When you form your LLC in California, you’ll have to pay certain costs to officially register your business with the state.
In addition to formation and ongoing costs, there will be business expenses like using a registered agent service, building a website, getting business insurance, and so on. So, what’s the total LLC California cost?
In this guide, we break down the costs associated with forming your LLC, from the California LLC filing fee to LLC upkeep prices and other business expenses.
Cost of Forming an LLC in California
When forming your limited liability company (LLC), there are a few different costs that you may incur. These include the filing fee, LLC formation service cost, operating agreement draft, and registered agent costs.
California LLC Filing Fee
To form an LLC, you must file Articles of Organization with the California Secretary of State. The filing fee for the Articles of Organization is $70 online or by mail and $85 in person. This is the case regardless of whether you wish to form a domestic or foreign LLC. However, the state filing fee now costs $0 until June 30, 2023. You will commonly see this fee referred to as the “state fee” or “filing fee.”
If you choose to use an LLC formation service, you will pay the $70 state fee on top of their service fee. Generally, these service fees start around $29 and increase depending on additional services you purchase.
Most people choose to use an LLC formation service to create their LLC. The cost is low and they guarantee that your filing is done correctly. Check out our #1 rated LLC service:
For more details on the formation process, check out our California LLC Formation guide.
California Registered Agent and Registered Office
Every California LLC is required to appoint a registered agent. A registered agent is a person or entity you assign to receive tax forms, legal documents, or government correspondence on your LLC’s behalf. Registered agent services can cost around $130 per year or more.
Your registered agent can be:
- A registered agent service (most common)
- Yourself (not recommended)
- Another member of the LLC
- A business attorney
If you haven’t yet formed your LLC, we recommend using Northwest Registered Agent to form, as you will receive one year of registered agent services for free with a $29 formation.
California LLC Operating Agreement
An operating agreement defines the roles and responsibilities of the members or managers in your LLC and will help prevent and solve any business disputes that may arise later on.
The costs associated with the operating agreement come in the drafting of the document. For single member LLCs and simple multi-member LLCs, most people choose to create the document themselves.
You don’t need to file this document with the California Secretary of State. Using a free operating agreement template or document builder, that means your total cost would be $0.
Optional California LLC Formation Costs
Along with the California LLC fees associated with your formation, there are several optional LLC formation costs that you may encounter.
- LLC Name Reservation – You will need to verify that your business name is available and not used by another organization. You can do that by conducting a business entity name search. The name reservation fee of $10 will allow you to reserve your name up to 60 days prior to the formation of your LLC.
- Doing Business As (DBA) Name – It is somewhat common for companies to set up their LLC with a name that’s different from the name they market. If that is true in your case, you need to file a DBA. The filing fee for a DBA in California is different from one city and county to the next.
- Expedited California LLC Filing – California allows for a rushed service for filing your LLC documentation. This may be able to process your information within 18 days for an additional $50 fee per document.
- Certified Document Copies – If you need to obtain certified copies of your new California business documents, you can order them directly through the Secretary of the State. There is a fee for each document. The fee for requesting a certified copy is $6 for the first page and then an additional $0.50 for every additional page.
- Certificate of Status – In California, a Certificate of Status, also called a Certificate of Good Standing, is a form required by lending institutions and other banks for establishing accounts or obtaining loans. The fee for requesting a Certificate of Status is $5.
California LLC Cost and Fees Over Time
There are a few things you need to address to keep your LLC in good standing with the state year after year. Each of these comes with costs and fees.
Biennial LLC Fee California
Every two years, your California LLC must file a Statement of Information (also known as a biennial report). The fee for filing the Statement of Information is $20, along with a $5 disclosure fee.
The Statement of Information is due the last day of the calendar month in which you registered your LLC. The filing period is within a six-month period and you can file anytime within that month or in the five calendar months preceding that month.
