You’ll pay two filing fees to form an LLC in California: A $70 fee to file articles of organization with the California Secretary of State’s office. A $20 fee to file a Statement of Information, Form LLC-12, with the California Secretary of State.
Every LLC that is doing business or organized in California must pay an annual tax of $800 . This yearly tax will be due, even if you are not conducting business, until you cancel your LLC . You have until the 15th day of the 4th month from the date you file with the SOS to pay your first – year annual tax .
How to Form an LLC in California Choose a Name for Your California LLC . File Articles of Organization with the Secretary of State. Choose a Registered Agent. Decide on Member vs. Manager Management. Prepare an Operating Agreement. File Biennial Report. Pay Your California State Tax Obligations. Comply With Other Tax and Regulatory Requirements.
How long does it take to form an LLC in California ? The state will approve your California LLC in 3-5 business days. Also, if you form your LLC during peak filing season (December through January), approval can take up to 6-7 business days. You can form your California LLC online or by mail.
Due to the multitude of tax disadvantages that burden the California LLC , it is a very expensive means to operate a business. It is therefore typically in the owners best interest to form a corporation, rather than a LLC , unless the entity is being formed to hold real estate.
You can go to your State’s Secretary of State office, (Most states have this online) and search for your LLC , if you can’t find it, it may not be registered. The EIN is applied for through the IRS. You can do this through email or fax.
The best way to avoid paying back-to-back $800 franchise tax is to not let your California LLC go into existence at the end of the year.
The California Franchise Tax Board imposes a penalty if you do not pay the total amount due shown on your tax return by the original due date. The penalty is 5 percent of the unpaid tax (underpayment), plus 0.5 percent of the unpaid tax for each month or part of a month it remains unpaid (monthly).
When you do not pay your minimum LLC tax of $800 the Franchise Tax Board (FTB) will charge you a penalty. Eventually, if you do not pay the tax your LLC will be suspended.
A California LLC also offers the following advantages : Personal limited liability protection for all members, such that unless a member personally guarantees a debt or obligation, or fails to form or maintain the LLC properly, the member may not be held personally liable for the LLC’s debts and obligations.
How to Start a Business in California Choose a Business Idea. Decide on a Legal Structure. Choose a Business Name. Register Your Business Entity. Apply for California Licenses and Permits. Pick a Business Location and Check Zoning Regulations. Register and Report Taxes. Obtain Insurance.
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LegalZoom is not worth it for starting a business with an LLC . With LegalZoom’s LLC formation service, you are paying extra fees for everything. Instead of wasting money with LegalZoom you can download the forms for an LLC for free, and pay the filing fee to the state if you want to do it yourself for some reason.
Key takeaway: Having your LLC taxed as an S corporation can save you money on self-employment taxes. However, you will have to file an individual S – corp tax return, which means paying your CPA to file an additional form. An S – corp is also less structurally flexible than an LLC .
You can be your own registered agent in California , but you’ll have to list your name and address in the public record. Many business owners don’t want the hassle that comes with this (unsolicited phone calls, junk mail offers, etc.). Hiring a registered agent keeps your information out of the public record.