Forming an LLC in California

UPDATED: Oct 1, 2022

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Forming an LLC in California

I am currently in the process of starting a small business on Amazon and was

considering forming an LLC however the very high cost to do so in California is a major hurdle for a small business. If I operate as a sole proprietor can I still make business write offs/deduction or is that only an LLC? If I do not have much in the form of personal assets is it simply better so go sole proprietor at the start? Apart from that is there any benefit at all to filing for an LLC in CA as I cannot understand why the cost is so astronomically high compared to the majority of other states.

Asked on July 20, 2018 under Business Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Legally, a valid business expense is a valid business expense: you can take it as a deduction as a sole proprietor or as an LLC. It is true that it is easier to track and demonstrate that expenses are business expenses when you have a separate business structure and bank account(s), credit card(s), etc., but if you keep very thorough records of what was spent for what, that is hardly an insurmountable obstacle. 
Even if you don't currently have much in the way of assts, bear in mind that if you are sued, the judgment against you lasts for many, many years: someone who sued you can try to collect from you later, when you have assets. That's why having the personal liability protection of an LLC even when you don't presently have much at risk is beneficial.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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