Key Takeaways

  • California charges different business registration fees depending on the entity type, such as $70 for LPs, $100 for LLCs, and $100 for corporations.
  • All California LLCs and corporations must file a Statement of Information ($20–$25) and pay an $800 minimum annual franchise tax.
  • Businesses must pay the franchise tax even if inactive, unprofitable, or operating solely online in California.
  • DBA registration and publication are required when operating under a name other than the legal business name.
  • Additional expenses may include name reservations, expedited filings, and registered agent services.

The cost to register a business in California can depend on what type of business entity you are registering. When forming a limited partnership, for example, you can expect to pay a $70 filing fee for your Certificate of Limited Partnership.

Registering a California Business

One of the most common questions about forming a California business is if registration is necessary for a business incorporated in the state but operating only online. The California Franchise Tax Board requires an $800 Franchise Tax from several types of businesses:

  • Businesses that have organized in the state.
  • Businesses that have organized in another but have registered to conduct business in California.
  • Businesses that are operating in California, even those that have not incorporated, registered, or organized in the state.

Businesses are also required to pay this tax even if they are operating at a loss or are completely inactive. California requires entities that do business in the state to register. Doing business can take several forms in California:

  • Engaging in transactions for the purpose of making a profit.
  • Organizing in the state.
  • Making more than $500,000 of annual sales in California, or having 25 percent of total sales take place in the state.
  • Owning personal property or real property in California that is worth more than $50,000 annually or is 25 percent of the business's property.
  • Paying more than $50,00 of compensation in California, or paying 25 percent of the business's total compensation in the state.

If your business meets any of these qualifications, you will need to pay the California Franchise Tax.

Who Needs to Register and Pay California Franchise Tax

Even if your business operates solely online, you may still need to register in California and pay state taxes. The Franchise Tax Board (FTB) requires registration and franchise tax payments from:

  • Entities formed in California (e.g., LLCs, corporations, LPs).
  • Foreign entities registered to do business in California.
  • Out-of-state entities doing business in California, even without registration.

“Doing business” includes:

  • Conducting sales exceeding $500,000 or 25% of total annual sales in California.
  • Paying over $50,000 or 25% of total payroll in the state.
  • Holding real or tangible property in California exceeding $50,000 or 25% of total assets.

Failure to register or pay the $800 franchise tax can result in penalties, interest, and loss of good standing.

The Cost to Register a Business

Depending on the structure you have chosen for your business, you may not need to register with your state. Sole proprietorships and partnerships, for instance, typically don't need to register, and only need to start doing business.

Other business entities, such as corporations and limited liability companies (LLC), will need to register with their state, which requires filing a large amount of paperwork and paying the correct fees. In California, for example, both LLCs and Corporations must file Statement of Information fees, which can be either $20 or $25.

Breakdown of California Business Registration Fees by Entity Type

Registration fees vary by business structure. Below are standard formation costs in California:

Entity Type Formation Fee Statement of Information Annual Franchise Tax
Limited Liability Company (LLC) $70 (Articles of Organization) $20 (Due within 90 days) $800 minimum, due annually
Corporation $100 (Articles of Incorporation) $25 (Initial Statement) $800 minimum, plus income-based tax
Limited Partnership (LP) $70 (Certificate of LP) $20 $800 minimum
Limited Liability Partnership (LLP) $70 $20 $800 minimum
Sole Proprietorship or General Partnership No state registration required N/A Only if meeting “doing business” criteria

Expedited processing services may incur additional fees ranging from $350 to $500 depending on turnaround time and filing method.

Optional and Additional Fees to Consider

In addition to base registration fees, California businesses may incur optional or indirect startup costs, including:

  • Name Reservation Fee: $10 to reserve a business name with the Secretary of State.
  • DBA Filing Fee: Varies by county, typically $40–$65.
  • DBA Publication Fee: Publishing costs vary based on local newspaper rates but often range from $40 to $120.
  • Registered Agent Service: $100–$300 annually if you use a professional agent instead of serving as your own.
  • Certified Copies & Good Standing Certificates: Around $5–$15 per document, if needed for legal or financial purposes.
  • Expedited Filing: Available for faster turnaround, costing $350–$500 depending on the urgency level.

Planning for these expenses ensures smoother business formation.

Steps for Registration

Registering your business in California requires several important steps. In particular, you need to be sure that you have your paperwork in order. First, you need to gather any paperwork you have received from the IRS. Before you start the registration process, you need to acquire an Employer Identification Number (EIN), know what type of business you are registering, and choose a legal name for your business.

Next, if you want to use a business name that is something other than your personal name, you will need to complete a Doing Business As (DBA) registration. In California, you can register your DBA online. First, search the Secretary of State's business name directory to see if your chosen name is available, and if it is, you can reserve your name. Double-check your spelling before reserving your name. Keep in mind that the DBA name you choose cannot be too similar to the name of another business already registered in California.

Now that you have reserved your business's name, you can work towards registering your name. Acquire a Fictitious Name Statement form from your county clerk. Fill out this form and then file it along with the fee required by your county. Once you have filed the form, you must alert the public to the formation of your business by publishing a DBA notice. Publish your DBA notice in a newspaper in the location where your business will operate. Your notice should be published at least once a week for a period of four weeks. Check with your county clerk to find a newspaper that has been pre-approved for these publications.

After the newspaper publishes your DBA notice, they need to submit an affidavit to your county clerk. Most businesses in California can use a DBA, including:

  • Sole proprietorships
  • Partnerships
  • LLCs
  • Corporations

The most important step in registering your business is filing the correct formation documents with the California Secretary of State. Almost every business entity, except for sole proprietorships and standard partnerships, will need to file formation documents with the state.

When and How to File the Statement of Information

The Statement of Information is a mandatory disclosure form required for LLCs and corporations in California. Key details include:

  • Due Date:
    • LLCs: Within 90 days of formation, then every two years.
    • Corporations: Within 90 days of incorporation, then annually.
  • Filing Fees:
    • LLC: $20
    • Corporation: $25
  • Information Required: Business address, registered agent, CEO and officer names, and principal business activities.

This form can be submitted online, by mail, or in person. Missing the deadline may result in a $250 penalty and suspension by the Secretary of State.

Frequently Asked Questions

1. How much does it cost to register an LLC in California?The base cost is $70 for filing Articles of Organization, plus a $20 Statement of Information fee and an annual $800 franchise tax.

2. Do sole proprietors have to register their business in California?No, sole proprietors generally don’t need to register with the state, but may need a DBA if operating under a business name.

3. What is the California franchise tax and who must pay it?The franchise tax is a minimum $800 annual fee required from most business entities doing business in California, including inactive or unprofitable LLCs and corporations.

4. Do I need to publish a DBA in California?Yes, if you register a DBA, you must publish a notice in a local newspaper once a week for four consecutive weeks.

5. Are there penalties for not registering my business in California?Yes. Unregistered businesses operating in California may face penalties, back taxes, interest, and possible suspension of rights to do business in the state.

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