Free California LLC Filings Are Over

Editor’s Note: California had recently reduced its LLC cost from $70 to $0, but this ended on June 30, 2023. California LLC filings are once again $70. Other business entity filings that were made free during that time frame have also returned to their previous costs. But even though the state’s free filings have ended, our LLC formation service can still file your LLC paperwork for you for no additional cost aside from the state fees.

For a brief time period, California dropped its filing fees for starting a new limited liability company (LLC) and many other business entities. However, that free filing period only lasted until June 30, 2023. As of this writing, entrepreneurs once again have to pay $70 to file their Articles of Organization. It’s no longer possible to form a California LLC for free ($0).

The California legislature initially waived these formation fees to help encourage business growth for domestic and foreign LLCs, corporations, and limited partnerships. But even though these fees are reinstated, it’s still a great time to launch your California dream business.

Below, we’ll break down everything you need to know about how to form an LLC in California and the other new California business filing fees. We’ll explore the basic filing fees, the types of business entities you can form, and more about starting a new business in the Golden State.

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How much does it cost to form different business types in California?

Three of the most popular business types in California include the limited liability company (LLC), corporation, and limited partnership. While it’s no longer free to form these businesses, they’re still great options for new business owners, California filing fees and all. 

LLC

Now that the free filing period has passed, the California Articles of Organization are $70 to file. Filing the California LLC Articles is crucial as it includes essential information about your business and is a key step in establishing a legal business entity in the Golden State. Just a few benefits of starting an LLC include:

• Separation of personal assets and liabilities from those of your business
• Flexible organizational and management options
• Avoiding double taxation
• No ownership or profit restrictions
• Less red tape to stay compliant than in a corporation

This business entity type is a popular choice for entrepreneurs who want a flexible and simple structure. Learn more about LLCs.

Corporation

Corporations used to cost just $0 to form during the free filing period, but now, you’ll need to pay $100 to file your Articles of Incorporation. A few of the benefits of corporations include: 

• Limited liability protection (if someone sues a corporation, they generally can’t go after the personal assets of its shareholders)
• The ability to issue shares of stock
• An unlimited number of investors
• Unlimited classes of shares
• The ability to go public

Some of the drawbacks of corporations include higher costs, double taxation, and the fact that business losses are not tax-deductible. However, entrepreneurs often choose this structure to raise money for their business concept and sell shares to investors. Learn more about corporations.

Limited Partnership

It used to be possible to form a limited partnership for $0 during the grace period, but now there’s a filing fee to file the Certificate of Limited Partnership: $70. A limited partnership is a business formed by at least two people. One partner is considered the “general partner” and oversees business operations. The other partners are known as “limited partners,” and their responsibilities don’t involve business management. 

In this structure, the general partner holds unlimited liability for the business’s debt. The other partners have liability equal to their investment in the company.

Two of the benefits of limited partnerships include limited liability (for the other partners) and full business control for the general partner. This entity type may work better for certain industries than others, such as family businesses or real estate investors. Learn more with our guide on the definition of limited partnerships.

So how much should I expect to spend?

No two businesses will have the exact same startup costs. But for most business owners, you can expect to spend between $70-$100 on your initial filing fees alone. There are also extra steps to tackle, like getting an Employer Identification Number (EIN) from the Internal Revenue Service or writing an operating agreement. Technically, you can get these essentials on your own without spending any extra cash, but hiring a service can save you time and effort in exchange for a fee.

If you’re hiring a registered agent service, then you’ll need to budget for $100-$300 per year (on average).

Last but not least, know that the California Franchise Tax Board charges an annual franchise tax that applies to most registered businesses, including limited liability companies. There’s a minimum franchise tax of $800, and you’ll need to pay taxes like this every year.

What are the essential CA documents if I want to form a business? 

The exact business documents you’ll need to form a business will vary depending on the type of business you’re forming. Here are some of the most common forms you need for business creation:

• Articles of Organization (California limited liability company)
• California articles of incorporation (corporation)
• Application to Register (qualification for a foreign qualification)
• Statement and Designation by Foreign Corporation
• Certificate of Limited Partnership
• Application for Registration (Foreign Limited Partnership)

As of this writing, none of these forms are free to file; there’s always a fee associated. Please consult with the California Secretary of State for the most up-to-date filing fees.

