If you Google “start an LLC,” you’ll get a lot of results instantly. Most of them will be advertisements for different LLC formation services: LegalZoom, Incfile, Incorporate.com, Swyft Filings, Zen Business…the list goes on and on.
An LLC service is, for a lot of entrepreneurs, a lifesaver. Starting a business is a complicated process. It takes a lot of paperwork, and many people get overwhelmed by the legal procedures: filing for taxes, getting business licenses and permits, filling out the formation documents, and more.
Then there are requirements for ongoing compliance in California such as hiring a registered agent and filing annual reports.
LLC services take on most of that burden for you: you give them a bit of information about you and your business, and the service starts your business on your behalf. This process is perfectly legal, and hiring one frees you up to focus on the more “exciting” parts of your business. Most LLC services also offer registered agent service, helping you with ongoing compliance.
California LLC Fast-Facts
- LLC Formation Speed: 15 business days for standard filings; 5 business days for expedited filings
- Cost to File a CA LLC: $70, plus the service’s fee if you use one (you can add certified copies for $5 per page)
- How to File Your Articles of Organization: Online or by mail
- Biennial Reports: Due every other year (with the exception of your initial report, which must be filed within 90 days of forming your business); costs $20 to file
- State General Business License: Not required, but industry licenses may apply
- PLLCs: Not an option in CA
The Top 4 LLC Services in California
LLC formation services are a big help, but not all LLC formation services are created equal.
Between price differences, the extras offered (or excluded), and overall quality, some are better than others. And as a busy entrepreneur, you probably don’t want to spend your time sorting through the good ones and bad ones.
Luckily, we’ve done the hard work for you and compared the top LLC formation services. We’ve done our best to consider all the important categories, including cost, ongoing fees, customer service, and more. Based on those criteria, here are the four top LLC formation services.
Zen Business
Thanks to competitive technology and a dedication to affordability, Zen Business has one of the most affordable formation-plus-registered-agent packages available.
If you choose their Pro package ($149 annually), you’ll get a business formation, registered agent service, an operating agreement template, a risk-free accounting assessment, a banking resolution template, and access to their Worry-Free Compliance program for a flat annual fee.
- Formation package price: Starting at $39, plus CA LLC setup fee of $70 for a total of $109 (renews annually for $119)
- Registered agent service: $99 a la carte, but $119 in an annual package
- Customer service: Zen Business offers outstanding customer service thanks to their smaller customer base and individualized attention.
- Ease of use: Zen Business offers helpful tools for tracking annual reports and more, but the order process can be a bit confusing.
- Customer reviews: Overwhelmingly positive, with 4.8/5 stars on Trustpilot across 4,700+ reviews
Incfile
If start-up costs are your primary concern, Incfile is a great option. They are a free California LLC registration service and don’t require any fees until the second year.
Incfile doesn’t have as many bonus features as some of its competitors, but they do offer all the essentials at an extra fee — filing an EIN, registering a DBA, filing annual reports, and a few others.
- Formation package price: No cost beyond California’s $70 LLC filing fee
- Registered agent service: First year free, and then $119 per year
- Customer service: Incfile recently doubled their customer service team, improving their response times — which were already pretty good to begin with!
- Ease of use: While there’s nothing fancy to Incfile’s order process, that’s a good thing. There aren’t a ton of messy gimmicks to sort through when ordering a package from Incfile.
- Customer reviews: Fantastic; over 98% are positive across 21,000+ reviews on Shopper Approved
Northwest Registered Agent
“We’re just not annoying” is their brand promise, and they stick to it. Northwest Registered Agent may be smaller than some of their competitors, but they leverage more industry experience than their competitors, too.
They also throw in a free year of registered agent service, which keeps your start-up fees low. Compared to Zen Business, our top pick, Northwest is a service that prioritizes incredible customer support above all else.
- Formation package price: $39
- Registered agent service: $125 annually, but the first year is free
- Customer service: Northwest assigns a dedicated account representative to each client, ensuring prompt, personalized service.
- Ease of use: Northwest keeps their order form simple — no need for upsells to clutter up the process.
- Customer reviews: Primarily positive on most 3rd-party review sites; however, reviews are limited in number
LegalZoom
If you prefer to work with a large, established brand, then LegalZoom is about as big as it gets.
Founded in 2001, LegalZoom’s offerings have grown from 10 initial online legal offerings to hundreds of different services. Compared to some other services in this guide, LegalZoom has a higher price tag. But if you’re looking for a one-stop legal shop, you’ll find a wide variety of other services.
- Formation package price: Starting at $79, plus state fees for a total of $149
- Registered agent service: $249 per year (first year for $159 if added to a formation package)
- Customer service: As a large company, LegalZoom’s customer service won’t have the same personal touch as other companies we’ve listed.
