Setting up a real estate LLC (Limited Liability Company) in California is a smart choice if you want to start a real estate business. It provides certain benefits and protections.
However, there are some LLC costs involved in the process. In this guide, we will explain the steps to set up a real estate LLC in California and highlight the costs associated with each step.
Starting a real estate LLC in California involves several steps and costs. By understanding the process and associated fees, you can plan your budget accordingly.
Remember to consult with professionals, such as attorneys and accountants, to ensure you comply with all legal and tax requirements.
With careful planning and organization, you can successfully set up and operate your real estate LLC in California.
The first step is to choose a name for your company. You can select a name that reflects your business and is not already taken by another company.
This step doesn’t have any specific cost attached to it but there are a few requirements in naming. Read the full list of California naming guidelines for detailed information
Next, you need to hire an LLC agent. An LLC agent is a person or a company that will receive legal documents and important mail on behalf of your real estate LLC.
The cost of hiring an LLC agent in California can vary, but it usually ranges from $0 to $150 per year. Some may offer a year of free service to registered LLC agents.
To officially establish your real estate LLC, you need to file LLC Articles of Organization with the California Secretary of State.
This document provides information about your company, such as its name, address, and the name of the LLC agent.
The filing fee for the LLC Articles of Organization in California is $70.
After filing the LLC Articles of Organization, you must also file an Initial Statement of Information with the California Secretary of State.
This statement provides additional details about your real estate LLC, such as the names and addresses of the LLC members or managers.
It’s a required filing and it should be filed within 90 days of registration. The filing fee for the Initial Statement of Information is up to $25.
Failing to file an initial statement of information in time will cost you a $250 fine.
It is highly recommended to create a Real Estate LLC Operating Agreement, although it is not required by the state of California.
This agreement outlines how your real estate LLC will be managed and the responsibilities of its members or managers.
There is no specific fee for creating an operating agreement, as you can either create one yourself or hire an attorney to help you, which might involve some costs.
An Employer Identification Number (EIN) is a unique number issued by the Internal Revenue Service (IRS) to identify your real estate LLC for tax purposes. Getting an EIN is free of charge.
Once your real estate LLC is set up, there are some ongoing fees to keep in mind:
Every year, you are required to pay an annual franchise tax of $800 to the California Franchise Tax Board. This fee is due regardless of whether your real estate LLC makes a profit or not.
Every two years, you must file a Statement of Information with the California Secretary of State. The filing fee for this statement is currently $20.
Depending on the city or county where your real estate LLC operates, you may be required to obtain business licenses and permits. The fees for these licenses and permits can vary, so it’s important to check with your local government.
The amount of taxes your real estate LLC will need to pay can vary depending on various factors, such as its profits and the type of business activities it engages in.
Consult with a tax professional or an accountant to understand and fulfill your tax obligations.
Well, we can’t help you with the registration process but yes we can help you grow your business digitally after you have a registered business entity.
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