LLC and S Corporation Setup for New Businesses in Los Angeles
MangoBooks, a Los Angeles CPA firm, sets up California LLCs and corporations for new businesses, files the S corporation election when it suits the business, and handles the first year's bookkeeping, payroll and tax returns. LLC or S corporation setup starts from $950 plus state fees; the state's own filing fees, $70 for an LLC's Articles of Organization, $100 for Articles of Incorporation and $20 for the LLC's Statement of Information, are added. Monthly bookkeeping typically costs $650–$1,400 per month, payroll $175–$400 per month and the company's tax return $2,000–$3,500 per year.
The formation work is led by Felix Park, CPA, MBA, a licensed California CPA. Before anything is filed, we compare how the business would be taxed as an LLC, an S corporation or a C corporation, using the owners' expected income and payroll, and we give the new company a calendar of what is due to California and the IRS in its first year.
Situations We Handle
A sole proprietor forming an LLC. A sole proprietor reports business income on Schedule C of the personal return. Once an LLC with one member is formed it is disregarded for income tax by default, so the owner keeps filing Schedule C, while California requires the LLC to file Form 568 and pay the $800 annual tax each year. We file the Articles of Organization, obtain the employer identification number and set the first-year calendar; the owner's individual return with a business typically costs $1,100–$1,800. See Business Formation.
An LLC electing S corporation status. An eligible LLC that files a timely Form 2553 is treated as a corporation from the election's effective date without a separate Form 8832. From then on it pays its owner-employees reasonable compensation through payroll before non-wage distributions, files Form 1120-S and California Form 100S, and pays California 1.5 percent of its income; California also requires an S corporation to keep a separate bank account and separate records. The election is part of LLC or S corporation setup, from $950 plus state fees. See Tax Planning for the numbers behind the decision.
Two founders choosing an entity. An LLC with two or more members is taxed as a partnership by default and files Form 1065 and California Form 568, with a Schedule K-1 for each member. A corporation can elect S status if it has no more than 100 shareholders and one class of stock, and Form 2553 must be signed by all of them. We compare the tax under each structure with the founders' expected income and payroll before filing.
Hiring the first employee. Within 15 days after paying more than $100 in wages in a calendar quarter, the business registers with the EDD as an employer. From then on it files Form 941 each quarter, the DE 9 and DE 9C with the EDD, and Forms W-2 by January 31, which for 2026 wages is February 1, 2027. Payroll typically costs $175–$400 per month. See Payroll.
The First Year: What Is Due and When
- Secretary of State. Articles of Organization (Form LLC-1, $70) for an LLC or Articles of Incorporation ($100) for a corporation, then the initial Statement of Information within 90 days ($20 for an LLC): every two years for an LLC after that and every year for a corporation.
- Employer identification number. Issued by the IRS online at no charge once the entity exists.
- Form 2553. No more than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the preceding tax year. A late election can be accepted under Rev. Proc. 2013-30 when the form is filed within 3 years and 75 days of the intended effective date.
- LLC annual tax. $800 every year the LLC is organized or doing business in California, even if it is not conducting business, until it is cancelled. The first payment is due by the 15th day of the 4th month after the filing date with the Secretary of State; the first-year exemption applied only to tax years 2021 through 2023.
- LLC fee. Due when total California income is $250,000 or more, estimated and paid by the 15th day of the 6th month on form FTB 3536.
- Corporations. The $800 minimum franchise tax is not paid in the first taxable year by a corporation newly incorporated on or after January 1, 2020. An S corporation pays 1.5 percent of its California income, with the $800 minimum waived on the initial return for its first taxable year.
- Return due dates. Form 1120-S and Form 100S are due on the 15th day of the 3rd month after the year ends, March 15 for a calendar year; an extension runs to the 15th day of the 9th month, but the tax is still due on the original date.
- Estimated payments. Sole proprietors, partners and S corporation shareholders generally pay estimated tax when they expect to owe $1,000 or more; corporations when they expect to owe $500 or more. Federal payments are due April 15, June 15, September 15 and January 15, or the next business day when a date falls on a weekend or legal holiday. California requires estimates when at least $500 ($250 if married filing separately) is expected, paid 30 percent by April 15, 2026, 40 percent by June 15, 2026, nothing in September and 30 percent by January 15, 2027.
- Seller's permit. Required of a business engaged in business in California that sells or leases tangible personal property ordinarily subject to sales tax; there is no fee for the permit.
- EDD employer registration. Within 15 days after paying more than $100 in wages in a calendar quarter.
- City of Los Angeles. A business in the city registers with the Office of Finance for a Business Tax Registration Certificate, and a self-employed person based outside the city who works in the city seven days or more in a calendar year must register too. The annual renewal is due by the last day of February, or the following Monday when that day is a Sunday, and a registered business with gross receipts of $100,000 or less pays no tax when it renews on time.
- Contractors. Form 1099-NEC is required when a contractor is paid $2,000 or more in a year, starting with 2026 payments, and is due January 31, which for 2026 payments is February 1, 2027.
