're in 425 okay so it's very important that you file this this last one uh the limited offering exemption notice okay and then uh every within four uh i believe is three or three half months or four and a half months um this is the annual franchise tax okay so uh you probably know about this already uh every year if you are a california llc or corporation you need to file a pay for the 800 annual franchise tax to the state of california and so you pay that ideally you kind of pay right away because people tend to forget but if you don't you have to do it within um i believe three and a half months or four and a half months um uh whether you write so so if you're gonna just double check i believe it's three and a half months three and a half months you can't go wrong okay and so now it's so 125 plus 800 right so uh 800 that's 925 um just on basically government fees okay and so um one thing to know uh this is the year 2021 uh governor has uh um i believe um not required the franchise uh tax for new llcs formed this year and i believe next year okay so uh double check with your tax professional um but uh the last time i checked there's no franchise tax for new llcs now if you're an existing llc's form last year or the year before that year before that you still have to pay this fee this only applies to new llc's filed this year and perhaps next year so all in all just just government fees alone um 75 dollar filing fee california secretary state 25 filing fees california secretary of state for your statement of information um uh 25 could be minimum 25 for the limited offering exemption notice to the california um financial innovation and protection department i believe and then 800 to the california franchise export okay so uh 925 not including all uh you know attorney's fees um or other legal fees that you uh or service fees that maybe you hire a third party to do so hope that sheds you some light on how much it costs to form an llc in the state of california if you are looking to form a california llc and don't want the baller with figuring out how to do everything else that's involved with filing a california llc reach out to which reach out to us we'd be happy to chat and see how we can help okay this is dan i hope to talk to you soon bye

Thanks for your comment Sheldon Branscome, have a nice day.
- Lily Yannucci, Staff Member

Comment by Ghic

hey this is attorney elizabeth weinstein and today we're going to talk about how much money does it really take to start an llc in california so an llc or a limited liability company is not something that you're required to do when you start a business but a lot of people will form an llc to protect their personal assets from the liability of the business sometimes for tax reasons and sometimes because you may be hired by companies who require you to be an llc or corporation because they don't want to be accused of having an accidental employee and owing employment taxes on your earnings but like anything else we do in business forming an llc costs money so what's the minimal amount of money you will have to spend to start your llc and by the way i'm talking about doing it yourself not hiring a lawyer not using legalzoom or some other service but the minimum requirements it takes for all the kind of government filing fees to form your llc in california it's going to cost 70 just to file the forms with the state of california online you also may decide to get a certified copy of what you file which is a good idea so you can use that to open up your bank account and stuff like that and that's an extra five dollars as of the time that i am recording this video the next required expense is going to be a franchise fee this is like an annual tax that's not called a tax it's called the franchise fee that you have to pay for any llc or corporation in california either because you formed in california or you're an out of state business that has an office or some location in california such that you're legally located here or have an office here have a nexus here that annual fee is eight hundred dollars a year minimum it's more if you're making tons of money but if you're starting a brand new business you're probably not in that category yet now there are special rules for s-corporations that you only have to pay for a portion of the year but here's the thing that doesn't necessarily apply to an llc unless you're taxed as an ex-corporation and that gets into details beyond the scope of this video but just assume that you're gonna have to pay that 800 for the calendar year no matter when you file your llc so if you create it in january it's from january december but if you create it in december you have to file the 800 for the whole year so you want to be aware of this issue think about when you're filing when you're creating your llc and see if that rule applies to you specifically the last required filing that you're going to need to do with the state of california is a statement of information this is as of right now a 20 filing fee if you do it online and it's just telling them things like here's your physical address here's your mailing address here are the different members of the llc or the officers of the llc and their locations what your registered agent is which is probably the same register agent as you had on your original form you have to file that in the beginning within 90 days i think of when you create your llc it's best just to do at the same time and then you have to file it every couple years after corporations have to file more often than llcs so those required fees for your first year are almost 900 dollars the second thing we're going to talk about are fees that you're probably going to have to do so the first category is a business license you may or may not need a business license because it depends upon exactly where you're located and the kind of business that you have so if you're in san jose california if you're in the city of los angeles every single business there has to get a general business license which they actually kind of call a tax registration same thing and the fee depends upon the kind of business you have how much money you're making how many employees you have all that kind of stuff depending upon where you are i would budget like 200 a year for that when you start out and you're you have a you know simple one-person business and then it'll go up from there depending upon the complexity of your business occasionally you don't need a business license if you're in an unincorporated area in a rural area sometimes you don't need one so it's something that you're going to have to look into for your particular location the next item you'll probably have to do but maybe not is a dba a doing business as registration in california those are done at the county level so you do a county filing and then you have to publish that information in a newspaper usually a special legal newspaper so those exact requirements are different from county to county so you need to see what they are in your particular location and it only applies if the business name like your trade name that you use on your website in your marketing is a different name than the legal name the llc name you may use the same name so you don't need to do a dba or you may need to do that the third category are things that are a very good idea to set up for your business we're talking about bookkeeping now you can do free bookkeeping where you just have a spreadsheet and you just write down your income and expenses there but you may want to sign up for some kind of service like quickbooks online or xero there's a whole bunch of different ones some of them are there are ones that are free some of them are like seven dollars a month some of them the minimum is 25 a month so you want to budget 100 200 300 a year for your bookkeeping and that's if you do it yourself the second thing that you're probably going to want to set up is taxes so every year you're going to file a tax return for your llc the llc may be taxed as a pass-through entity where you're personally paying taxes on the money it distributed to you but the llc still has to file a tax return sometimes with the state sometimes if you're an s corporation if your llc taxed as an s corporation you'll have to file an s-corporation tax return if you're an llc text as a partnership you have to file partnership tax return okay it can get very complicated and you need to look into whether or not you're going to be able to handle that yourself or if you need to hire someone to do that if you're an llc that is a one-owner business and use a pass-through tax entity so it's just on your schedule c you could use turbotax for that but they don't have a turbo tax for s corporations okay so and then i'll mature tax for partnerships so if you have a more complicated tax situation you're probably going to want to hire someone to do that and that could be 500 a year a thousand dollars a year it really depends upon your location the last aspect is you want to make sure your llc is fully capitalized what does that mean it means that it needs to have enough money sitting inside of it to keep operations continuously going on how much money that is really depends upon the kind of business you have it may be a couple hundred bucks if you have a really simple service-based business it may be thousands of dollars maybe tens of thousands of dollars that needs to be sitting in that bank account it depends upon whether or n

Thanks Ghic your participation is very much appreciated
- Lily Yannucci

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