Most small businesses in California choose an LLC for simpler paperwork and flexible taxes, and because only an LLC can be set up with privacy. A corporation suits companies that plan to raise investment or issue stock, and it is not charged the $800 minimum in its first tax year. Licensed professionals generally must use a professional corporation.
| LLC | Corporation | |
|---|---|---|
| State formation fee | $70 | $100 |
| Statement of Information | $20 every 2 years | $25 every year |
| First-year $800 minimum | Owed | Not charged |
| Extra fee on revenue | LLC fee at $250,000+ gross receipts | Tax on net income |
| Default tax treatment | Pass-through (disregarded entity or partnership) | C corporation, or S corporation by election |
| Ongoing formalities | Light | Bylaws, director and shareholder meetings, minutes |
| Privacy option | Yes | No; officers and directors are public |
| Raising investment | Possible, less common | Common for venture investment and stock options |
| Licensed professions | Generally not allowed | Professional corporation |
How to decide
If you want simple upkeep and privacy, an LLC is usually the fit. If you plan to bring in investors, offer stock, or your CPA recommends S corporation treatment as a corporation, choose a corporation. An LLC can also elect to be taxed as an S corporation. We are not a law or CPA firm, so confirm the tax side with your CPA.
Last reviewed October 18, 2026 against California Secretary of State and Franchise Tax Board sources. This page is general information, not legal or tax advice.