- Usual entity
- LLC or corporation
- Annual minimum
- Franchise tax minimum applies
- Statement of information
- Required on a set cycle
- Foreign LLCs
- Must register if doing business here
Form a company in California
The state people try hardest to avoid and the one that is hardest to avoid. If you are here, forming elsewhere usually costs more rather than less.
- Country
- United States
- Usual entity
- LLC or corporation
Why founders choose California, and when they should not.
California has the most aggressive doing business standard in the country, and it enforces it. If you live here, or your employees do, or you actively conduct business here, California expects the entity to be registered and to pay its annual minimum franchise tax whether or not the company made a penny.
This is why the Wyoming advice so often backfires. A California resident who forms in Wyoming has not escaped California. They have added a Wyoming filing, a Wyoming registered agent and a Wyoming annual report on top of the California registration and minimum tax they were always going to owe. The result is two states instead of one.
Forming in California is more expensive than forming elsewhere. For a business that is actually in California, it is still usually the cheapest correct answer.
Who California fits.
California usually suits
- Businesses with owners, staff or premises in California
- Companies whose customers and contracts are predominantly Californian
- Anyone who has been told to form in Wyoming while living in California
On fees. Government filing fees are set by the jurisdiction and change without notice, sometimes mid year. We quote the current fee for your specific filing at intake, confirmed against the authority on the day, rather than publishing a figure here that may be stale by the time you read it. Our own service fee is on the pricing page and does not change.
- Order matters
- Doing these out of sequence causes rework
Filing in California, step by step.
The sequence specific to California, including the parts that differ from other jurisdictions.
Reality check
Before anything else, confirm whether you are already doing business in California
If you live here or your staff do, you are, and forming elsewhere will not change it.
Name
Check availability with the Secretary of State, which applies a distinguishability standard
Agent
Appoint an agent for service of process with a California street address
Filing
File the Articles of Organization or Articles of Incorporation
Statement
File the initial Statement of Information within the deadline that follows formation
This is separate from the annual tax filing and is missed constantly.
- Missing one
- How we track these
What a California entity owes each year.
| Obligation | Who wants it | When and how much |
|---|---|---|
| Annual minimum franchise tax | Franchise Tax Board | Due annually for entities registered here, whether or not the company earned anything |
| Statement of Information | Secretary of State | On a set cycle, confirming officers, managers and the agent |
| Registered agent | Your agent | Annually |
| Sales and use tax | Department of Tax and Fee Administration | If you sell taxable goods in California |
- Honest comparison
- Including where another jurisdiction wins
California against the Wyoming advice
This is the most common expensive mistake in the whole industry, and it is worth spelling out with numbers rather than in principle.
A California resident forms a Wyoming LLC because a video said it avoids California tax. California continues to tax them as a resident, and because the business is being conducted from California, the Wyoming entity is generally required to register here as a foreign LLC. They now pay a Wyoming filing fee, a Wyoming registered agent, a Wyoming annual report, a California foreign registration, a California registered agent, the California annual minimum and the California Statement of Information. The Wyoming layer bought nothing at all.
The only version of this that works is the one where you genuinely leave. Changing where a company is formed does not change where you live, and California is unusually attentive to the difference. If you are here, form here, and put the money you would have spent on the second state into planning that actually applies to you.
What people get wrong about California
The state taxes based on where business is conducted and where you reside, not on where a certificate was issued. The out of state entity generally has to register here as well.
It applies to an entity that exists and is registered, not to one that is profitable. Dormant companies accrue it too, which is why abandoned California entities generate unpleasant letters years later.
Simply stopping does not end the obligation. An entity that is not formally dissolved continues to accrue. If you are closing a California company, close it properly.
California questions
Not if you live or operate here. It generally results in paying both states. We tell clients this before they pay us, which is occasionally an unpopular conversation.
Rules on the first year have changed over time and depend on entity type and formation date. We confirm the current position rather than repeating an old summary.
California's periodic filing confirming officers, directors or managers and the agent. It is separate from the tax filing and has its own deadline.
Forming in California?
We will confirm the entity, the current government fee and the realistic timeline before anything is filed.