Cost to Register a Business in California
The cost to register a business in California can depend on what type of business entity you are registering.3 min read
2. The Cost to Register a Business
3. Steps for Registration
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.
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.
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
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.
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