How to Start a Corporation in California (2026): Steps, Costs & Filing Guide

California’s Articles of Incorporation filing fee is $100 — $30 more than an LLC. That’s the easy part. The number that actually matters is $800: the annual franchise tax every California corporation owes to the Franchise Tax Board starting its first year. That’s not a typo, and there’s no way around it.

This guide covers the complete process: naming your corporation, filing with the Secretary of State through BizFile Online, setting up bylaws, issuing stock, handling the franchise tax, and making the S-Corp tax election if you want it. By the end, you’ll know exactly what to file, what it costs, and what to do once you’re official.

Still deciding between a corporation and an LLC? If you’re not certain which structure fits your situation, read the full comparison guide. Short version: corporations are better for raising outside investment, issuing stock options to employees, or building toward an eventual acquisition or IPO. LLCs are simpler and cheaper to maintain for most small businesses — but in California, both owe the same $800 franchise tax, so that particular cost difference vanishes. If you’ve already made your decision, keep reading.

Corporation vs. LLC in California — Quick Decision Guide

Here are the five differences that actually matter for most founders:

Factor	Corporation	LLC
Taxation	C-Corp pays entity-level tax (8.84% CA + federal). S-Corp election available for pass-through.	Pass-through by default. No entity-level income tax (but still owes franchise tax).
Ownership transfer	Shares transfer easily. Clean structure for investors.	Membership interest transfers require operating agreement review; can be messier.
Outside investment	VCs and angel investors expect corporations (usually Delaware C-Corps, but CA works).	Most institutional investors won’t invest in an LLC.
Formality required	Annual meetings, minutes, officers, board — required by law.	No mandatory meeting or minute requirements.
Annual cost in CA	$800/year minimum (franchise tax) + $25 Statement of Information (biennial)	$800/year minimum (franchise tax) + $20 Statement of Information (biennial)

Corporation wins when: you’re seeking venture capital, planning employee stock option plans (ISOs only work with corporations), positioning for an IPO, or you want the credibility signal that a formal board structure provides to larger clients and partners.

LLC wins when: you’re a solo operator, small partnership, or service business without plans to raise institutional capital. Less paperwork, more flexibility — though in California, the cost difference is minimal thanks to the franchise tax hitting both entity types.

If you’ve decided a corporation is right for you, here’s how to form one in California.

Step 1 — Choose Your Corporation Name

Your corporation name must include one of the following designators:

Corporation or Corp.
Incorporated or Inc.
Limited or Ltd.

The name must be distinguishable from existing businesses registered in California. “Distinguishable” doesn’t mean dramatically different — the Secretary of State will reject a name that’s too similar to an existing one, even with minor variations.

Check availability through the Secretary of State’s business search at bizfileonline.sos.ca.gov. Search before you fall in love with a name.

If you’re not ready to file immediately, you can reserve the name for $10 for 60 days through the Secretary of State. That’s optional — most people just file when they’re ready.

California-specific restriction: You cannot use the words “bank,” “trust,” “insurance,” “surety,” or similar regulated terms in your corporation name without the appropriate licensing and regulatory approval. This applies even if you’re not in that industry.

Step 2 — Appoint Directors and Officers

California Corporations Code (Section 212) requires at least one director. For corporations with fewer than three shareholders, you can have as few as one director. Three or more shareholders requires at least three directors. Directors don’t need to be California residents.

California also requires officers — at minimum a president (or chair of the board), a secretary, and a chief financial officer (or treasurer). One person can hold all officer positions except that the same person cannot simultaneously hold the offices of secretary and president (unless the corporation has only one shareholder). In practice, for a one-person startup, you can be the sole director, president, secretary, CFO, and shareholder.

Officers are elected by the board of directors, typically at the initial organizational meeting (covered in Step 6). Directors are elected by shareholders.

For now, just know who you’re putting in these roles. You won’t name directors in the Articles of Incorporation themselves — California’s articles don’t require it — but you’ll establish them at your organizational meeting.

Step 3 — Appoint a Registered Agent (Agent for Service of Process)

Every California corporation must have an agent for service of process — a person or company with a physical California address who is available during normal business hours to receive legal documents and official state correspondence on your corporation’s behalf.