You must also file a Franchise Tax with the California Franchise Tax Board using an LLC Franchise Tax Voucher, which is due by the 15th day of the fourth month after the beginning of the current tax year. The fee for the annual tax is $800.
See our California LLC Statement of Information guide for a more in-depth overview.
Registered Agent Fee
If you use a professional registered agent service, you will pay their fee annually. Pricing will depend on the service provider that you use, but usually costs around $130/year. Using a registered agent service will save you time and the hassle of handling important legal documents and filings for the long term.
If you act as your own registered agent there are no maintenance fees. However, for privacy and compliance purposes, we don’t recommend being your own registered agent.
We recommend Northwest Registered Agent, which offers a year of its registered agent service for free when you use the company to form your LLC ($29 + state fees).
General Costs of Running a Business
Operating a business will obviously come with more than just LLC costs. These are a few of the expenses that you may run into.
Business Bank Account
An LLC separates your personal assets from your business assets. This separation is called the corporate veil. That corporate veil ensures that if your business is sued or incurs debts, your personal assets will be protected from any liabilities.
Commingling (mixing) your personal bank account with your business can pierce your LLC’s corporate veil, which means you are no longer protected by the separated entity of your LLC.
Using a separate bank account to accept payments and pay business expenses is the only way to prevent commingling funds and piercing the corporate veil.
Recommended article: Check out TRUiC’s Best Small Business Banks guide to find the best bank account for your business.
Business Permits and Licenses
Depending on the type of business you operate, your business may need the proper permits and licenses to legally operate in California.
Alongside the permits required, your business may require industry-specific business licenses to operate legally. Examples include licenses like the California real estate license, California insurance license, California adjuster license, and so on.
See TRUiC’s How to Get a Business License in California article for more information.
Every business needs a website. There’s no better way to get in front of your customers, build your brand, and grow your business.
Fortunately, the cost and difficulty of creating a business website have come down over the years. Websites are now simple to build and cheap to keep up.
We advise LLC owners to use the GoDaddy Website Builder. It’s an extremely simple to use system, creates great business websites, and only costs about $15/month.
Having the proper insurance coverage can potentially save your entire business if there is a loss, accident, or lawsuit.
A few of the most common business insurance policies include:
- General liability insurance – Protects against claims of personal injury, physical injury, property damage, and more. This is the most common of all business insurance policies. Learn more about general liability insurance.
- Professional Liability Insurance – Protects against claims of inaccurate or negligent work. It’s most common in the “professional” space where businesses offer services or advice to other businesses or consumers. Learn more about professional liability insurance.
- Commercial Workers’ Compensation Insurance – This type of insurance protects your employees from on-the-job injuries or illnesses. This coverage is required if you have one or more employees. Learn more about Workers’ Compensation insurance.
The cost of business insurance varies widely based on business type, size, location, and other factors. Getting a quote is the only way to understand the actual cost of insurance for your LLC.
We recommend NEXT Insurance to help protect and grow your California LLC. It features instant coverage with competitive pricing that’s tailored to fit your business’ needs.
LLC Cost in California FAQ
Do you have to pay ongoing fees for an LLC every year?
Yes. In California, you must file an $800 annual tax with the California Franchise Tax Board. You must also submit a Statement of Information with the state, and pay the associated $20 fee for doing so.
What’s the cheapest way to form an LLC?
Can you start a California LLC for free?
No. All applicants must pay the state filing fee to start a California LLC. The filing fee is $70 online or by mail and $85 in person. This fee has been waived until June 30, 2023.
How much does a registered agent cost?
Do I need to pay a franchise tax for my California LLC?
Yes. Every LLC in the state must pay an $800 minimum California LLC franchise tax. This fee is paid to the California Franchise Tax Board.
How much does an LLC formation service provider cost?
It depends on the LLC formation company you choose. We recommend Northwest Registered Agent, which starts at $29, plus the $70+ state fee, and includes the first year of registered agent services for free.