- Ease of use: Many customers complain that the order process with LegalZoom is long and confusing. Many upsells are presented, even before you have a chance to choose your package.
- Customer reviews: Mixed; most negative reviews stem from a misunderstanding of the package offerings and ongoing fees
What Is a California LLC?
Short for limited liability company, a California LLC is an entity type that combines the flexibility of a sole proprietorship with the personal asset protection of a corporation. We get it — that’s a lot of words. So let’s unpack what that means.
If you start selling handcrafted apparel from your house (which is totally legal), you’d be operating as a sole proprietorship. From a legal standpoint, sole proprietorships are the same entity as their owners.
That means everything the business “owns” from fabrics to sewing machines and so on are actually owned by the sole proprietor. The proprietor pays any and all taxes, too. And if the business is sued or taken to court, the owner can lose his or her personal belongings to pay the damages.
In contrast, registered entities like LLCs have personal asset protection because the business is considered a separate legal entity from its owners. The business itself can own assets, maintain a bank account, and be sued. And in turn, the members of the business cannot lose their assets if something goes wrong with the business.
But unlike corporations, LLCs don’t have a bunch of complicated requirements. That makes it a good choice for entrepreneurs who want to keep filings simple but still get asset protection.
Pros and Cons of Creating a Limited Liability Company
An LLC is one of the most popular entity types nationwide. But it isn’t the right type for everyone.
Only you can pick which entity type best fits you and your business; after all, you understand your business idea better than anyone. You have a clear vision for your products and services, both present and future.
To truly determine whether an LLC is right for you, it’s helpful to consider the advantages and disadvantages of LLCs.
Pros
- Easier to form and maintain than a corporation
- Personal asset protection
- Flexible taxation structure; can pay as a partnership or a corporation
- Business name is protected for exclusive use within state boundaries
Cons
- No authority to issue stock, so opportunities to raise capital are limited
- In some states, annual fees and taxes can be higher than partnerships or sole proprietorships
- Requires more paperwork than some entrepreneurs are comfortable with
How to Set Up a California LLC on Your Own
Technically speaking, you don’t have to use an LLC formation service like Zen Business or LegalZoom. These services are incredibly helpful, but you can save money by completing the process yourself.
You can read our complete guide to DIY an LLC setup in California, but here’s a quick look at the process:
Choose a business name
Every LLC in California needs a name that’s memorable and gives potential clients a good idea of what goods or services are available. The name also needs to be unique — both for legal reasons and so your business stands out from the competition.
Appoint a CA registered agent
Like we’ve mentioned in this guide, every LLC needs an agent who can accept service of process on your behalf. In most states, you can act as your own registered agent as long as you have a physical address in the state. That said, we generally recommend that you appoint someone else (like an online service) to act as your agent.
File the Articles of Organization
This document, once filled out and filed, officially forms your business in the state of California. You’ll need to provide some important information, including your contact information, your business address, signatures for your LLC’s members, and more. California has a $70 filing fee.
Setting up the LLC is as easy as 1-2-3; it’s the maintenance requirements that are a bit more complicated:
Register for and pay taxes
If you have employees, you’ll need to get an Employer Identification Number from the IRS. Then there are state-specific taxes, too. California has pretty heavy taxes. For LLCs taxed as corporations, there is a flat rate of 8.84%. The individual rate ranges between 1% and 13.3%. You will also need to account for sales taxes (7.25% plus local fees) and other miscellaneous taxes. More information can be found at the California Department of Tax and Fee Administration.
Get licenses and permits
There’s no general state business license in California, but that doesn’t mean you won’t need to get professional licenses. California offers a nearly comprehensive resource to business licensing: CalGold.
Create an operating agreement
Even single-member LLCs should create a “master document” that sets out how the business will operate, both now and in the future.
File your biennial report
Every other year, your LLC will need to file an annual report to update the state about the standing of your business. California has a $20 filing fee for this document.
Obtain business insurance
Every business with employees needs to maintain workers’ compensation insurance and a commercial vehicle policy for company-owned vehicles. You may also want to get a general business liability policy, too.
Get a business bank account
You should sign up for a business bank account so you can write checks and make purchases in the name of the business instead of pulling from your personal accounts (a legal no-no).
This is just the tip of the iceberg, though. For more detailed guidance, we recommend contacting an attorney or checking out the full California LLC Formation Guide.
Conclusion
Forming an LLC is possible on your own, and it’s cheaper to do so. But the process can be overwhelming. LLC formation services make it possible to start your LLC without all the hassle, but that convenience will cost you. Either way, starting a California LLC enables you to run a business that’s recognized by the state and federal government.