California Specifics
- LLC. Files Form 568 whether it has one member or several, pays the $800 annual tax and, from $250,000 of total California income, the LLC fee.
- S corporation. Files Form 100S and pays 1.5 percent of its California income with an $800 minimum, waived for the first taxable year. A corporation with a federal S election and a California filing requirement is treated as having made the California election on the same date.
- C corporation. Files Form 100 and is subject to the $800 minimum franchise tax, which a corporation newly incorporated on or after January 1, 2020 does not pay in its first taxable year.
- Pass-through entity elective tax. For tax years through 2030, an S corporation or partnership can elect each year, on a timely filed original return, to pay 9.3 percent of its qualified net income at the entity level, with the first payment due June 15 of the tax year; consenting owners who are individuals claim a credit on their California returns.
Where We Work
We set up companies for owners throughout Los Angeles, including the San Fernando Valley communities around our office in Woodland Hills and the Conejo Valley. Meetings are scheduled in advance, and documents are exchanged electronically. A company in the City of Los Angeles also registers with the city's Office of Finance; Burbank, Glendale, Thousand Oaks and Agoura Hills have registrations or licenses of their own, Calabasas requires no business license, and the City of Westlake Village requires no city business license. See CPA in the San Fernando Valley and CPA for the Conejo Valley.
Services Involved
- Business Formation: the entity comparison, the Secretary of State filings, the EIN, Form 2553 and the first-year calendar
- Bookkeeping: the new company's monthly books from its first month
- Payroll: the first employee, and the owner's salary once an S election is in place
- Business Tax Preparation: the company's first federal and California returns
- Individual Tax Preparation: each owner's return with its Schedule C or K-1
- Tax Planning: estimated payments and the S election decision
- Financial Statements: statements for the owners or a lender
Fees
| Service | Typical range |
|---|---|
| LLC or S corporation setup | From $950 plus state fees |
| Monthly bookkeeping | $650–$1,400 per month |
| Payroll | $175–$400 per month |
| Business tax return (1120-S, 1065 or 1120 with the California return) | $2,000–$3,500 per year |
| Owner's individual return with a business | $1,100–$1,800 |
State filing fees are added to the setup fee: $70 for an LLC's Articles of Organization, $100 for Articles of Incorporation of a general stock corporation and $20 for an LLC's Statement of Information. Tax planning is quoted after a consultation. Fees depend on the scope of work and are set out in a written engagement letter before work begins. See the Fee Guide.
Frequently Asked Questions
Should a new business be an LLC or an S corporation?
An LLC is a legal entity formed with the California Secretary of State; an S corporation is a federal tax status that a corporation, or an LLC eligible to be taxed as one, elects on Form 2553. By default an LLC with one member is disregarded for income tax and an LLC with two or more members is taxed as a partnership. An S corporation must pay its owner-employees reasonable compensation through payroll before other distributions and pays California 1.5 percent of its income, while an LLC pays the $800 annual tax and, from $250,000 of total California income, the LLC fee. We compare the tax under each structure with the owners' expected income and payroll before anything is filed.
What does it cost to set up an LLC or S corporation, and are state fees included?
LLC or S corporation setup starts from $950 plus state fees. The state's filing fees are not included: $70 for an LLC's Articles of Organization, $100 for Articles of Incorporation of a general stock corporation and $20 for an LLC's Statement of Information. The fee is set out in a written engagement letter before work begins. See the Fee Guide.
What is due in the first year of a new California LLC?
The initial Statement of Information within 90 days of registering; the $800 annual tax by the 15th day of the 4th month after the LLC files with the Secretary of State, since the first-year exemption applied only to tax years 2021 through 2023; the LLC fee, estimated and paid by the 15th day of the 6th month, when total California income reaches $250,000; and Form 568 with the year's return. Owners who expect to owe $1,000 or more of federal tax, or $500 or more of California tax, also make estimated payments during the year.
When is Form 2553 due, and what if the deadline was missed?
Form 2553 is filed no more than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the preceding tax year. A late election can still be accepted under Rev. Proc. 2013-30 if the form is filed within 3 years and 75 days of the intended effective date and the IRS requirements for relief are met.
Does the setup fee include bookkeeping, payroll or the tax returns?
No. Each is a separate service with its own fee: monthly bookkeeping $650–$1,400 per month, payroll $175–$400 per month, the company's tax return $2,000–$3,500 per year and the owner's individual return with a business $1,100–$1,800. They can be set up under the same engagement letter as the formation. See the Fee Guide.
Can MangoBooks prepare the company's first return and the owners' personal returns?
Yes. We prepare the company's federal and California returns, Form 1120-S and Form 100S for an S corporation or Form 1065 and Form 568 for an LLC taxed as a partnership, with a Schedule K-1 for each owner, and then each owner's Form 1040 and Form 540 from the same year-end figures. See Business Tax Preparation.
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Call (213) 255-4665 or send us a short message about your situation.
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