Forming an LLC in California costs a minimum of $870 in the first year: $70 to file the Articles of Organization with the Secretary of State, plus the $800 annual franchise tax every LLC owes the Franchise Tax Board. The total California LLC cost climbs from there depending on your income, your city, and whether you hire help. Between biennial filings, income-based surcharges, and common expenses like a registered agent, California runs one of the most expensive LLC regimes in the country.
The $70 Filing Fee
You create a California LLC by filing Articles of Organization (Form LLC-1) with the Secretary of State. The fee is $70, paid by check, money order, or credit card for online submissions.1California Secretary of State. Limited Liability Companies (LLC) – California It’s a one-time charge, and the LLC exists legally once the filing is processed.
Standard online processing takes a few business days. If you need it faster, the Secretary of State offers expedited service at $350 (24 hours), $500 (four hours), or $750 (same day), each on top of the $70 base fee.2California Secretary of State. Service Options Most people forming a straightforward LLC don’t need to pay for the rush.
The $800 Annual Franchise Tax
This is the cost that catches most new business owners off guard. Every LLC organized or doing business in California owes $800 per year to the Franchise Tax Board, even if the LLC has zero income and does no business at all.3Franchise Tax Board. Limited Liability Company The tax continues every year until you formally cancel the LLC.
For a new LLC, the first $800 is due by the 15th day of the fourth month after you file your Articles of Organization. Form on January 15 and the first payment is due by May 15. After that, calendar-year LLCs pay by April 15 each year, using Form FTB 3522.3Franchise Tax Board. Limited Liability Company
California briefly waived the first-year tax for LLCs formed between January 1, 2021, and January 1, 2024, but that exemption has expired.4California Legislative Information. California Revenue and Taxation Code 17941 Form an LLC in 2026 and you owe the full $800 the first year. A narrow carve-out remains through 2030 for LLCs solely owned by a deployed member of the U.S. Armed Forces where the business is operating at a loss or has ceased operations.
Statement of Information: $20 Every Two Years
Within 90 days of forming your LLC, you must file a Statement of Information (Form LLC-12) with the Secretary of State, reporting the LLC’s address, management structure, and agent for service of process. The fee is $20.1California Secretary of State. Limited Liability Companies (LLC) – California
After the initial filing, you refile every two years during a six-month window tied to your original registration date. LLCs registered in even-numbered years file in even years; odd-year registrants file in odd years.5California Secretary of State. Instructions for Completing the Statement of Information (Form LLC-12) Miss the deadline and the Secretary of State assesses a $250 penalty, collected by the Franchise Tax Board.3Franchise Tax Board. Limited Liability Company
Income-Based LLC Fee
Once your LLC’s total California income crosses $250,000, an additional annual fee kicks in on top of the $800 franchise tax. “Total income” here means gross income plus cost of goods sold from California sources, which is broader than net profit. The tiers:6Franchise Tax Board. Limited Liability Company Filing Information
- $250,000 to $499,999: $900
- $500,000 to $999,999: $2,500
- $1,000,000 to $4,999,999: $6,000
- $5,000,000 or more: $11,790
You estimate and pay this fee by the 15th day of the sixth month of your tax year (June 15 for calendar-year LLCs). Underpayment triggers penalties and interest.3Franchise Tax Board. Limited Liability Company Most new LLCs won’t hit these thresholds right away, but service businesses and retailers with high gross receipts can get there fast.
Annual Tax Return
Every California LLC also files a Limited Liability Company Return of Income (Form 568) with the Franchise Tax Board each year.3Franchise Tax Board. Limited Liability Company There is no separate fee for the return itself, but this is where many owners end up paying for professional help. A CPA or tax preparer who handles California LLC returns typically charges several hundred dollars or more, depending on complexity.
Federal Tax ID and BOI Reporting
Most California LLCs need an Employer Identification Number from the IRS to open a business bank account, hire employees, and file federal taxes. Applying for an EIN is free, and you can get one online in minutes or by fax or mail using Form SS-4.7Internal Revenue Service. Employer Identification Number Register the LLC with the state first.
As of March 2025, domestic LLCs are exempt from FinCEN’s Beneficial Ownership Information reporting requirement. An interim final rule limited the requirement to entities formed under a foreign country’s laws that register to do business in the United States.8FinCEN.gov. Beneficial Ownership Information Reporting A standard California LLC has no BOI filing obligation or fee.
Registered Agent, Licenses, and DBA Costs
Every California LLC must designate an agent for service of process to accept legal documents on the LLC’s behalf.9California Secretary of State. Service of Process You can serve as your own agent for free if you have a California address and are reliably available during business hours. Hiring a commercial registered agent runs roughly $100 to $300 per year, and it buys you privacy (the agent’s address goes on public records instead of yours) and coverage if you step out.
City and county business license requirements vary widely. Some cities charge a flat annual fee; others base it on projected gross receipts. If you sell physical goods, you’ll need a California Seller’s Permit from the Department of Tax and Fee Administration. The permit itself is free, though the agency may require a refundable security deposit.10California Department of Tax and Fee Administration. Obtaining a Sellers Permit
If your LLC operates under a name different from what’s on file with the Secretary of State, file a Fictitious Business Name statement with the county clerk where your business is based.11Sacramento County Department of Finance. Fictitious Business Name FAQ County fees generally run $26 to $40, and most counties also require newspaper publication of the name, which adds another $30 to $80.
What Falling Behind Costs
California collects LLC taxes and fees aggressively. If your LLC fails to pay the $800 franchise tax or file required returns, the Franchise Tax Board will suspend or forfeit the entity. A suspended LLC loses its legal right to operate in California.12Franchise Tax Board. My Business Is Suspended
The consequences bite hard. A suspended LLC cannot enter enforceable contracts, defend itself in court, sell or transfer real property, or even close the business through formal dissolution. Contracts signed during suspension can be voided by the other party. You also lose the right to use your business name while suspended.12Franchise Tax Board. My Business Is Suspended
Getting back in good standing means filing all past-due returns, paying every outstanding balance (including $800 for every year since registration, regardless of whether the LLC did any business), and submitting a revivor application (Form FTB 3557 LLC). The Secretary of State can independently suspend your LLC for skipping the Statement of Information, adding a $250 penalty on top of whatever the FTB is collecting.12Franchise Tax Board. My Business Is Suspended People who formed an LLC years ago and forgot about it often find they owe thousands in back franchise taxes before they can officially close.
Closing the LLC
If you decide the LLC isn’t worth keeping, cancel it formally or the $800 annual tax keeps accruing. Cancellation requires filing a Certificate of Cancellation (Form LLC-4/7) with the Secretary of State. The filing itself is free.13California Secretary of State. Certificate of Cancellation – Form LLC-4/7 You must also file a final Form 568 with the Franchise Tax Board and pay any outstanding taxes and fees. If the LLC has been suspended, you’ll need to revive it first by clearing all back taxes before the state will process the cancellation.
The most expensive mistake with a California LLC usually isn’t forming one. It’s forgetting to close one you no longer use. Three years of neglect means at least $2,400 in franchise taxes plus penalties before you can shut the door.