Do I need an LLC?California LLC cost: year one and every year after
Short answer. For a solo operator in California, the state costs confirmed on official sites add up to $890 in year one ($70 Articles, $20 Statement of Information, $800 annual tax) and about $810 a year after that, even with no revenue. Forming in Wyoming instead costs more, because a California resident still registers in California and still owes the $800. Staying a sole proprietor has no state formation fees. City and county business taxes are not covered.
Informational only. Not legal or tax advice. Confirmed means read on an official government page on 2026-10-31. Estimates are shown apart and are never added to confirmed totals.
California LLC vs Wyoming LLC vs sole proprietor
| Path | Year one | Each year after |
|---|---|---|
| A. LLC in California | $890 confirmed ($70 + $20 + $800) + a second $800 if the LLC is formed late in the year (assumed second taxable year, not verified) | $810 confirmed ($800 + $20 every 2 years averaged) |
| B. LLC in Wyoming + register in California | $990 confirmed ($100 Wyoming + $70 California registration + $20 + $800) + the same unverified second $800 + Wyoming registered agent: no figure found, not included | $870 confirmed ($60 Wyoming minimum + $800 + $20 every 2 years averaged) + Wyoming registered agent, no figure found |
| C. Sole proprietor (baseline) | $0: free EIN from the IRS, separate bank account | $0 in state formation fees |
Not in any total above: the LLC fee on income (only at $250,000 or more of California-source total income, see the tax page), your federal and California income tax, bank fees, a fictitious business name (DBA) filing if you use a business name, a commercial agent for service of process if you do not serve as your own, and any attorney or CPA time. City and county business taxes and licenses are not covered.
California LLC fees, line by line
| Fee | Amount | Status | Source |
|---|---|---|---|
| California Articles of Organization | $70 | verified | CA Secretary of State fee table |
| Statement of Information (within 90 days, then every 2 years) | $20 | verified | CA Secretary of State; the FAQ says "$20 or $25" without saying which method costs $25 |
| LLC annual tax (Form FTB 3522) | $800 | verified | California Tax Service Center |
| Registration of an out-of-state LLC (LLC-5) | $70 | verified | Secretary of State form LLC-5 (also needs a Certificate of Good Standing from the home state) |
| Reduced first-year tax for first years starting 2027 through 2029 | $400 instead of $800 | estimate, not verified | Secondary sources only; see the tax page |
| Newspaper publication | none found | not verified | No requirement found on the Secretary of State pages read; an absence is not proof |
| Wyoming Articles of Organization | $100 | verified | Wyoming SOS fee schedule, effective July 1, 2026 |
| Wyoming annual report license tax | $60 minimum | verified | Same schedule: $60 or two-tenths of one mill on Wyoming assets, whichever is greater. |
| Wyoming registered agent | no figure | unresolved | Private companies set the price. Wyoming requires an agent (seen in a search excerpt of an SOS guide, not read in full). |
| California agent for service of process | $0 if you are your own | verified | Secretary of State FAQ: an individual residing in California or a registered corporate agent; commercial prices not found. |
| EIN | $0 | verified | IRS: "You never have to pay a fee for an EIN." |
Why Wyoming does not avoid California
The Secretary of State FAQ says a foreign LLC must register before transacting intrastate business in California, with a valid certificate of good standing from its home state, and form LLC-5 lists a $70 fee and says registered LLCs may owe the $800 minimum tax each year. The California Tax Service Center says the $800 applies to an LLC that is doing business in California and/or registered with the Secretary of State. So a Wyoming LLC run from California pays Wyoming's fees and California's registration, Statement of Information and $800. Whether a particular Wyoming LLC is "doing business" in California is a legal question; the registration route alone triggers the tax.
California taxes: what an LLC does and does not change
The IRS treats a single-member LLC as "disregarded as separate from its owner": you report profit on Schedule C and pay self-employment tax as a sole proprietor would. Forming in Wyoming does not change federal income tax on your profit. California income tax on a resident's profit is not computed here. Federal estimated tax for 2026 is due April 15, June 15, September 15 and January 15, 2027 (Form 1040-ES); California lists the same dates. When a date falls on a weekend or federal holiday it moves to the next business day; the calculator computes this.
What is different about forming in California if you sell software
These items apply to a California software seller whether or not an LLC exists, so none of them is a reason to form, or not to form, in Wyoming. Each was read on a California government page on 2026-10-31.
- Sales tax starts reaching SaaS on January 1, 2027. The California Department of Tax and Fee Administration (CDTFA) says that from that date digital products, defined as prewritten software transferred electronically or accessed remotely, are tangible personal property, so retail sales may be subject to sales and use tax. The notice lists prewritten SaaS providers as affected. It says digital product sellers in California who are not registered must register for a seller's permit and file returns, and that out-of-state sellers engaged in business in California must register for a use tax certificate. It names exemptions, including custom software and products bought solely for use outside California. This is a change in the rules, and the notice is dated September 2026, so the details may move. Source: CDTFA Special Notice L-1036.
- Your first contractor creates a state report. The Employment Development Department (EDD) says a business that pays or contracts with an individual, sole proprietor or single-member LLC must report it on form DE 542 within 20 calendar days of reaching $600 in payments or contract value in a calendar year, when it would also file a federal 1099-NEC or 1099-MISC. The page lists a $24 penalty per failure without good cause. Source: EDD independent contractor reporting.
- Your first employee has a 15-day clock. The EDD says to register as an employer within 15 days if you pay more than $100 in wages in a calendar quarter. Source: EDD, Step 1: register as an employer.
- A missed Statement of Information can cost the LLC its standing. The Secretary of State says an entity can be suspended or forfeited for failing to file one, and that the statement is due within 60 days of the notice date to avoid that. It adds that the Franchise Tax Board assesses penalties, with no amount listed there, and that a missed reminder is no excuse. Source: Secretary of State FAQ.
Not verified and left out of every total: city business taxes, and any sales tax threshold for out-of-state sellers. The CDTFA pages read did not state one.
What this California page doesn't tell you
Whether you need an LLC yet, which line of the table applies to you, your own dates (Statement of Information, annual tax, Form 568, estimated taxes), or whether to ask a CPA about an S-corp. The calculator takes your answers and returns a verdict, your numbers and a dated checklist you can download as a PDF and calendar file.
California LLC questions
How much does it cost to form an LLC in California?
Confirmed state costs in year one for a solo operator are $70 for the Articles of Organization, $20 for the Statement of Information (due within 90 days) and $800 for the first annual tax, $890 in total. An LLC formed late in the year can owe a second $800 within about five months; that is an unverified estimate and is not in the $890.
What does a California LLC cost every year?
The confirmed recurring state costs are the $800 annual tax and a $20 Statement of Information every two years, about $810 a year averaged, even with no revenue. An LLC fee of $900 or more is added only when California-source total income reaches $250,000.
Is a Wyoming LLC cheaper for a California resident?
No. A California resident forming in Wyoming still registers the LLC in California ($70), still owes California's $800 annual tax and the Statement of Information, and also pays Wyoming's $100 formation fee and $60 minimum annual report, so the total is not lower.
Does California require newspaper publication for an LLC?
We found no publication requirement for California LLCs on the Secretary of State pages we read, but an absence on a page is not proof, so this is not verified. Check with the Secretary of State or an attorney.
Do I pay less income tax with an LLC?
Not by default. A single-member LLC is treated by the IRS as disregarded, so you report profit on Schedule C and pay self-employment tax as a sole proprietor would.