California calls this an “agent for service of process” rather than a “registered agent,” though the terms mean the same thing. You’ll see both used interchangeably.

Your options:

You (or someone in your company): Works if you have a physical California address and will reliably be there during business hours. Not ideal if you work from home and don’t want your address on public record.
A colleague or attorney: Same requirements — California address, available during business hours.
A commercial registered agent service: Typically $50–$300/year. They handle the address, forward documents, and keep you compliant. Worth it for most small corporations.

For a full breakdown of registered agent options and how to choose, see the registered agent guide.

Step 4 — File Articles of Incorporation with the Secretary of State

This is the official step that creates your corporation under California law.

How to file: Online through the Secretary of State’s BizFile Online portal at bizfileonline.sos.ca.gov, or by mail using the standard Articles of Incorporation form. Online is faster and easier.

Filing fee: $100.

What you’ll need to include:

Corporation name — exactly as you want it to appear
Purpose statement — California allows a general purpose statement (“The purpose of the corporation is to engage in any lawful act or activity…”). Use the general statement unless you have a specific reason not to.
Agent for service of process — name and California address
Incorporator name and signature — this is the person filing the document, not necessarily a future officer or director
Number of authorized shares (see below)

Authorized Shares — What This Actually Means

California requires you to state the number of shares your corporation is authorized to issue. This is one of the concepts that trips people up most.

Authorized shares are the maximum number of shares your corporation is legally permitted to issue. You don’t have to issue all of them — or any of them — right away. It’s a ceiling, not a requirement.

A sensible default for most small corporations: 10,000,000 shares of common stock. California startups commonly authorize a higher number than you’d see in other states. This gives you flexibility to issue shares to founders and future investors, create option pools, and accommodate future rounds without hitting the limit prematurely.

Par value is a nominal dollar amount assigned to each share — a legal formality left over from an earlier era of corporate law. It has almost nothing to do with what the shares are actually worth. California actually allows — and most practitioners recommend — no-par-value shares, which skips the par value concept entirely. Unlike some states, California doesn’t base its filing fee on the number of authorized shares, so there’s no cost penalty for authorizing more shares.

Processing time: Online filings through BizFile typically process in 3–5 business days. Expedited processing is available for an additional fee ($350 for 24-hour, $750 for same-day) if you need faster turnaround.

Step 5 — Create Corporate Bylaws

Bylaws are your corporation’s internal rulebook. You don’t file them with the Secretary of State — they’re an internal document — but they’re legally required and practically essential.

Where an LLC’s operating agreement focuses heavily on economics (profit splits, capital contributions, what happens when a member leaves), bylaws focus on process:

When and how board and shareholder meetings are held
What constitutes a quorum for votes
How officers are elected and removed
How shares can be transferred
How the bylaws themselves can be amended

For a one-person corporation, bylaws feel like bureaucracy. But they matter. If you ever bring in investors, get sued, or need to prove that your corporation operates as a separate legal entity, you’ll want documented bylaws and meeting minutes.

Getting bylaws:

Formation services (ZenBusiness, Northwest, etc.) typically include a bylaws template in their packages. Functional for most simple corporations.
An attorney will charge $500–$2,000 to draft custom bylaws. Worth it if your ownership structure is complex or you’re raising investment immediately. California attorneys tend to charge more than the national average.
DIY templates are available online. Use them carefully — make sure they’re California-specific and current.

Step 6 — Issue Stock and Hold Initial Board Meeting

Once your Articles of Incorporation are approved by the Secretary of State, your corporation exists — but you’re not done with formation. You need to complete the organizational steps that make the corporation functional.

Issue stock. California allows both paper stock certificates and uncertificated shares (electronic records). For a simple startup, uncertificated shares with a shareholder ledger in your corporate records book works fine. If you’re issuing to outside investors, certificates are more common.

California securities law note: California has its own securities regulations (administered by the Department of Financial Protection and Innovation). Most small corporation stock issuances to founders qualify for exemptions, but be aware that California’s securities rules are more complex than most states. If you’re issuing stock to more than a handful of people, talk to an attorney.

