What is the total cost of a California LLC?
A California LLC costs $890 in the first year and $820+ per year ongoing. The first-year cost includes $70 for the filing fee, $800 for the franchise tax, and $20 for the Statement of Information. LLCs with California-source revenue over $250,000 pay an additional fee of $900 to $11,790 per year.
First-Year Cost Summary
| Fee | Amount | When Due |
|---|---|---|
| Articles of Organization filing | $70 | At formation |
| Franchise tax | $800 | 15th day of 4th month |
| Statement of Information | $20 | Within 90 days of formation |
| Registered agent | $50-$200 | At formation |
| Total first year (state fees) | $890 | |
| Total first year (with agent) | $940-$1,090 |
Annual Ongoing Cost Summary
| Fee | Amount | When Due |
|---|---|---|
| Franchise tax | $800 | 15th day of 4th month |
| Statement of Information | $20 (every 2 years) | Biennial anniversary |
| LLC fee (if revenue > $250K) | $900-$11,790 | 15th day of 6th month |
| Registered agent | $50-$200 | Annual renewal |
| Minimum annual (state fees) | $820 |
Important: The $800 franchise tax is the defining cost of a California LLC. This tax applies regardless of whether the LLC earns revenue. A dormant California LLC with no business activity owes $800 per year until it is formally dissolved.
What is the California LLC filing fee?
The California LLC filing fee is $70 for Articles of Organization filed with the Secretary of State. This is a one-time fee paid at formation. California's filing fee is lower than many states, but the $800 franchise tax makes the total first-year cost one of the highest in the country.
How to File Articles of Organization
File Articles of Organization (Form LLC-1) online through the California Secretary of State website at bizfileoline.sos.ca.gov. The filing requires the LLC name, the agent for service of process (registered agent), the LLC's address, and the organizer's name and address. Online filing costs $70 and processes in approximately 3-5 business days.
Mail filing is also available by sending Form LLC-1 to the Secretary of State with a $70 check or money order. Mail processing takes 3-5 weeks. There is no expedited processing option for California LLC filings through the standard Secretary of State office.
LLC Name Requirements
The LLC name must contain "Limited Liability Company," "L.L.C.," or "LLC." The name must be distinguishable from existing California business entities. Search the California Secretary of State business search at bizfileoline.sos.ca.gov to verify name availability before filing.
Comparison to Other State Filing Fees
| State | Filing Fee | Total First Year |
|---|---|---|
| California | $70 | $890+ |
| Wyoming | $100 | $160 |
| Delaware | $90 | $390 |
| New York | $200 | $1,259+ |
| Florida | $125 | $263.75 |
| Texas | $300 | $300 |
| Nevada | $425 | $775 |
California's $70 filing fee appears competitive until the $800 franchise tax is added. The total first-year cost of $890 makes California the second-most expensive major state after New York (which adds $1,000-$2,000 in publication costs).
What is the $800 California franchise tax?
The California franchise tax is an $800 annual minimum tax charged to every LLC registered in the state. The tax is collected by the Franchise Tax Board (FTB) and applies regardless of revenue, profit, or business activity. Even LLCs with zero income owe $800 per year.
When Is the Franchise Tax Due?
The franchise tax is due by the 15th day of the 4th month after the LLC's tax year begins. For calendar-year LLCs, this is April 15. The tax is paid using FTB Form 3522 (LLC Tax Voucher). For the first year, the tax is due within the first few months of formation.
Starting in the second year, the LLC must also make an estimated franchise tax payment for the following year. The estimated payment is due by the 15th day of the 6th month (June 15 for calendar-year LLCs). This means that in certain years, an LLC may pay $800 for the current year and $800 for the next year in the same calendar year.
First-Year Exemption Status
California Assembly Bill 85 (AB 85) provided a first-year exemption from the $800 franchise tax for LLCs formed between January 1, 2021, and January 1, 2024. This exemption has expired. LLCs formed in 2024 and after owe the full $800 franchise tax in their first year. There is no current legislation to reinstate the exemption.
Penalties for Non-Payment
Late payment of the franchise tax incurs a penalty of 5% of the unpaid tax plus 0.5% per month (up to 25% maximum). Interest accrues on the unpaid balance at the rate set by the FTB. The FTB can file liens, levy bank accounts, and suspend the LLC for non-payment. A suspended LLC cannot legally conduct business, file lawsuits, or defend lawsuits in California courts.
