California LLC vs. Corporation
Both cost the same to form ($70 for LLC, $100 for corporation) and both owe the $800 minimum franchise tax. The choice depends on governance preferences, tax planning, and whether you need to issue stock. See all comparisons.
Quick Comparison
| Factor | CA LLC | CA Corporation |
|---|---|---|
| Formation fee | $70 | $100 |
| Franchise tax (minimum) | $800/year | $800/year |
| Additional tax | LLC fee ($900-$11,790 on gross income >$250K) | Corporate tax 8.84% on net income |
| S-corp election | Available | Available |
| Management | Flexible (member/manager) | Board + officers required |
| Stock/equity | Membership interests | Shares of stock |
| Professional practice allowed | No (must use PC) | Yes (via PC) |
When LLC Is Better
- Simpler governance (no board meetings/minutes)
- Flexible profit allocation
- Most small businesses
When Corporation Is Better
Ready to get started?
Get Started- Raising VC (stock structure preferred)
- Stock option plans for employees
- Going public eventually
- Professional practice (must use PC in CA anyway)
FAQ
Which pays less in California taxes?
Depends on revenue vs. profit. LLC pays LLC fee on GROSS income (>$250K). Corporation pays 8.84% on NET income. High-revenue, low-margin businesses may pay less as corporations. High-margin businesses may pay less as LLCs (until the fee kicks in at $250K gross).