California LLC vs Sole Proprietorship Calculator
Compare the costs and benefits of forming an LLC versus operating as a sole proprietor in California. Get personalized recommendations based on your business situation.
Revenue minus expenses
High: Physical products, professional services. Low: Digital products, consulting.
LLC Recommended
An LLC will provide more credibility for your business size and help with client trust, contracts, and growth opportunities.
California LLC
First Year Total
$880
Annual Cost (Year 2+)
$810
5-Year Total Cost
$4,120
Breakdown:
Sole Proprietorship
First Year Total
$140
Annual Cost (Year 2+)
$100
5-Year Total Cost
$540
Breakdown:
Cost Difference
Sole Proprietorship saves $3,580 over 5 years ($716/year average)
Feature Comparison
Self-Employment Tax (Both Structures)
Both LLCs and sole proprietorships pay self-employment tax (15.3%) on profits:
~$7,650 per year
Based on $50,000 profit
What This Calculator Compares
Formation Costs
Initial setup expenses
Annual Fees
Ongoing maintenance costs
Liability Protection
Personal asset safety
Tax Implications
Filing requirements
Why Use This Calculator?
Make Informed Decisions
Compare costs and benefits before choosing your business structure
Understand Trade-offs
See what you gain and lose with each option
Plan Long-term
View 5-year costs to understand long-term impact
Official References
This comparison is based on official California business requirements:
- California Franchise Tax Board
LLC tax requirements and fees
- California Secretary of State
Business entity registration
- IRS Self-Employment Tax
Federal tax requirements for both structures
This calculator provides general comparisons. Consult with a business attorney or tax professional for advice specific to your situation.