How to Stop the Franchise Tax
The only way to stop the $800 annual franchise tax is to formally dissolve or cancel the LLC. File a Certificate of Cancellation (Form LLC-4/7) with the Secretary of State and file a final tax return with the FTB. The franchise tax is owed for the year of dissolution. Simply stopping business activity does not stop the tax.
Key fact: The $800 California franchise tax costs more per year than 13 years of Wyoming annual reports ($60/year x 13 = $780). Over 10 years, the franchise tax alone costs $8,000. Wyoming's total 10-year cost is $640.
What is the Statement of Information and how much does it cost?
The Statement of Information (SOI) is a biennial filing with the California Secretary of State costing $20. The SOI lists member/manager names and addresses publicly. The initial SOI is due within 90 days of formation, then every two years.
What Information Is Required?
Form LLC-12 (Statement of Information) requires the following information: LLC name, California Secretary of State file number, business address, mailing address, names and addresses of all managers (for manager-managed LLCs) or all members (for member-managed LLCs), the agent for service of process, and a description of the LLC's business.
Public Disclosure
All information on the Statement of Information is publicly searchable on the California Secretary of State's website (bizfileoline.sos.ca.gov). Anyone can search by entity name, officer name, or agent name to view the filed SOI. This means all member/manager names and addresses are publicly available for California LLCs.
For non-residents who value privacy, this public disclosure is a significant disadvantage. Wyoming does not require any member or manager information on any filing, providing complete anonymity. The SOI requirement is another reason non-residents should avoid California LLCs.
Late Filing Penalties
Failure to file the initial SOI within 90 days does not incur an immediate penalty, but the LLC is considered not in compliance. Continued failure to file can result in the LLC being suspended by the Secretary of State and the Franchise Tax Board. A suspended LLC cannot conduct business in California.
Avoid the $800 annual franchise tax. Form your Wyoming LLC for $100 with $60/year and complete privacy.
Start on WhatsApp — FreeWhat is the California LLC fee based on revenue?
California charges an additional LLC fee based on total income from California sources. This fee ranges from $900 to $11,790 and is paid in addition to the $800 franchise tax. LLCs with total California income under $250,000 do not owe this fee.
Revenue-Based LLC Fee Schedule
| Total Income from California Sources | Additional LLC Fee | Total Annual State Tax (with franchise tax) |
|---|---|---|
| Under $250,000 | $0 | $800 |
| $250,000 - $499,999 | $900 | $1,700 |
| $500,000 - $999,999 | $2,500 | $3,300 |
| $1,000,000 - $4,999,999 | $6,000 | $6,800 |
| $5,000,000 or more | $11,790 | $12,590 |
How the LLC Fee Is Calculated
The LLC fee is calculated on the LLC's total income from California sources, which is generally the LLC's total revenue attributable to California business activities. This is reported on Form 568 (Limited Liability Company Return of Income), Schedule IW. The fee is based on gross revenue, not net profit. A California LLC with $500,000 in revenue but $0 in profit still owes the $2,500 LLC fee.
Estimated Fee Requirement
LLCs expecting to owe the LLC fee must make an estimated fee payment by the 15th day of the 6th month of the current tax year (June 15 for calendar-year LLCs). The estimate is based on the current year's expected income. If the estimate is too low, a penalty applies. The penalty is the difference between the amount paid and the amount owed.
Wyoming: Zero Revenue-Based Fees
Wyoming charges $60 per year for the annual report regardless of revenue. There is no revenue-based fee at any level. A Wyoming LLC earning $5 million pays the same $60 as one earning $0. This flat, predictable cost structure is one of Wyoming's most significant advantages.
What income tax do California LLCs pay?
California LLCs pass income through to members who pay California personal income tax at rates from 1% to 13.3% on California-source income. LLCs taxed as C-corporations pay an 8.84% corporate income tax. Wyoming has no income tax of any kind.
Pass-Through Taxation
Single-member LLCs and multi-member LLCs (taxed as partnerships) are pass-through entities. The LLC does not pay income tax at the entity level (except the $800 franchise tax). Instead, income passes through to the members who report it on their personal tax returns. California residents pay California income tax on all income. Non-residents pay California income tax only on California-source income.
