How Much Does it COST to Start a California LLC and California LLC Annual Fees

Summary

Starting an LLC in California involves several financial considerations you should be aware of. Initially, there's a $70 filing fee with the California Secretary of State to register your LLC. Within the first 90 days, a $20 Statement of Information is due. Additionally, securing an EIN is free but essential. You'll need a separate business bank account which may incur further costs. An annual $800 LLC tax is charged after the initial year, though it's waived for 2023. Compliance costs include a biennial $20 Statement of Information. City-specific business licenses range from $50 to $200. Business owners might also consider virtual office services, registration for a DBA, and hiring a registered agent. Business insurance and record-keeping solutions are also vital expenses. For an efficient start, Ginny recommends using services like Incfile that simplify the setup process.

Highlights

• California LLC registration fee is $70. 📄
• Statement of Information fees are $20 initially and biennially. 🏷️
• Get your EIN for free via IRS, avoid third-party charges. 💸
• The $800 LLC annual tax kicks in after the first year, waived for 2023. 🗓️
• Your LLC needs a business bank account, additional bank fees may apply. 🏦
• Consider a business license; fees vary by city, ranging from $50 to $200. 🌆
• Use a virtual office service for privacy, as home addresses become public. 🏠
• Hiring a registered agent service can protect your personal contact information. 🚀

Key Takeaways

• Starting a California LLC involves a $70 registration fee and a $20 Statement of Information fee. 💸
• An EIN can be obtained for free from the IRS, don't pay a service for it. 🆓
• An $800 annual tax applies from the second year onwards, but it's waived in the first year for 2023. 🎉
• Businesses need a separate bank account, and additional fees may apply based on the bank. 🏦
• Consider using a virtual office or registered agent service to maintain privacy and compliance. 🏢

Overview

Starting an LLC in California involves several steps and costs. The initial expense is a $70 filing fee to the California Secretary of State, followed by a $20 Statement of Information. Don’t forget to secure your EIN for free from the IRS. It’s crucial to have a separate business bank account which might have additional fees. Expect an annual $800 LLC tax, although it's waived for your first year if 2023 is your starting year.

Keeping your LLC compliant requires diligence. A biennial Statement of Information costs $20, and a business license may be necessary based on your city, costing anywhere from $50 to $200. Privacy concerns lead many owners to opt for a virtual office service rather than using a home address for public records. A DBA registration, if operating under a different name, further adds to this cost. Most LLCs also use a registered agent service to protect personal information.

Business insurance and proper record-keeping are non-negotiable features of running an LLC. Costs vary based on the specific type of insurance or record-keeping service, like QuickBooks or a CPA. Industry-specific licenses may also be required depending on your field of work. Ginny emphasizes a streamlined LLC setup using a service like Incfile, which simplifies the process by charging only the state filing fee and offering a free year of registered agent service.

