Costs of Incorporating Your Business

Business owners choose to incorporate their business because they perceive tax advantages, believe it will help their image or wish to limit their personal liability. If personal liability is a concern for you, we recommend working with an accountant or attorney to make sure you set up and maintain your corporation properly. Failure to do so could endanger your personal assets in the case of a lawsuit even if you have incorporated your company.
There are several fees involved in setting up a California corporation. First, you must preserve a unique name, which would be payable to the City of Santa Clarita, or to LA County should your SCV business possess an unincorporated area address. The articles of incorporation filing fee is $100 for a corporation, such as a C Corp, or $85 for a limited liability company (LLC). California also requires the filing of an initial report containing detailed information about your company, which costs $100, as well as a $25 statement of information due every following year by the date of incorporation. The fee for an LLC is $20. You also may need specific licenses. Small business licenses usually range between $50 and $100. Furthermore, an LLC must pay an annual fee of $800, which is due within 3.5 months from the date of formation and then subsequently due every April 15th.
Your new corporation will also be required to designate a registered agent in California. A registered agent is a corporation or individual who resides in California that has been assigned to accept service of process in case of a lawsuit. As the business owner, you may be able to save as much as $500 by becoming the registered agent for your corporation, if you meet the requirements for doing so and adhere to them. However, the time spent and potential future costs may prohibit you from making this decision.
The point is that the incorporation, whether a California corporation or LLC, costs about $2,000 to $2,500 including the fee for an accountant or an attorney. In many cases, the benefits easily outweigh the costs. If you have questions about incorporating your business, we welcome you to contact us.
For more information concerning Professional Tax Services, call 661-259-1967. Through the EZ2 Thrive program, Professional Tax Services provides unlimited complimentary advice on income and payroll taxes. For information on how you can receive advice at no cost, visit www.scvprotaxservices.com.