When you’re preparing to open a business in California, it’s important for you to know how much it is going to cost, so that you can budget accordingly. Some costs are unavoidable while others can be side-stepped if you take the necessary actions. To help you navigate the process of setting up an LLC, we’ve compiled the most common California startup fees here.
LLC Name Reservation Fee
If you feel like you have the perfect name for your business, and you are worried that someone might use it before you have registered your business, then you might want to apply for a name reservation. California doesn’t require you to reserve a name before starting a business, so this is an optional service. For a $10 fee, the name reservation gives you ownership of your name for 60 days.
Filing an Article of Organisation
To create your LLC you will have to file an Article of Organisation with the California Secretary of State, and this will cost you a $70 filing fee. In addition, the LLC must file a statement of information, within 90 days of filing the Articles of Organisation, and this will cost $20.
Franchise tax
Most businesses will also need to pay an $800 franchise tax. This tax must be paid annually. There is an additional fee if your LLC is being taxed as either a sole proprietorship or a partnership and has income from California operations that are equal to or greater than $250,000. The amount of this fee varies depending upon the amount of income.
Every two years after filing the initial Statement of Information, the LLC must pay a fee of $20 and file either a Statement of Information or a Statement of No Change.
Hiring a Registered California Agent
Your LLC is required to have a registered agent in California. A Registered Agent is a person or company who agrees to receive legal mail on behalf of your LLC in preparation for the possibility your business is sued. The Registered Agent’s address must be a street address, and it must be located in California. To hire a registered agent costs about $50 to $500 per year.
If you prefer not to pay for the hiring of an agent, you can also have a member of your LLC or a trustworthy friend step in as your registered agent. This person must be 18 years of age, be a resident in California, and be available in person during business hours.
Licenses and Permits
Not all businesses require a license, but If you need specific business licenses, there will likely be fees associated with them. Most cities and jurisdictions charge between $50 – $100 for a small business license and depending on your type of business you may need industry-specific licenses as well.
Attorney Fees
If you have questions or concerns about the LLC formation process or whether or not it’s the best business structure for you, it’s better to not take chances and rather consult an attorney.
Some attorneys offer free consultations but will usually charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
This is once again not a required step, but often it can be useful to consult an attorney to make sure you have done everything correctly and to ensure that your LLC can run smoothly without any legal hiccups along the way.
As you review the various forms, fees, and taxes that are needed to start your California LLC or corporation, it’s easy to be overwhelmed. Our website is here to make the process as simple as possible, and you can view our site to learn more. If you follow our easy guides, you will have your LLC set up in no time!
