Starting a limited liability company anywhere in the United States can be stressful. But did you know it can also end up costing a lot? As a potential business owner, you might ask yourself, “How much does an LLC cost? Is this going to eat into my business funds?”

In this article, we will answer the question, “How much does an LLC cost to form in California?” We’ll also cover the definition of an LLC, how you can create one, and where you can seek help if you need it. After you read this article, you’ll be well on your way to starting your own business and keeping costs low!

What Is an LLC?

Before we get into the logistics of the costs associated with an LLC, let’s cover this basic question: what is an LLC in the first place? A limited liability company can be defined as a business structure or business entity in the United States that gives limited liability protections to its owners. That is, an LLC protects its owners and their personal assets from business debt and liabilities.

The liability protection makes LLC different from a sole proprietorship or a corporation. The business owners are not responsible for the debts and losses incurred, and the company and business assets are also protected from the debts and personal liability of the owners.

This is one reason why a limited liability company is the most sought-after business structure for potential business owners. They don’t have to worry about the risk of losing all they have worked for if the business ever fails. Also, if the owners fall into a financial crisis in the future, the business doesn’t have to fail too.

Steps to Take to Form an LLC in California

There are various steps to follow when starting or setting up a limited liability company. These steps can be streamlined if you are setting up your LLC as a domestic LLC in a particular state. If you are setting up your LLC to work in multiple states, you will have to register it as a foreign LLC.

Below, we highlight the business formation processes of limited liability companies in California.


To start any business, you know you have to choose a name! To do this, you have to follow the guidelines for naming a limited liability company in California. The naming requirements include the following.

  1. Include a phrase that makes the LLC status of the company evident. The company name must include phrases like LLC, Limited Liability Company, Ltd, Co, etc.
  2. Avoid using restricted words or words that can make the LLC seem like a government agency like a bank, university, attorney, FBI, etc. If you really can’t avoid this, you should be ready to file some additional paperwork. You also need a licensed individual on staff who holds the affiliation referred to in your name. For example, if your name includes “attorney,” you need to employ an attorney.
  3. Confirm business name availability. You can do this by conducting a name search on the state’s business name database.
  4. Check the internet to see if the domain name you are going to use is available. If it has been taken, you may want to consider a new name.

Appointment of Registered Agent for Service Process

This is commonly called the registered agent in other states. A registered agent for the service process is that person or agency who acts as the point of contact of your limited liability company. This person or agency receives legal documents, legal notices, lawsuits, and correspondence on behalf of the company. You can use a registered agent service, but you can also save on the service fee by acting as your own registered agent.

Articles of Organization/Form LLC 1

The articles of organization are a legal document you must file with the state to start a limited liability company. This document establishes the rights and duties of each member of the limited liability company.

When you file articles of organization, you also indicate whether the limited liability company will be member-managed or manager-managed. Not sure what that means? We will discuss the filing cost later in this article.

Operating Agreement

Also called articles of operation, an operating agreement is an important internal document in the formation of a limited liability company in California. This document details:

  • Ownership of the company
  • Principal business activity
  • Business location
  • Mode of operation
  • Regular business hours
  • Operating procedures
  • Management structure
  • Service options and professional services
  • Other aspects of business operations.

Summarily, the operating agreement serves as a working business guide for the limited liability partnership. It details what every member has to do and outlines any other additional requirements to ensure smooth sailing.

Employee Identification Number

The employee identification number (EIN) is assigned by the internal revenue service to the company in a bid to ease identification for income tax and other tax purposes. If a limited liability company is looking to hire employees, then the employee identification number is important. The employee identification number is also needed to open a business banking account for the company, file personal tax returns, and prepare important business documents. In other words, this isn’t a step you can skip.

Initial Statement of Information/Form LLC 12

You have to file the initial statement of information of an LLC with the office of the California Secretary of State within ninety days of the formation of the limited liability company. After that, you need to file biennial statements. The statement of information typically details the company’s operations and finances. You can submit the statement of information by mail service, online, or in person.

