How Much Does it Cost to Start a Business In California?

With its booming economy and the highest US GDP, California is the land of sunshine and opportunity for entrepreneurs starting a new business.

But doing business in the Golden State comes with a high price tag. Driven by complex business regulations, high taxes, and living costs.

Even so, 4.24 million small businesses call it home; of those, 3.46 million are one-person shows. 

Before you start a business in California and prosper in the land of milk and honey, let’s ensure you can afford the entrance fee.

How much does it cost to register a business in California?

It depends on your chosen business structure. 

For example, sole proprietorships and general partnerships don’t need to register with the California Secretary of State’s office and can begin trading once they have the necessary licenses and permits.

On the other hand, legal entities like limited liability companies (LLC), limited partnerships (LP), and S corporations do.

How much does it cost to form a California LLC or corporation?

To start a California LLC, you must file articles of organization and, for a corporation, articles of incorporation and register with the California Secretary of State’s office.  

Registering an LLC costs $70, and a corporation $100.

The cost of California's annual franchise tax

The California Franchise Tax Board imposes an $800 franchise tax on all registered businesses. Consider it a charge for doing business that applies to:

How much does it cost to get a business name in California?

Nothing, well, almost!

Legal entities like LLCs and LPs register their business name when filing Articles of Organization, so it’s in the $70 fee.

Soul proprietors and general partnerships use their legal names unless they want a cool brand name, which means getting a DBA.

California DBA filing costs

California uses the term “Fictitious Business Name” (FBN) instead of Doing Business As (DBA), but they mean the same. 

A DBA is a name sole proprietors, and general partnerships can use instead of their legal names. And an LLC, LP, or S corporation instead of their registered name. 

DBA filing costs vary throughout California, for example:

Contact the County Clerk’s office in your location for the exact DBA filing costs.

How much does it cost to reserve a business name in California?

You can reserve your business name for up to 60 days before forming an LLC, LP, or S corporation by completing the Name Reservation Request Form with the $10 filing fee. 

This reservation allows you to hold the name and prevents others from using it while you prepare your business entity formation process.

California registered agent fees

California requires every business entity to have a registered agent, also called a California agent for service of process, a California corporate agent, or a California statutory agent.

A registered agent receives official documents and legal notifications for your LLC, LP, or corporation. Your agent must have a physical California street address and be available during working hours.

Registered agent fees in California cost around $200 per year. You can save the cost by acting as your agent.

California business license fee

California doesn’t have a mandatory business license and only requires some businesses to get one. However, many companies need a county, city-level, or industry-specific license, which varies in price depending on your industry.

But in general, small business licenses cost around $50 to $100 per city or jurisdiction, and you can learn more about them on the website.

Seller's permit fee

Anyone individual or legal entity that does business in California, sells or leases tangible property, or makes temporary sales (under 90 days) need a seller’s permit to collect and pay sales tax. 

Seller permits are free, and you can apply online using the California Department of Tax and Fee Administration (CDTFA) website.

Zoning and other permit fees

Depending on your industry, your business might need specific permits to operate. For example, running a restaurant might require a health, building, and signage permit. 

Permit costs vary throughout California; some, like signage, are free, while others, like a health permit, can cost up to $400. 

Contact your county clerk’s office to see which permits your business needs. 

How to reduce the cost of forming an LLC, LLP, and LP in California?

You can start a business in California and save money on the formation costs, for example:

Pro tip:

The California Secretary of State’s website can provide helpful resources to guide you through the formation process.

Register a business in California online

Another way to form your business is by using an online entity formation service to do it all for you.

These services offer affordable packages that help you prepare and file the necessary documents.

Additional costs to starting a business in California?

Okay, that’s the question “How much does it cost to start a business in California?” answered.

But additional costs besides licenses, permits, and formation fees can significantly impact how you run your California business.

Complex regulations

California’s dynamic approach to governance means the regulatory landscape is constantly changing, presenting a challenge for businesses. 

As a small California business owner, you must stay ahead of the curve to remain compliant and minimize potential financial pitfalls.

High taxes

California’s reputation as a high-tax state is no secret.

The corporate income tax rate can be as high as 8.84%, and the individual tax (for pass-through entities) 13.3%.

Both are higher than most US states, making California an expensive place to do business in.

Cost of living

California’s wealth is undeniable, but it comes at a price, as the cost of goods, services, and wages are higher than in most states.

For example:

High minimum wage

California stands out among the 49 other US states with a minimum wage of $15 per hour for larger employers and $14 per hour for smaller businesses. 

Compare that to the federal average of $7.25, and you see how California is a top-tier minimum wage state. 

Competitive labor market

California’s economy is booming, wages are strong, and demand is high, so it’s an employee market, making it difficult for small start-ups to attract and retain employees. 

All businesses must now offer enticing compensation packages to land the best available talent, like competitive salaries, enticing benefits, and an inspiring work environment. Pushing up employer costs!


How much does it cost to start an LLC in California?

To start your LLC, you must file Articles of Organization by mail or online. The filing fee is $70; if you want a certified copy, add an extra $5.

Once you’re in business, there’s an annual minimum tax of $800, regardless of whether you turn a profit. Yup, you heard it right. That’s the California Franchise Tax Board’s saying, “Hey, we appreciate your entrepreneurial spirit, but we need our slice of the pie.”

Is California's franchise tax deductible?

As per the California Tax Service Center, the annual franchise fee is a deductible business expense, and you can subtract it from your tax bill.

How much does a business license cost in California?

California business licenses vary in price as cities administer them, ranging from $50 to $100. Check with your local city administration for precise pricing information.

How much does a DBA cost in California?

Each California county determines its DBA filing fee, and they can differ from city to city. But the average DBA application fee is $40.


How much it costs to start a business in California depends on your chosen market, the licenses and permits you`ll need, and whether you`ll have employees.

And that’s the same for most US states.

But California’s dynamic economy and diverse consumer base make it an especially attractive place to start a business. 

And while wages, taxes, and living costs are high, tapping into the Golden State’s potential could be a rewarding success story.

This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.

Terry is a serial entrepreneur with over 25 years of experience building businesses across multiple industries – construction, real estate, e-commerce, hotelier, and now digital media. When not working, Terry likes to kick back and relax with family, explore Taoism’s mysteries, or savor the taste of fine Italian red wine.