Key Takeaways

  • Forming an LLC in California requires a $70 filing fee for Articles of Organization.
  • LLCs must pay an annual $800 franchise tax to the California Franchise Tax Board.
  • Businesses earning over $250,000 in annual income must also pay an additional LLC fee of $900–$11,790 depending on total revenue.
  • California LLCs must file a $20 Statement of Information every two years.
  • Optional costs include registered agent services, name reservation fees, operating agreements, and business licenses.
  • The first-year $800 tax exemption (from 2021’s AB 85) no longer applies to new LLCs in 2025.
  • Maintaining compliance with state reporting and tax obligations helps avoid penalties and suspension by the Franchise Tax Board.

California LLCs are formed when the Articles of Organization document is filed with the California secretary of state. They file biennial Statements of Information and pay an annual franchise tax which varies from $800 to $12,590. LLCs in California cannot provide professional services.

California LLC: Formation

The process of LLC formation in California is similar to the processes in other states. 

  • The process starts by choosing a name for the LLC. The name must meet all the requirements of the secretary of state and should be available. You can check your name for availability online on the business database of the California secretary of state and then reserve the name for 60 days at a fee of $10.
  • The LLC then needs to appoint a person or entity as a registered agent for service process. The agent is responsible for receiving and forwarding legal papers for the LLC.
  • To officially create the LLC, file the Articles of Organization with the secretary of state. Filing costs $70. Foreign LLCs register in California by filing the LLC-5 form. 
  • It is a good practice to have an LLC operating agreement. This document, although not submitted to the state will help guide the affairs of the LLC.
  • Multi-member LLCs are required to get an EIN for the LLC. Even Single-member LLCs that have employees must get an EIN.
  • You might also be required to get federal, state, and local government licenses and permits.

California LLC Filing Fees and Additional Costs

When determining how much an LLC costs in California, the total amount extends beyond the $70 Articles of Organization filing fee. Entrepreneurs should account for several state-imposed and optional expenses:

1. Required State Fees

  • Articles of Organization (Form LLC-1): $70 to file with the Secretary of State.
  • Statement of Information: $20, filed within 90 days of formation and every two years thereafter.
  • Franchise Tax: $800 minimum annual payment to the California Franchise Tax Board, due by the 15th day of the 4th month after formation.
  • Additional LLC Fee: Applies when annual gross income exceeds $250,000, ranging from $900 (for $250,000–$499,999) up to $11,790 (for $5 million or more).
  • Foreign LLC Registration (Form LLC-5): $70 filing fee, plus $800 annual tax once registered.

2. Optional and Miscellaneous Costs

  • Name Reservation: $10 for 60 days.
  • Registered Agent Services: Typically $100–$300 annually if hiring a commercial agent.
  • Operating Agreement Drafting: Free if self-drafted, or $200–$1,000 when prepared by an attorney.
  • Business Licenses and Permits: Vary by city and county (for example, Los Angeles business tax registration can cost $50–$100).
  • Certified Copies and Good Standing Certificates: Usually $5–$25 per document.

3. First-Year Tax Waiver While California temporarily waived the $800 franchise tax for first-year LLCs formed between 2021 and 2023, that relief expired. New LLCs formed in 2025 must pay the annual minimum franchise tax starting in their first taxable year.

4. Late Filing and Penalties Failure to file the Statement of Information or pay annual franchise tax can lead to penalties up to $250 and administrative suspension by the Franchise Tax Board, halting business operations until compliance is restored.

Maintenance of a California LLC

  • File a Statement of Information form within 90 days of the company's formation. After that, the same document should be filed every two years. The filing fee for this form is $20. The Statement of Information lists current details about the LLC.
  • All registered California LLCs that conduct business are required to pay the California franchise tax. This tax is paid to the California Franchise Tax Board. The least possible rate for this tax is $800 per year.
  • You can have your LLC treated as a corporation for tax purposes by filing IRS Form 2553. For such companies, the franchise tax is charged at a rate of 8.84% of the LLC's net income for that year.
  • If the LLC will be involved in selling goods, you will need to register with the California State Board of Equalization (BOE). You can then collect and forward sales tax to the board.

Ongoing Costs to Maintain a California LLC

After formation, maintaining a California LLC involves annual and biennial compliance responsibilities that ensure the entity remains in good standing.

