Have you ever thought of an easy and convenient way to put your business plan into action as a business owner? An easy and cheap LLC formation might just be the answer! Creating a limited liability company (LLC) can help you achieve security for your business and accomplish your goals to become a successful CEO.
The advantages to LLCs are vast. Apart from protecting your personal assets, LLC grants you great flexibility to run your business in California. Also, an LLC gives your company a legal identity so that no one can copy your name. Finally, LLCs come with serious tax benefits compared to some other types of corporations. You can read more about this here.
When starting an LLC, you need to consider all the possible costs. Obviously, you want a cheap LLC formation in California so you can allocate your business funds to other areas. In this article, we will outline the costs associated with LLC formation and how to approach cheap LLC formation in California.
Government-Mandated Steps and Fees for Cheap LLC Formation
Each of the fees outlined above corresponds to important steps in the LLC formation process. Here’s a closer look at each of these steps and the fees associated with each.
Articles of Organization Fee ($70-$85)
The most important forms when filing your LLC documents include your articles of organization. The articles for the organization officiate the registration of your LLC. Also, it helps to safeguard your business name. When filing for this form online, you’ll pay $70. You’ll pay an additional $15 if you deliver the form in person.
You don’t have to file this form several times since you only register your business once. Ensure you attach the following information to your formation paperwork:
- Official business name for your LLC
- Official business address
- Name and address of the agent for service of process
- The number of managers for your LLC
- Total number of LLC members
- Your name and signature
In case you find it challenging to file the articles of organization by yourself, you can try out a legal document assistant. At A People’s Choice, we can guide you in every step to ensure you fill in every information as required.
Business License Fee ($20-$4,000)
Almost every type of business entity in California requires you to obtain a license. An LLC may actually need more than one business license report.
Business licensing varies based on business type and state. In California, the type and number of licenses needed vary based on the city in which you want to run your business services. If your LLC operates in a regulated business niche, you need a professional license that indicates your compliance with state law.
You may need to pay business license fees for:
- Building permits ($50-$2,000)
- Alarm permits ($20-$40)
- Zoning permits ($25-$4,000)
LLC Annual Registration Fee ($20)
In California, you need to file your statements of information every two years. You must file your first statement of information for your LLC during the first 90 days of registration service. Filing a biennial statement will cost $20. This is a requirement even for sole proprietors LLCs or single-member LLCs. The statement of information consists of details such as:
- The official name for your LLC
- The jurisdiction for your LLC formation
- The principal office address for your LLC
- Description of the business type
Annual LLC Taxes ($800)
You don’t need to pay any federal taxes for your LLC. In California, however, you must complete form 3522 and meet your obligation for an annual franchise tax. Every year, you pay business taxes that amount to $800.
If you registered your LLC as a corporation, you won’t have access to the franchise tax option. In such a case, you’ll have to file a corporation tax return and pay the required corporate tax rate. To find the best deal for you, you need to check with the state regarding the tax structure and the most affordable options.
Foreign Qualification Fee ($70-$85)
If you want to expand your business from another state to California, you’ll need to satisfy the foreign qualification standards for a foreign LLC. You’ll have to file the “application to register file” for your popular services. Your business also needs to satisfy all the foreign quality standards to avoid any penalties.
When submitting your “application to register form” online, you’ll need to pay $70. You may incur an additional $15 if you do hand delivery.
Optional Steps and Fees: Avoid These for Cheap LLC Formation
If you’re trying to be frugal, you want to avoid any additional cost incurred for filing services, unnecessary legal service, and any other superfluous additional services. Here are some areas where this may occur if you’re not careful. There are situations where these extra costs can’t be avoided, though; just think carefully before you buy in.
LLC Name Reservation Fee ($10-$20)
This fee applies when you think that someone may pick out a business name that you plan to give your business. By paying the required fee, you have legal rights over that name for 60 business days before you formally launch your LLC. When you reserve the given name, any other party aspiring to use it will be blocked.
You need to conduct a business search for an appropriate name before seeking a business name reservation service. Additionally, this step costs $10, plus another $10 fee if you drop the name reservation form physically. It’s possible to skip this step entirely by launching your business formally right away.
