I
United States

United States

Company Formation in California

State of California — Secretary of State

Formation Time
2–5 business days
Min. Capital
No minimum
Corporate Tax
8.84% state corporate tax (C-Corp); 8.84% on LLC net income over threshold
Foreign Ownership
100%

Overview

California is the economic titan of the United States and the world's fifth-largest economy by GDP ($3.9 trillion), surpassing the United Kingdom, India, and France. As the undisputed global capital of technology and venture innovation, Silicon Valley (San Francisco, Palo Alto, San Jose) produces more venture-backed unicorns and deep-tech breakthroughs than any other jurisdiction on Earth, while Los Angeles leads the world in entertainment, media, and Pacific Rim logistics. Incorporating in California provides direct access to the world's most concentrated pool of software engineers, AI researchers, and venture capitalists. California businesses are subject to the California Franchise Tax Board (FTB) $800 annual minimum franchise tax; however, under California AB 85, new corporations, LLCs, and LPs are granted a statutory exemption from the $800 minimum franchise tax for their first taxable year. For companies requiring an authentic Silicon Valley or Los Angeles presence, California is unmatched in technological prestige.

5th largest global GDP
Silicon Valley tech capital
Year 1 $800 tax waiver
Sand Hill Road VC access
Hollywood media center

Why Choose California

1

5th largest economy in the world ($3.9 trillion GDP) — ahead of the UK, India, and France

2

Silicon Valley — undisputed global epicenter of AI, software, hardware, and venture capital

3

First-year $800 minimum franchise tax waiver for newly formed entities (California AB 85)

4

Los Angeles — global capital of entertainment, Hollywood media, gaming, and Pacific logistics

5

World's highest concentration of tier-one venture capital firms (Sand Hill Road)

6

Exceptional talent pool from Stanford, UC Berkeley, Caltech, and UCLA

7

World-class Pacific ports (Port of Los Angeles and Port of Long Beach) handling 30% of US imports

8

Deep international banking ecosystem with direct Asia-Pacific financial links

Business Entity Types

EntityOwnershipDirectorsCapitalTaxBest For
C-Corporation100%1 (must have at least the number of shareholders, up to 3)None21% federal CIT; 8.84% California corporate tax (exempt from $800 min tax in Year 1)Silicon Valley tech startups, VC-funded ventures, AI development platforms
LLC100%N/A (member or manager managed)NonePass-through taxation; $800 annual minimum tax (waived Year 1) + gross revenue fee if income > $250kConsulting agencies, digital media, e-commerce, entertainment services

Step-by-Step Formation Process

1

Corporate Name Clearance

1 day

Search California Secretary of State bizfile database for name uniqueness.

2

Articles of Organization / Incorporation Filing

2–4 business days

File formation documents with the Secretary of State via bizfile California.

3

Statement of Information (Form LLC-12 / SI-550)

1–2 days

File initial Statement of Information within 90 days of formation ($20 fee).

4

Federal EIN Registration

3–10 business days

Obtain Employer Identification Number from the IRS.

5

FinCEN BOI & Corporate Banking

3–7 business days

Submit FinCEN BOI report and establish US corporate bank accounts.

Costs & Fees

Government / License FeeUSD 70+
Our Service FeeUSD 950 – 2,500
Annual RenewalUSD 820+

Fees are indicative and may vary based on business activity, entity type, and additional approvals required. Contact us for a precise custom quote.

Get Custom Quote

Banking

California hosts the most innovation-friendly banks in the world. Startups can bank with specialized venture and tech banks, fintech leaders (Mercury, Brex), or major commercial institutions (Wells Fargo, Chase).

Account Opening Time
3–7 business days
Multi-Currency
Yes — multiple currencies supported

Recommended Banks

Silicon Valley Bank / First CitizensMercuryBrexJPMorgan ChaseWells Fargo

Tax Overview

Corporate Tax
8.84% California corporate tax; 21% federal CIT
Personal Income Tax
1.0%–13.3% state personal income tax
VAT / Sales Tax
7.25% base state sales tax (up to 10.75% combined local)
Capital Gains Tax
Taxed as ordinary income at state level
Withholding Tax
30% federal statutory (reduced by treaties)
Double Tax Treaties
68 countries

The $800 California annual minimum franchise tax is waived for an entity's first taxable year under AB 85. In subsequent years, the $800 fee is mandatory. For LLCs with total California gross revenue exceeding $250,000, an additional annual fee ranging from $900 to $11,790 applies.

Frequently Asked Questions

Is the California $800 minimum franchise tax really waived for the first year?
Yes. Under California Assembly Bill 85, new corporations, LLCs, and limited partnerships formed in California are granted a statutory exemption from the $800 annual minimum franchise tax for their first taxable year. The $800 tax begins applying in the company's second taxable year.
What is the California LLC Gross Revenue Fee?
In addition to the annual $800 minimum tax, California imposes an annual fee on LLCs based on total income derived from California sources. If California gross revenue is under $250,000, the fee is $0. If revenue is between $250k and $500k, the fee is $900; $500k to $1M is $2,500; $1M to $5M is $6,000; and over $5M is $11,790.
What is the California Statement of Information requirement?
Within 90 days of formation, every California corporation and LLC must file an initial Statement of Information (Form LLC-12 for LLCs, Form SI-550 for Corps) with the Secretary of State, listing directors, officers, and registered agent details ($20 fee). Corporations must file annually; LLCs file biennially.
Why do tech founders choose California despite higher tax rates?
Founders locate in California for unmatched access to Sand Hill Road venture capitalists, executive talent, elite universities, and tech network effects. For companies raising institutional capital, being physically and legally established in Silicon Valley can significantly accelerate funding rounds.
Can a foreign national be the sole director and shareholder of a California C-Corp?
Yes. California corporate law permits foreign nationals without US residency to hold 100% of shares and serve as the sole director, CEO, and CFO of a California corporation.
Can non-US founders open bank accounts for a California company remotely?
Yes. Remote FDIC-insured banking is fully supported through Incorp International's integration with Mercury, Brex, and Relay, enabling founders to manage corporate cash flows worldwide without traveling to the US.