how much does it cost to do an llc in california [Updated]

Last updated : Sept 6, 2022

Write a comment

hello i'm nasa nia and welcome to the community today i want to talk to you about how to form an llc why do i want to talk to you about how to form an llc because that's the process that i'm currently in and it's a multi-step process but it's not difficult i want to tell you first and reassure you you can do it you can do it yourself you don't need to pay anyone to do it please don't waste your money because there's lots of companies that will attorney i'm not offering you legal advice i'm just telling you the steps that i am taking to form an llc what an l what is an llc it's a limited liability company okay so what is that exactly so people get them to provide protection from having their own personal assets taken if there's an issue with the company so it provides you legal protection so maybe your home is not taken if the company's sued or if they um have debt they incur debt it's not your personal debt so that's why they form an llc and that type of business model has some tax benefits as well there's about five or six month business models but that is the llc is the most popular one here in california the other reason why i want to talk to you about my steps in forming an llc are you need to read on your state's secretary's website the steps to form an llc in your state this is i was excited i was gung-ho i was ready to go then i read because i'm a reader and what i found out was unfortunately california seems to be the only state that charges 800 a year whether your small business makes money or not yes you heard right every april you pay eight hundred dollars then i read further because of covet the state given incentive to small businesses to start up they want to stimulate the economy so in order to help with that effort they will waive the first year's fees on an llc 2021 2022 and 2023 yes all i need to do is wait till january then i can file my paperwork is already filled in because i was so excited that my hopes were dashed so what i want to say to you is you can do this please don't pay to have someone else do it you can do it yourself you can do it yourself and read what your state's requirements are the first step is you need an address because you need to put your business address on your form people have gotten super excited about starting their llc and they put their home address on their form please don't put your home address on your form it becomes public record so let's say you were selling goods on amazon and one of your customers became disgruntled they could look up your address and come to your house i would hope that didn't happen but it's possible the other obvious solution you might think of is i'm gonna get a p.o box the state doesn't want you to have a po box they want you to have a real address because they want an address they can serve paperwork to say if someone were to sue and they need an agent for your llc you can be your own agent for your llc or someone else can be your agent for your llc it doesn't mean they're suing that agent just means that person will receive paperwork for your company so don't use your address do get an address here's some advice there are businesses that will allow you to use their address and they put their address a b c d or you know 100 101 102 and so that delineates what business it is that's receiving mail there and they'll even act as an agent for an extra fee and so you can write their name down and you can receive packages or forms there and you need to also have this address when you go to open your business bank account because they want that most banks want your address your legal address for your business a copy of your llc approved and your tax ein number those things make you legitimate so you kind of see the order of the things how it works so first what are we going to do we're going to get a business address we're going to get an agent we're going to file a form to save our name but first before we file that form we're going to google our name we can also check our name out with the u.s patent office to make sure no one else has our name and we can google our name first we're going to google maybe then we're going to check with the u.s patent office and then once we find that no one else has our name we're going to file the 10 form here in california to hold our name for 90 days we don't want anyone else to have our name and operate with our name because that can cause confusion with our customers we want to give our customers the best possible experience right right so we're going to file to hold our name for 90 days then we're going to use that name on our llc paperwork so you say joe smukatelli llc that's how it goes in the form joe smukatelli llc you file that makes it legal so now joe smuckatelli llc is a legal entity see how that works so you made it official by filing your form then they will take receipt of your form within three to five business days and then you can check and they will let you know they received your form but i will link the secretary of state of california's website down below that way you can get a pdf of the llc paperwork and the cover sheet along with the instructions and you can also get that form to reserve your name for 90 days okay that can be filed electronically the llc paperwork cannot i don't know why it just part 2 will come up shortly if that's what you guys would like let me know if this helped you if this was productive for you if you'd like me not to make any more videos just joking as always god bless you

Thanks for your comment Jack Canas, have a nice day.
- Brunilda Forguson, Staff Member

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 Delsie your participation is very much appreciated
- Brunilda Forguson

About the author

Brunilda Forguson

I've studied mechatronics at Eureka College in Eureka and I am an expert in counselor education. I usually feel drunk. My previous job was exhibit designer I held this position for 22 years, I love talking about cue sports and kung fu. Huge fan of Christina Perri I practice snow skiing and collect disney pin trading.