Limited liability Company – LLC in California is an advantageous legal structure because it offers personal asset protection and allows the business to choose how it will be taxed. Despite the pros mentioned above many entrepreneurs who are planning to set up their company in California are asking oneself - how to start an LLC and how much does it cost to form an LLC in CA?
That is the cost of forming an LLC in California broken right down to the basic steps, which include the filing fees. The current fee to file articles of organization with the California Secretary of State is $70, per Individual filing. In addition to the state fee, there is also a small county processing fee, which may apply depending on the county in which your LLC will be located. Range for most counties between $10-$30.
All in all, the filing fees for creating a California LLC initially range between $80 and $100 depending on your county. This is the bare and the minimum legal expenses that a party has to meet but there are others which he may wish to meet as follows.
Unlike for corporations, it is not mandatory for LLCs to draw up an operating agreement, though it is advised that all LLCs prepare one. An operating agreement details the rights and duty of the members concerning the ownership, structure, and functioning of the business. It is essential because it fosters diplomatic relations and provides structure when making decisions as the business evolves.
If one creates this operating agreement online or hires an attorney to draft it, the cost will be between $99-$500 to come up with a well-developed agreement. The cost is dependent on two factors namely, the template and the custom document. On balance, there can be considerations for your particular business needs and customizations that may be met by one platform or the other.
Another important legal concern is permitting, licensing, and reporting registration, which may vary based on your industry and the state or county you are located in. They can include a seller’s permit, commercial licenses, food handling permits, and fictitious business name filings. Each of these items entails small administrative charges that can build up to a sizable amount. As for the compliance, make sure to investigate what your type of business will require in terms of compliance.
Overall, the cost of forming an LLC in California depends on your circumstances, with most services falling between a few hundred to over a thousand dollars. However, it is still relatively cheap to form an LLC while there are numerous legal and financial advantages to creating this type of business structure. This is one of the reasons it is advisable that people who are planning on starting a business should take their time and deliberate on the amount of capital they want to spend before they start the business.