1. California LLC and Corporate Taxes & Fees
2. California Fees for Incorporation
3. California LLC Fees and Taxes

Updated July 7, 2020:

How much an LLC costs in California is a question that many entrepreneurs in the state of California have. There are filing fees and annual fees associated with the formation and maintenance of an LLC. You can expect to pay at least $900 in fees when starting a California LLC. Since these fees can be significant, it is essential that entrepreneurs know about these fees before going through the process of forming an LLC.

California LLC and Corporate Taxes & Fees

Many people wonder about the LLC fee and corporate tax in California when they're getting ready to set up their business in the state of California.

The corporate tax rate in California is 8.84 percent. This corporate tax rate is comparable to that of many other states that are popular for incorporation.

There are also strategies, exemptions, and deductions that exist that will help you reduce this corporate tax rate. There are also many advantages associated with different types of corporations that entrepreneurs can benefit from.

California Fees for Incorporation

There are a number of fees associated with the incorporation process in the state of California. For example, entrepreneurs will need to pay a fee to reserve a name. The fee will need to be payable to the city or county where the entrepreneur is incorporating. The fee will vary from city to city and county to county.

The filing fee for the Articles of Incorporation in California is $100. There is also a handling fee of $15.

You will also need to file an initial report, which contains information about the business. The fee for filing the initial report is $25, and there is a service fee of $75. Every year, the state of California requires that corporation owners file annual reports. The filing fee for the annual report is $25.

The majority of corporations are also required to pay an annual tax. The minimum annual tax is $800, and this tax is paid to the California Franchise Tax Board.

If you need to get business licenses for your corporation, you will likely need to pay fees. A small business license costs $50 to $100 in the vast majority of cities and jurisdictions. The price of a license depends on the type of business and the industry.

California LLC Fees and Taxes

It costs less to form an LLC in California than it does to form a corporation. The LLC fee in California is $85, and this fee should be made payable to California's secretary of state. 

Entrepreneurs also need to pay a fee for the Statement of Information. LLC owners need to submit this document within three months of forming an LLC. The filing cost for the Statement of Information is $20.

LLC owners also need to pay fees for business licenses. The fees depend on the city or jurisdiction where the company was formed.

Small business licenses cost up to $100, and it may be necessary to get business licenses for your LLC that are specific to your industry.

If you own an LLC, you will need to pay fees that are ongoing. The LLC fee schedule in California includes an annual fee. This annual fee is $800 and is due every April 15. For an LLC that has just been formed, the owners need to pay this annual fee within 3.5 months of formation.

For the purposes of tax, a single-member California LLC is treated like a sole proprietorship. On the other hand, a multiple-member LLC is treated like a partnership.

The tax fee for an LLC in California is based on the total income received by the LLC. This income can come from sources all over the world. The IRS doesn't tax LLCs directly. The income of an LLC is reported on the individual tax returns of the members.

If the net annual income of your LLC is greater than $250,000, you may need to pay an extra fee along with the regular filing fee for the annual tax return.

If your LLC decides to hire employees, your LLC will need to register for these payroll taxes:

  • Disability insurance
  • California Employee Withholding Tax
  • Unemployment Insurance Tax

If you need help with the cost of LLC in California, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.