California Incorporation Services

Formation
in California

If you live in California, or your business is based in California, there is no legal requirement to form your new corporation or LLC there. However, for a small business entity that primarily or exclusively does business in California, there is rarely an advantage to forming it in another state because you will still be required to qualify your entity in the state where you are doing business. This increases compliance requirements and maintenance costs related to annual filings and franchise fees in multiple states.

Choose Your Entity

C Corps

For founders who:

$825

C Corps

$825

For founders who:

S Corps

For founders who:

$825

S Corps

$825

For founders who:

LLC's

For founders who:

$825

LLC's

$825

For founders who:

Professional Corps

For founders who:

$825

Professional Corps

$825

For founders who:

Factors to consider

One of the first decisions a business owner must make after deciding to incorporate is where to incorporate. The common choice is your home state where your business is located and this is usually the best choice, though not legally required. However, many people believe that there are advantages toincorporating in one of the “tax-free” states or a so-called “corporation-friendly” state like Delaware. Since you are not required to incorporate your business in the state in which you operate your business,you may choose any of the 50 states. But should you?

Your decision should be based on consideration of three main factors:

  • Tax considerations
  • Cost considerations, and
  • Jurisdictional considerations.

In all but exceptional cases, a small business will conclude that it is most advantageous and convenient to incorporate your business in the state in which the principal business is located and operates – the business’ “home” state.

Although the primary characteristics of corporations are similar from state to state, the applicable tax rate is not. Some states have tax rates as high as 10%. Nevada, on the other hand, has no franchise tax and no state income tax. Income tax considerations will generally not apply, however, to an entity that is not taxed at the business level, such as an LLC or S Corporation. 

It certainly would be advantageous to start or move your business to Nevada to enjoy these tax advantages. However, if you’re operating your business in a different state, incorporating in Nevada won’t excuse you from paying business taxes in your home state because every state requires businesses operating within its borders to pay tax on sales or revenue that originates within the state. More on this later. 

Although retaining an attorney is not required to incorporate your business, seeking legal counsel is advisable due to the complexities of the process. Thus, if you are considering incorporating out of state, consulting with legal counsel licensed and practicing in the incorporating state may represent an additional cost if you already obtain legal advice in your home state.

Every state requires a corporation to have a resident agent for service of process located at a physical address within that state. Many private service companies offer resident agent services in all states. The typical fees are between $125 and $200 per year. If you don’t have a physical address in the incorporating state, you’ll be required to pay an authorized company an annual fee for this service.

Finally, every state requires a foreign (out-of-state) corporation to register, or qualify, before conducting business within that state. This process involves filing paperwork with the foreign state, paying filing fees, and possibly paying penalties for conducting business prior to registering as a foreign corporation. It also imposes the same or similar annual reporting requirements and franchise and/or income tax obligations on the foreign corporation as are imposed on domestic corporations. In short, a corporation will usually wind up paying corporation maintenance fees and taxes in its home state as well as the foreign state where it registers.

If a business headquartered in one state is incorporated elsewhere, it will be subject to jurisdiction and service of process in the foreign state of incorporation. This may prove to be inconvenient for a variety of reasons. 

First, subjecting your corporation to service of process in the state of incorporation means that any legal notices and/or communications from the state will be sent to your registered agent in that state. Materials may therefore be delayed as your registered agent forwards them to you. Time-sensitive materials may be misplaced or may not reach you in time.

Second, subjecting your corporation to another state’s jurisdiction usually means that your corporation is governed by the laws of that state, which may differ from those of your home state. An important consequence of this is that the court system in your corporation’s state will probably require you to appear in court in that state if any legal disputes arise (for example, if a creditor is attempting to collect a debt owed by your corporation).

Comprehensive Pricing

Our Digital Incorporation Packages cover everything you need to legally form your entity and register with the IRS so that you can open your company’s bank account and get started.

    How We Do It

    How We Do It

    The secret to our success is personalized attention. At Nationwide Incorporators, an attorney answers your specific questions and walks you through each step of the process.

    The secret to our success is personalized attention. At Nationwide Incorporators, an attorney answers your specific questions and walks you through each step of the process.

    STEP 1

    Quality Check

    An attorney thoroughly reviews your questionnaire and contacts you to resolve any questions

    STEP 2

    Name Availability Check

    Your requested entity names are checked with your formation state for availability

    STEP 3

    Document Filing

    We prepare and file your formation documents to create your new legal entity

    STEP 4

    Finalize Documents

    An attorney prepares fully customized final documents and forms based on your package selection

    STEP 5

    Unlimited Free Support

    An attorney is always here to provide assistance and answer questions about your new entity

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