Starting a business in California is exciting, but it can also feel overwhelming. As a new business owner, you might not be sure where to begin or what steps to follow.
If you’re planning to launch a company in California, learning how to incorporate a business in California is the first and most important step. But between legal paperwork, fees, and state requirements, the process can seem confusing.
That’s why we’ve simplified the process for you.
In this blog, we’ll walk you through the steps on how to incorporate a business in California so you can start with confidence and avoid costly mistakes.
By the end of this blog, we’ll cover the entire process in a way that’s easy to follow, even if you’ve never done it before.
Benefits of incorporating a business in California
Before exploring the steps, let’s consider why incorporating a business in California is a smart move.
- Close to venture capital: California, especially Silicon Valley, has many investors. Starting your business here puts you near people who can fund your growth. This can make it easier to raise money and scale your company.
- Supportive legal system: California’s business laws are clear and helpful. They give strong legal protection to you as a company owner and director, lowering personal risk and helping you feel more confident starting a business.
- Long-term stability: A California corporation keeps going even if owners or managers change due to its legal flexibility. This gives your business more stability and a better future.
- Tax savings options: California offers tax credits like the California Competes Credit and R&D Credit. These can lower your tax bills if your business qualifies.
- Stronger brand image: Since your company is located in California, it can be more trustworthy and innovative. Hence, it becomes easier to advertise and expand relationships.
Bonus Read → What You Need to Know About Incorporating Your Business
Steps to incorporate a business in California
Now that you understand the benefits, it is important to complete some legal and planning steps when you start your business in California.
Let’s walk through the incorporation process step by step to set up your business properly.
Step 1: Create a business plan
Before diving into paperwork, start with a business plan
It should include
- What will your business offer?
- Who are your target customers?
- How do you make money?
- What are the marketing and growth strategies?
This plan will guide your decisions and help you explain your idea to investors or partners.
Step 2: Pick a unique business name
Your business name must be different from other names already used in California.
- Check the U.S. Patent and Trademark Office for trademarks.
- Use the California Secretary of State’s online tool to check availability.
- If your business will use a name that isn’t your personal legal name, file a DBA (Doing Business As).
- You can also reserve the name for 60 days if you’re not ready to file yet.
Step 3: Choose the right business structure
It is very important to pick the correct business structure. Every business type comes with certain rules for paperwork, taxes, and liability.
You can structure your California business as follows:
- Sole Proprietorship: Your business dealings are simple and affordable to set up, but you are responsible for all debts.
- General Partnership: You and one or more partners own the property together. All partners are personally liable.
- Limited Partnership (LP): One partner that you designate operates the partnership and is responsible, while others provide capital.
- Limited Liability Partnership (LLP): Common for you to pursue if you’re a lawyer, accountant, or architect. You are not responsible for another person’s errors.
- Limited Liability Company (LLC): Offers legal protection similar to a corporate business but has fewer rules.
- Corporation (C Corp or S Corp): Protects the company from the costliest liabilities. However, it requires more paperwork and formal rules.
Step 4: Designate a registered agent
You need a registered agent in California. This person or company will receive legal and government papers for your business.
Your registered agent services must:
- Be located in California.
- Be available during business hours.
- Have a street address (no P.O. boxes).
You can be your own agent, pick someone you trust, or hire a professional service.
Also Read → Top Business Incorporation Attorney and Best States to Incorporate
Step 5: File formation documents
Once you’ve picked a structure, it’s time to register your business.
To legally form your business in California, you must file the correct documents with the California Secretary of State:
- LLC: File Articles of Organization (Form LLC-1)
- Corporation: File Articles of Incorporation (Form ARTS-GS or ARTS-ST)
You can file online, by mail, or in person. Standard filing fees apply based on structure and method.
Step 6: Prepare internal governing documents
Even though California doesn’t require you to file them, you must create and keep internal documents for legal and operational reasons.
- Corporations: Write corporate bylaws, hold your first board meeting, appoint officers, and issue stock certificates.
- LLCs: Create an operating agreement that explains how your business will be managed.
These documents help avoid conflicts and support your legal standing.
Step 7: File a statement of information
Within 90 days of forming your business, you must file a Statement of Information with the Secretary of State.
- LLCs: File Form LLC-12
- Corporations: File Form SI-550
This includes basic details like your business address, the names of your officers or members, the registered agent, and the reason your business exists. You must file this form for an LLC every two years, and corporations must submit it annually.
Step 8: Get an EIN from the IRS
An Employer Identification Number (EIN) is like a Social Security number for your business.
It’s free and required to:
- Hire employees
- Open a business bank account
- File federal or state taxes
You can apply online at the IRS website.
Step 9: Register for California state taxes
Depending on your business type, you may need to register with the California Department of Tax and Fee Administration (CDTFA) if you:
- Sell goods (you’ll need a Seller’s Permit)
- Collect sales or use tax
- Hire employees (you’ll need to register with the Employment Development Department (EDD))
Also, most LLCs and corporations must pay an $800 annual minimum franchise tax to the Franchise Tax Board (FTB).
Read → Find the Best Estate Planning Attorney in California
Step 10: Get local licenses and permits
Every city and county where you operate in California has its own rules for business licenses.
You may need:
- A general business license from your city
- Special health permits, zoning clearance, or home occupation permits
- Industry-specific licenses (e.g., contractors, food service)
Check your local government’s website for the permits and licenses you need for your business.
Step 11: Open a business bank account
Keep your personal finances separate from your business. A dedicated business account helps with taxes and protects your personal assets.