LLC Formation Service ($50+)
If you don’t want to spend much time on your LLC business documents, you may consider using an LLC formation website. Thousands of reviews show that this website addresses everything on your behalf including the registration process. Most domestic LLC formations services address issues like:
- Filing of articles of organization
- Communication support (phone or email)
- Tax consultations
- Employer identification numbers (EINs)
- Expedited filing, and
- Creating operating agreements
Agent for Service of Process ($100-$300 annually)
A registered agent can help you with the entire process. With an agent service, you will have the liability protection to conveniently deal with any sensitive legal matter and tax-related documents. The agent ensures that your business complies with all laws and that you duly file your annual report alongside other necessary documents. This minimizes the chances of delinquent filing penalties.
When choosing an agent service, make sure you pick someone you can trust with your sensitive information. Also, the individual chosen must have a registered agent address. Picking a reputable company with a good customer service team is always a plus if you’re looking at a larger agency.
LLC Attorney ($425+)
Consulting a business attorney offers great confidence during your business formation process if you’re dealing with a large or particularly complex case. An experienced attorney can offer great insights regarding a proper business structure for your LLC.
You may receive a free consultation for up to the first 60 minutes for your business formation service. After that, the charges will recur on an hourly basis. Most attorneys charge between $150 to $350 per hour. You can also receive a flat rate of $500 to $2,000 for all the business hours.
The amount you’ll pay a given lawyer depends on their level of experience in the business incorporation service. You can search for a qualified attorney from this database of attorneys in California. However, in most cases, you don’t really need a lawyer to form an LLC. A legal document preparation service like A People’s Choice makes an excellent option that costs far less.
Business Domain and Website Fees for Cheap LLC Formation ($10-$200,000+)
This final expense is one you cannot avoid. To ensure the online presence of your business, you need to launch a website. Acquire the domain name for your online business as soon as possible to prevent someone else from using it. Ensure the name matches that of your business during domain name search.
You can acquire a domain name for as little as $4.99. With a proper website for your business, you can acquire fantastic customer reviews and a good track record. A website also comes with additional features that make your business appealing; this is especially important for some types of businesses, like ecommerce platforms with a wide range of products.
Cheap LLC Formation in California: Is It Even Possible?
Looking at the costs outlined above, you might ask yourself whether a cheap LLC formation in California is even possible. Sure, there are some fees that you can avoid, but many of them are necessary.
First, make sure you don’t cut corners for mandatory fees! Although there are loopholes for evading some of these fees, doing so may negatively affect your business enterprise in the future. You need to cover your bases and keep track of your statement of information and franchise tax to avoid expensive penalties and even legal problems later on. Doing things wrong is always the most expensive option, and it comes with a longer processing time and lots of stress.
Although the list of fees can seem daunting, most of them are one-time fees due when you file your business paperwork. You don’t need to pay any extra cost on an annual or biennial basis. Plus, after clearing most of these fees, you will have more time to focus on your core business and work towards profit-making. This makes the LLC formation process cheaper in the long run!
How to Approach Cheap LLC Formation and Maintenance in California
When starting an LLC in California, take note of the following key steps:
- Step 1– Give your LLC a name
- Step 2- Appoint your agent for service of process
- Step 3- File articles of organization and pay filing fees
- Step 4- File your statement of information
- Step 5- Create your LLC’s operating agreement
- Step 6– Apply for an employer identification number (EIN)
Once you’ve created your LLC, it’s time to create a bank account for your business. You should separate this from your personal accounts. This way, you can differentiate your business expenses from personal expenses. Additionally, you need to keep records of all the financial transactions for your business. Such financial transactions could include:
- Employee payments, and
- Contractor payments.
Get Help with Your Cheap LLC Formation in California
Do you need assistance from a legal document assistant service concerning cheap LLC formation documents? Consult A People’s Choice for detailed assistance with the paperwork needed to start your LLC formation process today at a cheaper cost.
Our team of legal professionals can provide you with the necessary help regarding low-cost LLCs. Also, we will make sure that your LLC formation documents adhere to all California laws so your personal liability is mitigated. Just contact us on 800-747-2780, and we will get started!
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