California Income Tax Rates
| Taxable Income | California Tax Rate |
|---|---|
| $0 - $10,412 | 1% |
| $10,413 - $24,684 | 2% |
| $24,685 - $38,959 | 4% |
| $38,960 - $54,081 | 6% |
| $54,082 - $68,350 | 8% |
| $68,351 - $349,137 | 9.3% |
| $349,138 - $418,961 | 10.3% |
| $418,962 - $698,271 | 11.3% |
| $698,272 - $1,000,000 | 12.3% |
| Over $1,000,000 | 13.3% (includes 1% mental health surcharge) |
Non-Resident Tax Obligations
Non-residents owe California income tax only on California-source income. If a non-resident's California LLC has no California-source income (for example, an online business serving customers outside California), the non-resident owes $0 in California income tax. However, the $800 franchise tax is still owed regardless of income source.
California aggressively audits LLCs and claims California-source income based on market-based sourcing rules. If your customers are in California, the FTB may argue that the revenue is California-source income. This risk makes California LLC formation particularly dangerous for non-residents with California customers.
What are the total annual costs of a California LLC?
The total annual cost of a California LLC depends on revenue level. The minimum is $820 per year. For a business with $500,000 in revenue and $150,000 in California-source profit, annual costs exceed $17,000 including state taxes.
Annual Cost by Revenue Level
| Revenue Level | CA Annual State Fees | WY Annual State Fees | CA Premium Over WY |
|---|---|---|---|
| $0 (dormant LLC) | $820 | $60 | $760 |
| $100,000 | $820 | $60 | $760 |
| $250,000 | $1,720 | $60 | $1,660 |
| $500,000 | $3,320 | $60 | $3,260 |
| $1,000,000 | $6,820 | $60 | $6,760 |
| $5,000,000 | $12,610 | $60 | $12,550 |
These figures include only state franchise tax and the revenue-based LLC fee. They do not include California income tax (1%-13.3%), registered agent fees, CPA/tax professional fees ($500-$3,000/year), or sales tax obligations. The true total annual cost of a California LLC is significantly higher than the state fee totals shown above.
Perspective: A California LLC with $1 million in revenue pays $6,820 in annual state franchise tax and LLC fees alone. The same business in Wyoming pays $60. That is a $6,760 annual difference that grows as revenue increases. Over 10 years, the difference exceeds $67,000 in state fees alone.
How do California LLC fees compare to Wyoming?
Wyoming costs $160 in the first year and $60 per year ongoing. California costs $890 in the first year and $820+ per year ongoing. Wyoming is 82% cheaper in the first year and 93% cheaper annually.
Side-by-Side Cost Comparison
| Cost Category | California | Wyoming |
|---|---|---|
| Filing fee | $70 | $100 |
| Franchise tax | $800/year | $0 |
| Annual report/SOI | $20/2 years | $60/year |
| Revenue-based fee | $900-$11,790 | $0 |
| State income tax | 1%-13.3% | $0 |
| Member privacy | Public (SOI) | Private |
| Asset protection | Standard | Strongest (exclusive remedy) |
| First year total | $890 | $160 |
| Annual ongoing | $820+ | $60 |
5-Year Total Cost Comparison
| Year | California (Cumulative) | Wyoming (Cumulative) | Wyoming Savings |
|---|---|---|---|
| Year 1 | $890 | $160 | $730 |
| Year 2 | $1,690 | $220 | $1,470 |
| Year 3 | $2,510 | $280 | $2,230 |
| Year 4 | $3,310 | $340 | $2,970 |
| Year 5 | $4,130 | $400 | $3,730 |
For a complete Wyoming cost analysis, see Wyoming LLC cost breakdown. For a head-to-head comparison, read Wyoming vs California LLC.
When is a California LLC required?
A California LLC is required when you have a physical office, employees, or real estate in California. Online businesses serving California customers from outside the state do not need a California LLC.
Physical California Presence
If you maintain an office, retail store, warehouse, or any physical location in California, you need a California LLC or must register your out-of-state LLC as a foreign LLC in California. Foreign qualification triggers the same $800 franchise tax and other California fees. Physical presence creates California nexus regardless of where the LLC is formed.
California Employees
Employing W-2 workers in California creates nexus for employment tax, unemployment insurance, disability insurance, and workers' compensation. California has the strictest employment laws in the US, including AB5 (worker classification law). If your LLC has California employees, California entity registration is required.
