Forming a business in California is two separate things that get confused with each other. Filing with the Secretary of State is a form and a fee, and it takes minutes. Deciding what entity to form, who owns what, what happens when someone leaves, and who is liable for what is the part that determines whether the business survives a disagreement — and no filing service does that part.
This page explains the entity choices, what California actually requires and charges, the documents that matter after formation, and where a lawyer is worth the cost. Our California business attorneys work from our San Mateo office. For a free consultation, call 650-250-0705.
Do I Need a Lawyer to Form a Business in California?
Not to file. California lets you form an LLC yourself through the Secretary of State’s bizfile portal — Articles of Organization cost $70, Articles of Incorporation for a stock corporation cost $100, and a Statement of Information is due within 90 days for $20. A lawyer matters for what the filing does not cover: choosing the entity, drafting the operating agreement or bylaws that govern ownership and control, allocating equity, and handling the tax elections. Most disputes among founders trace back to those documents, not to the filing.
Key Takeaways
- The filing is inexpensive; the governing documents are what actually protect owners.
- California charges an $800 annual minimum franchise tax on LLCs and corporations doing business here, separate from formation fees.
- An LLC’s operating agreement is where control, transfers, and exit terms live — without one, statutory defaults apply.
- Liability protection depends on maintaining the entity properly, not on having formed it.
- A Statement of Information is due within 90 days of registering, and periodically after.
Choosing an Entity
| Structure | How it is typically used | Points to weigh |
| Sole proprietorship | A single owner operating without forming an entity | No separation between owner and business; personal assets exposed |
| General partnership | Two or more owners without a formal entity | Partners may be exposed to obligations incurred by each other |
| Limited liability company | Closely held businesses, real estate holdings, professional service ventures where permitted | Flexible management and tax treatment; operating agreement does the real work |
| C corporation | Ventures raising institutional capital or issuing multiple share classes | Familiar to investors; separate entity-level taxation |
| S corporation | A tax election available to eligible corporations and LLCs | Eligibility limits on shareholders and share classes; California still imposes an entity-level tax |
| Limited partnership | Investment and family holding structures | General partner exposure; often used with an entity as general partner |
The choice usually turns on four questions: whether you intend to raise outside investment, how many owners there are and whether that will change, how profits should be taxed and distributed, and what the liability profile of the activity is. A structure that fits a two-person consultancy is rarely the one that fits a company planning a priced funding round.
Our pages on why businesses choose LLCs, partnerships for small business, and franchise arrangements cover particular structures in more detail.
What California Charges
Per the California Secretary of State and the Franchise Tax Board:
| Item | Amount | Timing |
| Articles of Organization, LLC (Form LLC-1) | $70 | At formation, filed online through bizfile |
| Articles of Incorporation, stock corporation | $100 | At formation |
| Statement of Information (Form LLC-12 for LLCs) | $20 | Within 90 days of registering, and periodically thereafter |
| Annual minimum franchise tax | $800 | Annually, for LLCs and corporations doing business in California |
| LLC fee based on total California income | Varies by income tier | Applies once California income exceeds the statutory threshold |
The $800 is the figure that surprises people. It is an annual minimum owed by entities doing business in California regardless of profit, and it is separate from income tax. First-year treatment has changed over time under legislation with defined start and end dates, so whether an exemption applies to a business forming now should be confirmed with the Franchise Tax Board or a tax professional rather than assumed from an older article.
Local requirements sit on top of this. Cities in San Mateo County generally require a business license or tax registration, and some activities need additional permits.
The Documents That Matter More Than the Filing
Filing creates the entity. These decide how it works.
An LLC operating agreement sets out who manages the company, what votes require whose consent, how profits and losses are allocated, what happens when a member wants out, what happens when one dies or becomes incapacitated, how a member’s interest may be transferred, and how deadlock is resolved. Without one, statutory default rules apply, and those defaults were not written with your business in mind.
Corporate bylaws and a shareholders’ agreement do the equivalent work for a corporation, alongside the share issuance itself. Getting the initial issuance right matters more than founders expect, and mistakes here are difficult to unwind later.
Founder and equity arrangements — vesting, what happens if someone leaves in year one, who owns work created before formation — are the source of a large share of early-stage disputes.
Intellectual property assignment ensures the company actually owns what its founders and contractors built. It is common to find that it does not. Our intellectual property page covers this.
Commercial agreements — customer terms, vendor and contractor agreements, and confidentiality agreements — are covered on our deals and contracts page.
Formation Does Not Guarantee Liability Protection
Forming an entity creates the possibility of limited liability; conduct after formation determines whether it holds. Courts can disregard the entity where owners have not respected its separateness.
The recurring failures are ordinary rather than exotic: mixing personal and business funds, failing to capitalise the business adequately, skipping required meetings and records, signing personally instead of on behalf of the entity, and letting filings and the franchise tax lapse. Our company governance page covers the maintenance side.