Chapters

• 00:00 - 00:30: Introduction to Starting a California LLC This chapter introduces the basics of forming a Limited Liability Company (LLC) in the state of California. It highlights the initial costs associated with starting an LLC, specifically noting the $70 filing fee required by the California Secretary of State for the registration. The chapter also mentions the filing of an Articles of Organization document as a part of the process.
• 00:30 - 01:00: Initial Filing Requirements and Costs The chapter covers the initial filing requirements and associated costs for registering with the California Secretary of State. The initial registration fee is $70. The chapter also explains the necessity of filing a California Statement of Information within the first 90 days of formation with a current cost of $20. Additionally, obtaining an EIN (Employer Identification Number) is mandatory for all LLCs, which can be done for free on the IRS website.
• 01:00 - 01:30: Additional Initial Costs and EIN Information The chapter discusses the initial costs and considerations associated with setting up an LLC, specifically regarding obtaining an Employer Identification Number (EIN) and the necessity of maintaining a separate business bank account. It emphasizes that obtaining an EIN should be free and warns against paying for this service. Additionally, the chapter advises being aware of potential fees from banks when opening business accounts. Lastly, it hints at ongoing requirements to maintain the LLC, such as filing income taxes in the first year.
• 01:30 - 02:00: Annual LLC Tax and Waivers This chapter details the mandatory $800 annual LLC tax imposed by the Franchise Tax Board in California. All LLCs are required to pay this tax each year, irrespective of profitability or income generated. However, there is an exception noted for the year 2023.
• 02:00 - 02:30: Biannual Statement of Information and Other Expenses The chapter 'Biannual Statement of Information and Other Expenses' discusses tax obligations for new businesses in California. A key point is that the California Franchise Tax Board waives the $800 tax in the first year of business, although this policy is set to conclude by 2023. Beyond the first year, businesses grossing over $250,000 will be subject to a different tax structure, detailed in an accompanying chart. Furthermore, to maintain compliance and keep the LLC active, a biannual filing of information is required.
• 02:30 - 03:30: Business License and Address Requirements This chapter discusses the requirement to file an updated statement of information, which comes with a twenty-dollar fee in years it is due. It also highlights additional necessary or recommended expenses associated with operating a business beyond just starting an LLC. Primarily, the chapter emphasizes the importance of obtaining a business license, which is mandatory in most cities.
• 03:30 - 04:30: DBA Registration and Publishing Requirements The chapter discusses DBA registration and the need for a business license, also referred to as a business tax certificate. It advises visiting calgold.ca.gov to determine if a business license is required and provides access to local requirements, the business license application, the submission department, and the specific city fee. Typically, fees range from $50 to $200 and vary by city.
• 04:30 - 06:00: Registered Agent Information This chapter discusses the requirement for LLC owners to have a business address on public record. It highlights the option to use a home address for home-based businesses, emphasizing that there is no additional cost for this choice. However, it also suggests that many business owners prefer not to use their personal home address for privacy reasons, and may need to consider alternative options.
• 06:00 - 07:30: Insurance and Record-Keeping This chapter elaborates on the essential office requirements for registering a business in California, emphasizing that a PO Box or simple virtual address is inadequate. Instead, it highlights the necessity of a virtual office service that enables business registration at that address.
• 07:30 - 08:30: Industry-Specific Licensing and Conclusion This chapter explains the processes involved in registering a different business name under an LLC in California, often referred to as a DBA (Doing Business As), trade name, or fictitious business name. It specifically emphasizes the terminology used in California where it is known as a 'fictitious business name statement.'

How Much Does it COST to Start a California LLC and California LLC Annual Fees Transcription