Hold an organizational meeting of the board of directors. This is typically the first formal corporate act. At this meeting, the board should:

Formally adopt the bylaws
Elect officers (president, secretary, CFO, and any others)
Authorize the initial issuance of stock
Set the fiscal year (calendar year is most common)
Authorize opening a business bank account
Ratify any pre-incorporation actions taken on the corporation’s behalf

Keep corporate minutes. This is not optional. California law expects corporations to maintain records of board and shareholder meetings. Failure to do so — consistently, over time — can create a legal vulnerability called “piercing the corporate veil,” where a court decides your corporation isn’t being operated as a real separate entity and holds you personally liable for corporate debts. Keep the minutes, even if they feel like a formality.

Step 7 — Get Your EIN and Handle Post-Formation Requirements

EIN (Employer Identification Number)

An Employer Identification Number is your corporation’s federal tax ID. You need it to open a business bank account, hire employees, and file taxes. Apply through the IRS at irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online. It’s free and takes about 10 minutes online.

S-Corp Election (IRS Form 2553)

By default, your California corporation is a C-Corporation for federal tax purposes. That means the corporation pays corporate income tax on its profits, and then shareholders pay personal income tax on dividends — the classic “double taxation” problem.

The S-Corp election lets you avoid this. With an S-Corp election, corporate profits pass through to shareholders’ personal tax returns, and the corporation itself pays no federal income tax.

California S-Corp tax treatment: Unlike some states, California does not fully follow the federal S-Corp election. S-Corps in California still pay a 1.5% tax on net income (with a minimum of $800 — the franchise tax). So while you avoid double taxation at the federal level, California still takes its cut at the entity level. Factor this into your math.

To elect S-Corp status, file IRS Form 2553 with the IRS (this is a federal election only).

Timing matters:

For a newly formed corporation: file within 75 days of incorporation
For an existing corporation switching to S-Corp status: file by March 15 to be effective for the current tax year

S-Corp status has restrictions: no more than 100 shareholders, only one class of stock, and all shareholders must be US citizens or residents. If you’re planning to raise venture capital, S-Corp status is generally incompatible with that path (VCs require C-Corp structure). But for a small, owner-operated corporation? The tax savings can be significant — just remember California’s 1.5% minimum on top.

Talk to a CPA before making the election — the right choice depends on your specific income situation, and California’s treatment adds a wrinkle you won’t find in most states.

Statement of Information

This is California-specific and catches a lot of new business owners off guard. You must file a Statement of Information (Form SI-200) with the Secretary of State within 90 days of incorporating. The filing fee is $25. After that, it’s due every year.

The Statement of Information lists your officers, directors, agent for service of process, and principal office address. It’s straightforward — just don’t miss the 90-day deadline.

The $800 Franchise Tax — The Big One

Every California corporation owes an $800 minimum franchise tax to the Franchise Tax Board (FTB), due by the 15th day of the 4th month after incorporation. This is not based on revenue — you owe it whether you make $0 or $10 million.

As of 2026, there is no first-year exemption. The exemption under AB 85 expired at the end of 2023. Your corporation owes $800 from year one.

This is the single biggest ongoing cost of doing business as a corporation in California. Budget for it. Pay it on time. Late payment triggers penalties and interest that compound quickly.

Open a Business Bank Account

Keep corporate and personal finances separate from day one. Commingling funds is one of the fastest ways to lose the liability protection your corporation provides.

California Tax Registration

California C-Corporations are subject to an 8.84% corporate income tax rate on net income — one of the higher state corporate rates in the country. S-Corps pay 1.5% on net income (minimum $800).

Register with the Franchise Tax Board at ftb.ca.gov. If you have employees or sell taxable goods, also register with the California Department of Tax and Fee Administration (CDTFA) for sales tax.

California’s base sales tax rate is 7.25%, but local add-ons push it to 8.5%–10.75% depending on where you operate. Los Angeles County, for example, sits around 9.5%–10.25%.

Local Business License

Most California cities require a local business license or business tax certificate. Unlike some states, this isn’t handled at the state level — contact your city’s finance or revenue department. Fees range from $0 to several hundred dollars depending on the city and your business type.

Use CalGold — the state’s permit assistance tool — to identify what licenses and permits your specific business needs at the city, county, and state level.

