Is it Expensive To Form An LLC In California?

California is a popular place to start an LLC with a vibrant culture and numerous opportunities for great businesses, but how much will you have to pay to build your business? 

Truth be told, the cost of starting an LLC (Limited Liability Company) in California still remains relatively low, as with starting an LLC in other states in the US. The Limited Liability Company provides the owners with personal asset protection, easy formation, and unique options to pay tax according to what is best for the individual business. The state is popular with LLCs because of the fact that it has the biggest economy in the US and has substantially more access to venture capital than other states. In fact, out of all 50 states, California has been ranked 1st in Access to Venture Capital, 2nd in Economic Climate, and 4th in Entrepreneurship. Those are incredible statistics and highlight why California is a great place to start an LLC. 

What follows is a breakdown of the necessary costs that you will encounter as you start registering your business and the legal documents attached to the costs. 

Hiring a Registered Agent: 

The first necessary cost that arises from forming your LLC is the hiring of a Registered Agent. It is obligatory for the owners to appoint a California Agent for Service of Process. This is a person or a corporation who has the authority to send and receive legal documents on your behalf. In California, an Agent of Service of Process has to be a full-time resident of California or a corporation who possesses the legal authority to operate in the State of California. However, you do have the option of choosing a person within your own company, even yourself should the person be suitably qualified to the post. This is a continued cost that will most often be repeated annually. There are many options available to you in this regard, but you can expect costs starting from $39 (ZenBusiness) billed annually for the starter option. Should you wish to choose a Pro option, you are looking at costs of $149 to be paid annually. The company even has a premium option which will cost $249 annually. These options have different benefits, and it would depend entirely on how much you are willing to spend, and what you truly require from the company. 

Articles of Organization State Filing Fee:

What follows is the State Filing Fee of $70. This needs to be paid when you file the Articles of Organization with the Secretary of State which is a requirement for the registration of your LLC. This document has to state the name of your LLC, the name of the registered agent, and provide a list of the services that will be offered by the LLC. This application can also occur online, by mail, or in-person. However, should you decide to file in-person at the Secretary of State Offices in Sacramento then you will have to pay an extra $15. This does have the benefit of prioritizing your application over applications that were submitted by mail. 

Initial Statement of Information:

After you have filed the Articles of Organization, you are required to file an Initial Statement of Information with the California Secretary of State. This filing has to occur within 90 days of forming your LLC. The cost of this document is $20 and can be filed online, in-person, or by mail. 

Many businesses will need to get an EIN in order to hire employees, get a business bank account, and state and federal tax reasons. Thankfully, acquiring this number is free-of-charge through the IRS and can be done either online or by mail. 

It’s important to remember that the above are the primary costs involved in starting an LLC. These are merely guidelines and these costs may vary depending on the industry wherein your business will operate. 

If you need more information on how to form an LLC then TRUiC offers great advice, a step-by-step guide, and detailed explanations of the relevant required legal documents and how to obtain them.