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Advantages and Disadvantages of Incorporating in California

Asked by: Ken Armstead - 18 February, 2011 What are advantage and disadvantages of incorporating in California?
Answered by: Lloyd Johnson - 22 February, 2011

Dear Ken,

Unfortunately, with California we are talking mainly about disadvantages.

The state is so strapped for cash that they fired most of their staff at the Secretary of State office. As a result, is takes anywhere form two to three month to form a company by mail.

On top of that, California apparently is trying to cover its budget deficit at the cost of the business owners. The state charges a minimum of $800 of so-called "franchise tax" to any business registered in California. That includes businesses formed in other states that have a foreign entity registration in the Golden State.

As a result, we generally recommend that business owners look elsewhere, like Wyoming for instance, unless they really have to incorporate in California.


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