Annual Requirements

California corporations must handle the following on an ongoing basis:

Franchise tax: $800/year minimum, due to the Franchise Tax Board
Statement of Information: $25/year, filed with the Secretary of State
Corporate income tax: 8.84% for C-Corps, 1.5% for S-Corps (in addition to the $800 minimum)

That’s at least $825/year in baseline state fees, every year, regardless of revenue. If you’re profitable, the corporate income tax adds significantly more. Budget accordingly.

California Corporation Costs

Here’s everything in one place so you can plan your budget.

Item	Cost	Notes
Articles of Incorporation	$100	One-time state filing fee
Name reservation	$10	Optional, 60 days
Agent for service of process	$0–$300/year	DIY or commercial service
Bylaws	$0–$2,000	Template vs. attorney-drafted
EIN	$0	Free from the IRS
Statement of Information	$25/year	Due within 90 days, then annually
Franchise tax (FTB)	$800/year	Non-negotiable minimum
Year-one minimum	$925	Filing + Statement of Info + franchise tax
Ongoing annual minimum	$825/year	Franchise tax + Statement of Info

Formation services (ZenBusiness, Northwest Registered Agent, Bizee, etc.) typically charge $0–$150 plus the state filing fee. They handle the paperwork and usually include a registered agent for the first year. If you’d rather not deal with the BizFile filing yourself, that’s a reasonable use of $50–$150.

The franchise tax is the elephant in the room. An $825/year floor — before you earn a dollar — is steep for pre-revenue startups. It’s one reason many California founders who aren’t raising VC money start with a sole proprietorship or out-of-state LLC before incorporating in California.

Frequently Asked Questions

How much does it cost to incorporate in California?

The state filing fee for Articles of Incorporation is $100 — paid to the Secretary of State. But that’s just the start. Add the $800 franchise tax (due within a few months of incorporation) and the $25 Statement of Information, and your first-year minimum is $925. Your total costs will be higher if you use a formation service or hire an attorney, but $925 is the mandatory floor.

Can one person form a corporation in California?

Yes. California allows single-shareholder corporations. If you’re the only shareholder, you only need one director and can hold all officer positions. The structure is the same as a multi-person corporation — you just fill all the roles yourself.

What’s the difference between a C-Corp and S-Corp in California?

The corporate structure itself is identical — both are California corporations formed the same way through the Secretary of State. The difference is a federal tax election made with the IRS via Form 2553.

A C-Corp pays corporate income tax at the entity level (8.84% in California + federal rates). An S-Corp elects pass-through taxation, so profits flow to shareholders’ personal returns — but California still charges S-Corps a 1.5% tax on net income with an $800 minimum. S-Corps avoid double taxation federally but don’t escape California’s entity-level tax entirely.

Does California have a corporate income tax?

Yes, and it’s significant. California taxes C-Corp income at 8.84% — one of the highest state corporate rates in the country. S-Corps pay 1.5% on net income (minimum $800/year). Combined with the $800 franchise tax floor and California’s high individual income tax rates (up to 13.3%), the tax burden in California is real. Talk to a CPA about structuring your compensation and distributions efficiently.

Can I avoid the $800 franchise tax?

No. As of 2026, there is no exemption for new corporations. Every California corporation and LLC owes the $800 franchise tax from its first year. The only way to stop owing it is to formally dissolve or surrender your entity with the Secretary of State and the Franchise Tax Board. If you let your corporation go inactive without formally dissolving, the $800 keeps accruing.

What to Do Next

Here’s the sequence in order:

Check name availability via BizFile Online
File Articles of Incorporation online through BizFile — $100
Get your EIN from the IRS (free, takes 10 minutes)
File your Statement of Information within 90 days — $25
Pay the franchise tax to the FTB — $800
Draft or obtain bylaws — template is fine to start
Hold your organizational meeting — even if it’s just you, document it
Issue stock and record it in your shareholder ledger
Decide on S-Corp election — talk to a CPA, file Form 2553 within 75 days if you want it
Open a business bank account
Register with the Franchise Tax Board and CDTFA if applicable
Check local business license requirements in your city — use CalGold for guidance

The Secretary of State filing is the official step — everything else follows from it. Most people complete the state filing in under an hour online, but budget time for the post-formation requirements. California has more of them than most states.

This article is for informational purposes only and does not constitute legal or tax advice. Consult a licensed attorney or CPA for guidance specific to your situation.