Recurring Costs:

  • Annual Franchise Tax: $800 minimum regardless of profit or inactivity.
  • LLC Income Fee: For LLCs exceeding $250,000 in gross income, a variable fee between $900 and $11,790 applies.
  • Biennial Statement of Information: $20 every two years.
  • Registered Agent Renewal: Annual fee if using a commercial agent.
  • Business Licenses: Renewed annually or biennially depending on the city or county.

Tax Filing Obligations:

  • File Form 568 (Limited Liability Company Return of Income) with the Franchise Tax Board annually.
  • Federal tax obligations depend on entity classification: single-member LLCs file under Schedule C; multi-member LLCs file Form 1065.
  • LLCs electing corporate treatment via IRS Form 2553 (S corp) or Form 8832 (C corp) must meet additional tax filing duties.

Penalty Avoidance Tips:

  • Pay franchise tax on time each year.
  • File Statements of Information promptly to prevent suspension.
  • Maintain accurate accounting records for gross receipts, as the state bases LLC fees on total annual income, not just profits.

How California LLCs Are Different from Other LLCs

The process of formation of an LLC in California mirrors the process in many other states. Nevertheless, in some ways, forming and maintaining an LLC in California is unique. Here are some things which are peculiar to California LLCs:

  • A California LLC cannot serve as its own service agent. It needs to appoint another person or corporation for this purpose.
  • Unlike some states, California does not require newly formed LLCs to publish their Articles of Organization.
  • LLC Reports to the secretary of state are not filed annually in California. California's equivalent of the annual report–the Statement of Information–is filed every two years.
  • The California franchise tax that is slapped on almost all LLCs for "the privilege of doing business in California" is high compared to most other states. The FTB charges the minimum tax of $800 even if an LLC is not involved in business or inactive in a particular year. The franchise tax, which can be as high as $12,590 per year is one of the reasons why some prospective small business owners do not register in California. 
  • California may levy self-employment taxes on profits from a company even if such profits are actually are re-invested in the business.
  • California LLCs cannot provide professional services, including all services that require a professional license from the state. If you want to start a business offering professional services, you have to register as a professional corporation. 

Why California LLCs Are More Expensive Than Other States

California’s LLC costs are higher than most states due to its mandatory $800 franchise tax, additional gross receipts fee, and strict regulatory filing schedule.

For comparison:

  • Delaware: $300 annual tax.
  • Texas: No annual franchise tax for small businesses under $1.23 million in revenue.
  • Florida: No annual LLC tax, only a $138.75 annual report fee.

These differences mean California’s cost structure can discourage smaller startups, but its large consumer market and strong legal protections often justify the expense. Businesses operating in California must pay these fees even if formed in another state, as the Franchise Tax Board taxes any LLC “doing business” in California (defined broadly to include economic presence or California-based clients).

How to Look Up an LLC in California

You may occasionally want to look up a business in California. The California secretary of state's website has a section for such searches. It can be used to look up LLCs. To do a search, open the business search page and enter the name or the 12-digit entity number of the LLC, and click on the search button. 

To get certified copies of documents for LLCs, including status reports, formation and dissolution documents; file the Business Entities Records—Order Form to the California secretary of state's office.

How to Budget for Starting and Running a California LLC

Before forming a California LLC, it’s helpful to create a cost estimate for both startup and maintenance phases:

Expense Category Cost Range
Articles of Organization $70
Statement of Information $20
Franchise Tax $800 annually
LLC Income Fee (if applicable) $900–$11,790
Registered Agent Service $100–$300
Name Reservation $10
Operating Agreement (optional legal drafting) $200–$1,000
Local Business Licenses $50–$100+
Certified Copies $5–$25

Total initial setup costs for most small LLCs range from $900 to $1,200, with ongoing yearly costs averaging $820–$1,100, depending on revenue and additional services.

Frequently Asked Questions

1. What is the minimum cost to start an LLC in California? The minimum cost is $70 to file Articles of Organization plus the $800 annual franchise tax, totaling $870 in the first year.

2. Do I have to pay the $800 California LLC fee every year? Yes. The $800 franchise tax is due annually, even if your LLC makes no income or is inactive.

3. What is the California LLC fee based on income? LLCs with annual income over $250,000 must pay an additional fee ranging from $900 to $11,790, depending on total revenue.

4. Can I avoid paying California’s LLC fees by registering in another state? No. If your LLC does business in California—such as having clients, employees, or offices there—you must still register and pay California’s fees.

5. Are there any tax breaks for new LLCs in 2025? No. The first-year $800 franchise tax exemption expired after 2023, and new LLCs formed in 2025 are required to pay the tax in their first taxable year.

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