How to Start a California LLC: The Cost and What to Do

The Cost of California LLC

As with any business matter, forming an LLC in California requires paperwork and filing. 4.8 million microenterprises made this step, making California one of the world's largest economies (1). But before you take that step, these are the fees and dues that you have to clear:

1. Legal Fees

To start, you need to pay the filing fees for starting a legal liability company. The filing costs $70. This is followed by another fixed $20 for something known as the statement of information. It will gather all your personal information and has to be paid every two years.

2. Registered Agent

Once you have these two out of your way, you can opt for a registered agent who can cost around $75 to $150. Having an agent means that they will handle all paperwork and the associated California LLC cost. This will, without a doubt, save you from a lot of trouble and hectic back-to-back office visits. Thus, if you don't have time or are currently living in another state, using the best-registered agent services can take a lot of load off your shoulders. 

3. Business License 

Another requirement for starting California LLC is getting a business license. The cost of a business license varies based on the total LLC income. It can be anything from $900 for a $250,000-$499,999 business to $12,000 for a $5 million business.

4. Naming Charges

The cost of California LLC also includes LLC name charges and the fictitious business name. If you choose to opt for a brand name different from the LLC name, you have to pay some extra charges. The charges vary, and you have to pay them every five years if you want to keep your LLC active in California. If you want to reserve a name for your future LLC, you can do that by submitting a small fee. That way, when you are ready to start your LLC, you can get the name right away. Typically, you don't have to pay more than $10 to do this.

5. Operation Agreement

Lastly, we have the operation agreement. This is a document that has information regarding the LLC, its structure, the owners, and the members. Since every business has its type of LLC, the cost varies for the operation agreement. It can be anything up to $10,000.

What is the California LLC Cost Per Year?

You may be wondering, how much does an LLC cost per year? Here is the deal: There are some requirements for keeping your LLC active in the state of California. If your business is worth more than $250,000, you have to pay additional taxes. 

The amount varies on several factors but most notably on the business worth. Other than this, your business should also pay an annual minimum tax of $800. It is also known as franchise tax, and you must pay it before the 15th of the fourth month of setting up your LLC.

Aside from this, you will not have to pay any additional fees if your LLC remains the same.

The Process of Starting a California LLC

Now that we have discussed the cost to start a California LLC, let's move on to how you can form one in California. Remember, however, that you can always delegate the work to the best LLC formation services. But if you are doing things on your own, here are a few things you should keep in mind. 

First off, you need a name for your LLC. It could be the name you are planning on using for your brand or business or a different one. There are some requirements when it comes to naming your LLC. You must use LLC or LLC somewhere in the name. Apart from this, you cannot use any government agency names and other such terms.

Once you have figured out the name, you can either opt for a registered agent or file yourself. This is the point where you would have to submit the dues and the required documents to the concerned offices.

After the approval, you'll receive a certificate indicating that you're good to go. Last but not least is the operating agreement, which will describe your LLC from a to z. You can then file a statement of information within 90 days. This document has every detail about your LLC. It has your LLC name, LLC agent information, LLC principal details, and mailing address, along with the complete business address and its member details.

Once you have completed these steps, you will be able to get your Employer Identification Number (EIN), business license, and a business bank account. This would also be a good time to finalize a business bank account.