There are also a variety of additional forms that you may need to file over the lifespan of your business. Some of these include:

• Resignation of Agent for Service of Process (all business entity types)
• Termination documents (all business entity types)
• Certificate of Dissolution
• Certificate of Cancellation
• Short Form Cancellation Certificate
• Statement of Dissolution (General Partnership)
• Corporate Disclosure Statement (Corporation and Foreign Corporation)
• Certificate of Election – Stock (Corporation)
• Certificate of Surrender (Foreign Corporation)
• Certificate of Cancellation of Foreign Name Registration (Foreign Corporation)
• Alternative Security Provision (Limited Liability Partnership)
• Supplement to Statement by Foreign Lending Institution

Additional California Business Forms

Forming a business is a bit more than just submitting paperwork to the California Secretary of State. Here are some other forms and paperwork you should anticipate.

California LLC Operating Agreement

If you’re forming an LLC, then your California operating agreement is a crucial document that outlines your ownership structure, management rules, and other vital company information. The agreement should include:

• Ownership Structure: Define the ownership percentage of each member, helping ensure clarity on who owns what portion of the business.
• Management Rules: Outline the decision-making process and roles of each member, specifying how the LLC will be managed and who has authority to make decisions.
• Distribution of Profits and Losses: Define how profits and losses will be distributed among members, helping ensure transparency and fairness.
• Dispute Resolution: Establish a process for resolving disputes among members, which can help prevent conflicts from escalating.
• Amendments: Outline the process for amending the operating agreement, allowing for flexibility as the business evolves.

California law doesn’t require you to file your operating agreement with the Secretary of State, so there isn’t an associated filing fee.

Licenses and Permits for a California Business

To operate a California LLC or other business structure, you may need to obtain various licenses and permits, including:

• Business License: Although California doesn’t have a statewide general business license, you may need to obtain a general business license from the city or county where your business is located.
• Sales Tax Permit: Register for a sales tax permit if your business sells taxable goods or services. This allows you to collect sales tax from customers.
• Professional Licenses: Obtain professional licenses if your business requires specialized licenses, such as a contractor’s license or a medical license. These are specific to certain professions.
• Environmental Permits: Obtain environmental permits if your business affects the environment, such as a permit for air or water pollution. This helps ensure compliance with environmental regulations.

The exact cost of these permits varies depending on your business location and your industry. You should also keep in mind that you might need to renew these permits on a regular basis. When you first apply, be sure to inquire about the initial application fee and the renewal fees so there aren’t any surprises.

Statement of Information

California’s $0 filings were only a temporary measure to help encourage entrepreneurs to start their businesses in the state. Understandably, the free filing period couldn’t last forever; the state does need the revenue from business filings to help build a prosperous environment for its citizens and businesses. So, to start a business in California in 2024 and beyond, you’ll need to pay the appropriate filing fees.

But even if California were to run its $0 filing fee period again, you’d still need to file a Statement of Information for your business, which always has a filing fee. A California Statement of Information is commonly known as an annual report or biennial report in other states.

This document must be filed by all LLCs, corporations, and nonprofits registered in the state of California. The filing is due within 90 days of registering your new business. If your business is an LLC or nonprofit, it must then be filed every two years thereafter. If your business is a corporation, it must be filed every year.

The filing fee for an LLC or nonprofit’s California Statement of Information is $20. The filing fee for a California corporation’s Statement of Information is $25.

Interested in starting an LLC? Use our guide to forming an LLC in CA. We walk you through the entire process step by step (with lots of helpful hints along the way). We’ve also got a helpful guide on how to form a corporation in California. 

If the process of navigating the rules to form a business still seems daunting, don’t sweat it. We’re here so that you never have to go it alone. We can handle everything from formation plans to compliance for you, so you can focus on actually running your business. 

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.