To open a business bank account, you’ll need:
- Your EIN
- Your Articles of Incorporation or Organization
- Your Statement of Information
Step 12: Get business insurance
Insurance helps protect your business from lawsuits, accidents, or disasters.
Common types include:
- General Liability Insurance
- Workers’ Compensation Insurance (required if you have employees)
- Professional Liability Insurance (for service-based businesses)
Talk to a licensed insurance broker to find what coverage you need.
Step 13: Stay compliant
To keep your business in good standing in California, you must:
- File required tax returns (federal and state)
- Pay the annual franchise tax
- Renew licenses and permits regularly
- Update your Statement of Information as needed
If you miss these steps, it can lead to fines or suspension of your business.
Step 14: Grow your business
Now that you’re officially incorporated, you should focus on growth.
You can:
- Launch your marketing plan
- Hire employees
- Apply for business loans or grants
- Get free mentorship from SCORE or Small Business Development Centers (SBDCs)
Also Read → Ultimate Guide To Wealth Management Business Plan
Business compliance checklist for California incorporation
| Stage | Task |
| Before Incorporation |
|
| At Incorporation |
|
| Within 90 Days | File Statement of Information |
| Post-Incorporation |
|
Common mistakes to avoid during incorporation
Skipping steps or making small errors can lead to big problems. You might mess up when trying to learn how to incorporate a business in California.
Let’s look at the biggest mistakes to avoid.
- Skipping a name availability check: Failing to check name availability leads to rejected filings or legal disputes with existing businesses.
- Choosing the wrong business structure: You might default to an LLC without understanding if a corporation better fits their tax or investment goals.
- Using a P.O. Box for a registered agent: California law requires a physical address—using a P.O. Box will get your filing denied.
- Forgetting the Statement of Information: Avoid missing this mandatory filing within 90 days and prevent penalties.
- Delaying EIN registration: Without an EIN, you can’t open a business bank account, file taxes, or hire employees.
- Not registering for local permits: Each California city or county may have different license rules—skipping this step could shut you down.
- Ignoring franchise tax requirements: You might not realize California charges an $800 annual franchise tax, even if you make no income.
How fast can I form an LLC in California?
You can form an LLC in California in as little as five to ten business days if you file online. If you pay extra for rush service, it might take only a few days. Mail filings usually take longer, around two to three weeks.
But forming the LLC is just step one. You’ll still need an EIN, state tax registration, and possibly local permits. Even though it’s quick, make sure you do every part right.
Resources for business incorporation in California
You don’t have to figure it out all alone. These groups and websites can help with every step of California business registration.
- California Secretary of State: The official source for filing documents, name searches, and business entity forms.
- CalGold (Governor’s Office of Business and Economic Development): Helps you find required licenses and permits based on location and business type.
- IRS.gov: Apply online for your EIN (Employer Identification Number) quickly and for free.
- Franchise Tax Board (FTB): Covers California income tax rules and franchise tax requirements for corporations and LLCs.
- Employment Development Department (EDD): Get info on payroll taxes, unemployment insurance, and employer registration.
- SCORE & SBDCs: Free business mentoring, training, and incorporation advice tailored for California entrepreneurs.
Incorporating your business in California is exciting, but following up with all these resources and completing your business set-up process can be overwhelming.
Focus CPA makes the process easier, faster, and stress-free.
Incorporate smart by partnering with Focus CPA
Getting your business off the ground starts with one major step: learning how to incorporate a business in California. It might sound like a big task, and that’s where Focus CPA steps in.
Our team goes beyond just filling out forms; we guide you through each legal and tax step, ensuring nothing gets missed.
- We tailor your incorporation plan based on your business goals, industry, and future growth.
- We handle everything from choosing the right entity to registering with the state and setting up your EIN.
- Our experts help you stay compliant, avoid penalties, and save on taxes.
- You’ll get clear advice, fast turnarounds, and real people who care.
With Focus CPA, you’re not just starting a business but building it right.
Contact us and we’ll help you incorporate your California business smartly.
In 2025, you must pay $100 to create a corporation and $70 to form an LLC. You must pay a $25 Statement of Information within 90 days after you receive the notice.
Every business must pay an $800 minimum franchise tax every year, regardless of whether it has made a profit or what activity it conducts.
Some states charge LLCs extra fees depending on how much money they receive. Using optional options such as expedited processing or getting a registered agent can raise the total price. You may need permits, licenses, and to file a DBA to cover additional costs.
When you need help with financial planning, consider Focus CPA.
Standard online filings are processed within 3 to 5 days. If you use expedited services, you’ll have to pay an additional fee, and options like 24-hour preclearance are available for $500.
Online filing can save time over the traditional mail filing option. Delays sometimes happen when documents are incomplete or have errors.
Business attorneys are optional, but hiring one is wise if your business structure is complicated. Attorneys help prepare bylaws and agreements for shareholders and ensure that regulations are followed.
For simple cases, people create their LLCs on their own, without consulting a lawyer. Yet, hiring experts can help you avoid expensive problems.
C corporations in California are subject to an 8.84% corporate tax on net income.
S corporations pay a 1.5% franchise tax, with income passed to shareholders' personal tax returns.
LLCs face a minimum $800 annual tax, plus fees based on gross income.
California also imposes personal income taxes up to 13.3% and various payroll taxes.
Tax credits, like the R&D credit, may offset some liabilities. These taxes apply even if the business operates at a loss.
Yes, companies from outside California can incorporate, but they must choose a registered agent with a real California address.
When a foreign corporation wants to do business in California, it must register with the Secretary of State and meet state rules. Doing business in California means following the state’s tax and legal regulations.
