Side-by-side comparison of Limited Liability Company and Sole Proprietorship for California businesses. See costs, tax treatment, and which structure fits your situation.
| Feature | LLC | Sole Prop |
|---|---|---|
| Filing fee (California) | $70 | $0 |
| Annual fee | $800/yr | $0/yr |
| Liability protection | Yes | No |
| Self-employment tax | On all profit | On all profit |
| Formation complexity | low | none |
| Ongoing complexity | low | none |
| Can raise funding | Limited | Limited |
Pros
Cons
Pros
Cons
⚠$800 annual franchise tax minimum — even if you earn $0
⚠S-Corps pay 1.5% entity-level tax
⚠Highest state income tax rate in the US at 13.3%
⚠LLC fee increases based on gross receipts ($250K+ gross receipts triggers additional fees)
Our free quiz calculates your actual tax burden under each entity type based on your income and California tax rates.
Take the QuizLimited Liability Company: Liability protection with pass-through taxation. The most popular choice for small businesses. Sole Proprietorship: The simplest structure. You and your business are the same legal entity. In California, LLC filing costs $70 and Sole Prop costs $0.
Both have similar tax treatment. The best choice depends on your specific income level and California tax situation. Use our free quiz for exact numbers.
LLC filing fee: $70, annual fee: $800/year. Sole Prop filing fee: $0, annual fee: $0/year. California also charges a $800/year franchise tax.
Disclaimer
This comparison is for educational purposes only and does not constitute tax, legal, or financial advice. Filing fees, tax rates, and regulations may have changed since this data was compiled. Verify all information with the California Secretary of State and consult a qualified CPA or tax attorney before making entity selection or tax election decisions.
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