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 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).
There’s no way for a registered business to legitimately avoid the California Franchise Tax . Sole proprietors and general partnerships don’t have to pay the California Franchise Tax , but they also don’t have any personal liability protection.
With an S – corp tax status, a business avoids double taxation, which is when a corporation is taxed on its profits and then again on the dividends that shareholders receive as their personal earnings. In an LLC , members must pay self-employment taxes, which are Social Security and Medicare taxes, directly to the IRS.
LegalZoom may be a decent option to form an LLC if you: Want to work with an established brand to start your LLC . Are willing to pay extra for better premium services and features, such as an EIN and registered agent services.
How long does an LLC last ? This is a question with more than one possible answer because it’s determined by the LLC’s articles of organization. An LLC can be basically unending or perpetual with no ending or expiration.
But even though an inactive LLC has no income or expenses for a year, it might still be required to file a federal income tax return. An LLC may be disregarded as an entity for tax purposes, or it may be taxed as a partnership or a corporation.
The least expensive way to form your LLC is filing the forms yourself, although it will depend on the filing fees in your state. Incorporation statements for LLCs are typically the Articles of Organization.
Any person starting a business, or currently running a business as a sole proprietor, should consider forming an LLC . This is especially true if you’re concerned with limiting your personal legal liability as much as possible. LLCs can be used to own and run almost any type of business.