• 00:00 - 00:30 if you are starting a business in the state of California you may be considering starting an LLC a limited liability company but what does it cost to start an LLC let's look at specifically what is going to cost to start an LLC in the state of California first as of 2023 there is a 70 dollar California Secretary of State filing fee for registering your LLC we'll be filing In Articles of organization document
• 00:30 - 01:00 with the California Secretary of State filing this initial registration is 70 next you're going to be required to file a California statement of information this initial filing is due within the first 90 days of formation and currently is twenty dollars next you're going to be required to get an EIN an employer identification number all LLCs are required to do this and there is a zero dollar cost you can do this on irs.gov
• 01:00 - 01:30 and Get It Free and instantly for no cost do not pay a service to get your EIN because you're going to be required to have a separate business bank accounts you cannot use your personal bank accounts with an LLC so any additional fees that are associated with your particular bank for opening these accounts are going to need to be taken into consideration next let's look at what is going to be required to keep your LLC up and running the first thing is going to be due at the first year that you file your income taxes for your
• 01:30 - 02:00 business and that is going to be an 800 LLC tax to the state of California the Franchise Tax Board charges an 800 minimum LLC tax annually this tax is paid every single year that you have your LLC regardless of a whether or not you turn a profit or how much money you make going to be required to pay this 800 LLC tax the only exception for this is that currently for 2023 the
• 02:00 - 02:30 California Franchise Tax Board is waiving the 800 tax on your first year in business this does not apply going forward it is set to end on 2023 as of this point in time however if your business grossed over 200 150 thousand dollars in that tax year then you're going to be taxed differently as shown on this chart additionally in order to keep your LLC active and compliant every other year biannually you're going to be
• 02:30 - 03:00 required to file an updated statement of information this is going to incur a twenty dollar fee on years where you are required to file it lastly there are going to be some other expenses that you need to plan for that aren't necessarily requirements for starting an LLC but rather requirements or strongly recommended requirements for holding a business in your city state and County the first is holding a business license in most cities you're going to be
• 03:00 - 03:30 required to hold a business license this is also known as a business tax certificate in order to see if you are required to hold a business license visit calgold.ca.gov and you can check your local requirements there here you can also find the direct link to that business license application and the department where to submit it and you can also locate in that website the specific fee for your own City these fees vary from City to city but in general plan on a fee between 50 and 200
• 03:30 - 04:00 next you're going to be required to have a business address on public record with your registration as an LLC now you can be a home-based business and use your home address and this of course would be zero dollars an additional cost however many LLC owners and business owners in general do not want to have their personal home address on public record for the world to see in this case you would then need to factor in any
• 04:00 - 04:30 additional office costs for having a brick and mortar office for yourself or a factor in cost for a virtual office service this is different than a PO Box in the state of California you cannot register a business to a PO box or a simple virtual address you must have a service that provides you with a virtual office service where you are actually allowed to register your business to that address that you are using in lieu
• 04:30 - 05:00 of your personal address next if you are going to be operating your business under a different business name from what you originally filed on your LLC registration then you will need to register a DBA a doing business as name this can also be called a trade name or a fictitious business name State of California most counties refer to this as a fictitious business name statement State of California most counties refer to this as a fictitious business name
• 05:00 - 05:30 statement fictitious business name statements are filed with your county clerk recorder's office and in order to check on the specific amount that you have to pay to file this head over to calgold.ca.gov where you can locate that office for your specific location once you register your DBA you also are going to in most cases be required to have that DBA published in a local newspaper this fee will also vary depending on the publication but again can range anywhere from 25 up to a hundred and fifty
• 05:30 - 06:00 dollars next take into account who your registered agent will be LLCs are required to have a registered agent on record a registered agent is essentially the person or representative responsible for receiving all business related information and contacts from the government now you can be your own registered agent and in this case it would be a zero dollar additional fee but keep in mind that just with your home address being
• 06:00 - 06:30 used for your business if you are your own registered agent then your contact information including your address and phone number will be on public record because of this many businesses choose to use a professional registered agent service if you use the link that I have in the description down below to form your LLC with ink file then you receive your registered agent service free for a year if you're someone who is paying for your registered agent service then this
• 06:30 - 07:00 fee can vary depending on which company you choose to use so make sure you research it in advance next you should strongly consider getting business insurance there's a variety of different types of business insurance that will apply based on the type of business that you operate what industry you're in in any specific industry city or county requirements for actually conducting business I have a video that lists the major types of insurances linked down below next you're going to want to think
• 07:00 - 07:30 about how you were going to record keep it is going to be a legal requirement that you keep business records how you do so has a lot of flexibility in it so you may decide to get a DIY software such as QuickBooks or you may decide to get a bookkeeping service or a CPA all of these are going to range in their cost so make sure you research that up front lastly is any industry specific licensing that you need to obtain and renew this is going to be very very varied according to what industry you
• 07:30 - 08:00 are in some business Industries will have specific licensing and permits that you must be registered for and others do not so head over to calgold.ca.gov check on your industry and see what may be required lastly if you're going to be starting an LLC I want to encourage you to start at the fast and easy way using a service that I love called ink file ink file allows you to start your LLC in about five minutes and it charges you zero dollars plus the
• 08:00 - 08:30 state filing fee to Simply register your LLC they also give you a year of free registered agent service it is a fantastic way to get up and running quickly and easily without the headache affiliate link is included down below I do receive a commission every time that someone signs up with ink file so it's a great way to help my channel to create more video content and also start your LLC quickly and easily