How Much Does an LLC Cost in California?

Finally, we’ve reached the question: “How much does an LLC cost in California?” The answer is that it depends! Based on your situation and level of involvement, the cost can go up or down. In this section, we give you a breakdown of the amount of money that starting a limited liability company could cost you.

Name Reservation ($10 – $20)

This costs just $10 or $20 if you are dropping off the form in person. This is an optional expenditure and is only needed if you are looking to start your limited liability company but are worried that someone else may register your potential company name before you get the chance. If you’re trying to cut costs, you can easily avoid this by simply filing your application.

Domain Name/URL ($4 – $20)

This expenditure has to do with obtaining and reserving a domain name or URL for your company’s website. All domain names have to be bought and the cost of buying a domain name is dependent on the service you are using to purchase one. This can cost anything between $4 to $20. It’s not a business law requirement, but almost all businesses need a website these days.

Articles of Organization ($70 – $85)

This is required and quite important. Articles of organization, as explained earlier is a document that, once filed, registers your business in the state. Filing articles of organization in California is a one-time activity that costs you a filing fee of $70 and an additional cost of $15 for hand-delivered filings or in-person filings. The fee paid for filing the articles of organization is a one-time fee, however, so you’ll never have to include it in your fee schedule again unless you start a new business.

To file your articles of organization with the state, you need the following:

  • Business name
  • Business address
  • Name of your agent for service of process
  • The physical address of your agent for service of process
  • The stipulation of whether your LLC is a member-managed LLC or manager-managed LLC
  • Your name and your signature.

Initial Statement of Information ($20)

In California, instead of an annual report, all limited liability companies are required to file a biennial report or statement of information with the Secretary of State. Upon the formation of your LLC, a statement of information must be filed with the office of the Secretary of State between the first 90 days for the cost of $20 which is the filing fee.

To file your statement of information, you need the following information:

  • Business name
  • Mailing address and/or principal address
  • LLC secretary of state entity number
  • Location or jurisdiction of formation
  • Details of your limited liability company
  • Type of business activities conducted by the company
  • Contact information of members/managers
  • Signatures or digital signatures of members/managers
  • Contact information and residence address of the agent for service of process
  • Contact information of the chief executive officer
  • Name and your signature of the owner
  • The date of filing the statement of information

Unlike the articles of organization, the statement of information is not a one-time thing. After filing your initial statement of information, you are required to file subsequent statements of information every two years according to California laws.

Business Licensing Fees (Varies)

Is your future limited liability company for a business that’s in a regulated industry like healthcare or law? If so, you need a business license or professional license to start up your LLC. Depending on business types and geographical location, you may actually require more than one business license both on state and federal levels to start up.

The fees for business licenses vary from city to city and depend on the profession. If you’re in one of these professionals, you need to find out the price of the business permit that suits your business. Be sure to take care of this and make any fee payment in an appropriate time frame so it doesn’t slow your business formation.

Franchise Taxes ($800+ annually)

This is one of the most popular aspects of an LLC. Almost all limited liability companies are set up as “pass-through” entities. This means the business owners are responsible for the tax payment and filing for individual tax returns via income. However, the company itself does not need to file for a state or federal income tax return.

In California, though, all limited liability companies are required to pay an annual franchise tax. The annual franchise fee in California automatically covers the annual income taxes and sales tax registration that could have been done if the business wasn’t a limited liability company. If the LLC’s business income is $250,000 or less in a year, the franchise tax fee for that year will be $800. The franchise tax fee will be higher if the company’s income is greater than $250,000.

How Much Does an LLC Cost? Less with A People’s Choice!

Now that you are familiar with the costs of forming a limited liability company in California, you can go ahead and start the process of forming yours. At A People’s Choice, our job is to make your legal processes easier by providing you with all your legal documents at affordable prices. Our team of experts works round the clock to ensure that you get comprehensive and up-to-date legal documents for all your legal processes, thereby saving you the cost of filing services provided by attorneys. Reach out to us today to get started!