California Real Estate
Owning or leasing property in California creates nexus. Rental income from California property is California-source income. A California LLC or foreign-qualified LLC is needed for California real estate holdings. Many investors use a Wyoming parent LLC that owns a California LLC specifically for the real estate.
Online Sales to California Customers
Selling digital products or services online to California customers from outside the state does not create nexus for the $800 franchise tax or income tax. However, economic nexus for sales tax may apply if your sales exceed $500,000 to California customers. Sales tax nexus and franchise tax nexus are separate requirements. You can owe California sales tax without owing franchise tax if you have no physical presence.
How can non-residents avoid California LLC fees?
Non-residents avoid California LLC fees by forming in Wyoming instead. A Wyoming LLC provides the same US business entity benefits (banking, Stripe, EIN) without the $800 franchise tax, public member disclosure, or income tax obligations.
Form in Wyoming Instead
The simplest way to avoid California LLC fees is to not form in California. A Wyoming LLC costs $100 to form and $60 per year. It provides a US business entity that can open US bank accounts, register for Stripe, obtain an EIN, and serve customers in all 50 states including California. No $800 franchise tax. No public member disclosure. No revenue-based fees.
Do Not Foreign-Qualify in California
If you form a Wyoming LLC and then register it as a foreign LLC in California, you owe California's $800 franchise tax and must comply with all California filing requirements. Only foreign-qualify in California if you have physical presence (office, employees, or property). Online businesses serving California customers do not need to foreign-qualify.
Dissolve Existing California LLCs
If you currently have a California LLC that you do not need, dissolve it to stop the $800 annual franchise tax. File a Certificate of Cancellation with the Secretary of State and a final tax return with the Franchise Tax Board. Then form a Wyoming LLC for $100 and save $760+ per year. Read the full guide at best US state for non-resident LLCs.
Important: Do not simply "abandon" a California LLC. The $800 franchise tax continues to accrue even without business activity. The FTB will send collection notices and can file liens. Always formally dissolve the LLC with both the Secretary of State and the Franchise Tax Board.
Form your Wyoming LLC today. $297 flat fee includes LLC formation, EIN, operating agreement, and bank account guidance. Skip the $800 California franchise tax.
Start on WhatsApp — FreeFrequently Asked Questions
How much does it cost to form a California LLC?
Forming a California LLC costs $70 for the Articles of Organization, $800 for the franchise tax (due within 3-4 months), and $20 for the Statement of Information (due within 90 days). Total first-year cost: $890 in state fees. A Wyoming LLC costs $160.
What is the California $800 franchise tax?
The franchise tax is an $800 minimum annual tax charged to every California LLC regardless of revenue or profit. Even LLCs with $0 income owe $800 per year. The tax is paid to the Franchise Tax Board. Wyoming has no franchise tax.
What are the annual costs of maintaining a California LLC?
Minimum annual costs are $820: $800 franchise tax + $20 biennial SOI. LLCs with revenue over $250K pay an additional $900-$11,790 LLC fee. California income tax (1%-13.3%) applies to California-source income. Wyoming costs $60/year.
What is the California LLC fee based on revenue?
California charges an additional fee on California-source gross revenue: $900 for $250K-$500K, $2,500 for $500K-$1M, $6,000 for $1M-$5M, and $11,790 for $5M+. This is in addition to the $800 franchise tax. Wyoming has no revenue fees.
Is there a first-year franchise tax exemption in California?
The first-year exemption under AB 85 expired for LLCs formed after January 1, 2024. LLCs formed in 2024 and after owe the full $800 franchise tax in their first year. There is no current exemption.
How does California LLC cost compare to Wyoming?
California costs $890 first year vs Wyoming's $160. California costs $820+/year ongoing vs Wyoming's $60. Over 5 years, California costs $4,130+ vs Wyoming's $400. Wyoming saves at least $3,730 over five years.
What is the California Statement of Information?
The SOI (Form LLC-12) is a biennial filing costing $20 that lists member/manager names, addresses, registered agent, and business description. This information is publicly searchable on the Secretary of State's website.
When is a California LLC required?
A California LLC is required with a physical office, employees, or real estate in California. Online businesses serving California customers from outside the state do not need a California LLC. Non-residents should form in Wyoming instead.