With the largest economy of any US state, 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, more than 4 million small businesses call it home, and most of them are one-person operations.
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 (LLCs), limited partnerships (LPs), and corporations do.
How much does it cost to form a California LLC or corporation?
To start an LLC in California, you file Articles of Organization with the California Secretary of State’s office; a corporation files Articles of Incorporation.
Registering an LLC costs $70 ($75 with a certified copy), and a corporation $100.
The cost of California’s annual franchise tax
The California Franchise Tax Board charges an $800 minimum annual tax on LLCs, corporations, LPs and LLPs. Consider it a charge for doing business that applies to:
- Entities formed in California.
- Any entity formed elsewhere but registered to operate in California.
- Entities doing business in California, even if not registered in the state.
For new LLCs, there’s some relief coming. Under SB 122, signed into law in June 2026, LLCs (as well as LPs and LLPs) whose first tax year begins in 2027, 2028 or 2029 pay a reduced $400 for that first year. From the second year on, the full $800 applies. Learn more in our guide to the California LLC franchise tax.
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 their formation documents, so it’s included in the filing fee.
Sole proprietors and general partnerships use their legal names unless they want a 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 corporation can use instead of its registered name.
DBA filing costs vary throughout California, for example:
- In Los Angeles County, filing costs $26 for one business name and one registrant, plus $5 for each additional name or registrant. An FBN is good for five years, then you refile.
- A business with no place of business in California files its DBA with Sacramento County, which sets its own fee.
You’ll also need to publish your FBN statement in a local newspaper once a week for four weeks, which costs extra. Contact the County Clerk’s office in your location for the exact DBA filing costs, and see our guide to filing a DBA in California.
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 corporation by filing a name reservation through the Secretary of State’s bizfile Online, with a $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, called an agent for service of process in California.
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 services in California typically cost $50 to $300 per year. You can save the cost by acting as your own registered agent.
California business license fee
California doesn’t have a general state business license. However, most businesses need a city or county business license, and some need an industry-specific license, which varies in price depending on your industry.
Local business license fees vary widely by city, and you can learn more about licensing on the CA.gov website or our guide to California business license costs.
Seller’s permit fee
Any individual or legal entity that does business in California and sells or leases tangible property, including temporary sales, needs a seller’s permit to collect and pay sales tax.
Seller’s 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 widely throughout California, from small fees for some sign permits to several hundred dollars or more for health permits.
Contact your city or county 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:
- Do-it-yourself formation: Instead of hiring an attorney, save money by filing articles of organization yourself.
- Choose standard filing options: Use the free standard processing times rather than expedited options when filing your formation documents.
- Minimize additional services: When forming your California LLC, or other entity, avoid unnecessary premium package offers, as they can increase costs.
- Avoid unnecessary extras: Avoid costly optional extras, services, or features during formation; only pay for what you need.
- Get better deals with professionals: When using tax accountants or lawyers, ask for pricing alternatives, such as limited-scope consultations or flat-fee arrangements.
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 LLC 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 is 8.84%, and the top personal income tax rate (which applies to most pass-through business income) is 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.
Wages and incomes in California are above the national average, giving Californians more spending power. But living costs are also higher, so even though California businesses can earn higher revenues, the cost of doing business is also more expensive.
High minimum wage
California’s statewide minimum wage is $16.90 per hour in 2026, for employers of all sizes. Many cities set higher local minimums, and some industries, like fast food and healthcare, have their own higher rates.
Compare that to the federal minimum wage of $7.25, and you see how California is a top-tier minimum wage state.
Competitive labor market
California’s economy is large, wages are strong, and demand for skilled workers is high, which can make it difficult for small start-ups to attract and retain employees.
Many businesses need to offer appealing compensation packages to land the best available talent, like competitive salaries, benefits, and a good work environment, which pushes up employer costs.
Conclusion
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.
FAQ
To start your LLC, you file Articles of Organization online or by mail. 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, though LLCs whose first tax year begins in 2027 through 2029 pay $400 for that first year.
The $800 annual tax is generally deductible as a business expense on your federal tax return, but it isn’t deductible on your California return. Check with a tax professional about your situation.
California business licenses are issued by cities and counties, so prices vary widely. Some charge a small flat fee, while others base the tax on revenue or number of employees. Check with your local city or county for exact pricing.
Each California county sets its own DBA filing fee; for example, Los Angeles County charges $26 for one name and one registrant. You also need to pay to publish the filing in a local newspaper for four weeks.