An owner also remains personally responsible for their own wrongful conduct, and for anything they personally guarantee — which includes most commercial leases and small business loans.
Where a Lawyer Is Worth It
Being direct about this: if you are a single owner starting a low-risk business with no partners, no outside money, and no employees, a filing service plus a competent accountant may be adequate, and there is no reason to pretend otherwise.
Legal help earns its cost when:
- There is more than one owner, and particularly where contributions are unequal
- You intend to raise outside investment, now or later
- The business has meaningful liability exposure or handles regulated activity
- Intellectual property is central to what the business is worth
- Real property, significant assets, or existing operations are being contributed
- Owners are in different states or countries
- Someone is joining an existing business, or an existing structure needs restructuring
The common thread is that these are all situations where the cost of getting it wrong is paid years later, by which time fixing it requires the agreement of the person you are now in a dispute with.
Forming a Business in San Mateo and on the Peninsula
Our office at 15 North Ellsworth Avenue, Suite 105, San Mateo, CA 94401 works with businesses across the Peninsula, from professional practices and local operating companies to venture-backed startups.
Two local patterns come up often. Founders frequently arrive with prior employment that raises questions about ownership of work created before formation, which is worth resolving before it becomes a diligence problem. And businesses here are more likely than most to face an eventual funding round or acquisition, where the formation documents get read carefully by someone whose job is to find problems in them. Structuring for that at the start costs less than remediating it under time pressure.
Details about the office are on our San Mateo page.
How We Help
Vaksman Khalfin, PC advises on entity selection against your actual plans rather than a default, prepares and files the formation documents, drafts the operating agreement, bylaws, or partnership agreement that governs ownership and control, handles founder equity and intellectual property assignment, coordinates the tax elections with your accountant, and sets up the governance practices that keep the entity’s protections intact. Where a business is already formed, we review what exists and address the gaps.
The practice is led by Alan D. Khalfin and Robert B. Vaksman. Initial consultations are free. To talk with a California business formation lawyer, call 650-250-0705 or schedule a consultation. Related work is covered on our startup counseling, outside general counsel, and business purchase and sale pages.
This page provides general information about California law and is not legal or tax advice; reading it does not create an attorney-client relationship. Filing fees and tax amounts are set by state agencies and can change. Every situation is different, and prior results do not guarantee a similar outcome.
Reviewed by Alan D. Khalfin, Partner and Managing Attorney, Vaksman Khalfin, PC (admitted in California). Last reviewed: 08/31/2026
Business Formation Frequently Asked Questions
Not to make the filing — the Secretary of State's bizfile portal accepts filings directly. A lawyer matters for entity selection, the operating agreement or bylaws that govern ownership and control, founder equity, intellectual property assignment, and tax elections. Those documents, not the filing, are where most later disputes originate.
The Articles of Organization filing fee is $70, and a Statement of Information is due within 90 days at $20. Separately, California imposes an $800 annual minimum franchise tax on entities doing business in the state, and an additional LLC fee applies once California income exceeds the statutory threshold. Attorney fees, if any, are on top of these state charges.
Articles of Incorporation for a stock corporation cost $100 to file. A Statement of Information is also required, and the $800 annual minimum franchise tax applies to corporations doing business in California.
An annual minimum tax owed by LLCs, corporations, and certain other entities doing business in California or registered here, payable regardless of whether the business is profitable. It is administered by the Franchise Tax Board and is separate from income tax and from Secretary of State fees. First-year treatment has changed under legislation with defined windows, so confirm current rules rather than relying on an older article.
It depends on whether you plan to raise outside investment, how many owners there are, how you want profits taxed and distributed, and the liability profile of the activity. LLCs offer flexible management and tax treatment; corporations are the familiar structure for institutional investors and multiple share classes. A lawyer can walk through which fits your plans.
It is the document that determines how the company actually functions — management, voting, profit allocation, transfers, exits, and deadlock. Without one, statutory default rules apply, and those defaults may not reflect what the owners intended. For a multi-owner LLC in particular, this is the single most consequential document.
It creates the possibility of limited liability, but the protection depends on maintaining the entity properly — keeping funds separate, capitalising the business adequately, observing formalities and records, signing on behalf of the entity, and keeping filings and taxes current. Owners also remain responsible for their own wrongful conduct and for anything they personally guarantee.
A filing with the Secretary of State reporting the entity's addresses, management, and agent for service of process. For an LLC it is Form LLC-12, due within 90 days of registering and periodically thereafter, at a $20 fee. Missing it can lead to penalties and suspension.
You can, and for a single-owner, low-risk business with no partners or outside money it may be adequate. What those services generally do not do is advise on entity selection for your circumstances or draft governing documents tailored to your ownership arrangements — which is where multi-owner businesses run into trouble later.
Online filings through bizfile are processed comparatively quickly, and expedited options exist for an additional fee. The governing documents usually take longer than the filing, because they require decisions the owners have to make rather than forms to complete.