California LLC and Corporation Formation Attorneys
The $99 online LLC feels like a win until it becomes the $50,000 problem.
Our attorneys form California LLCs and corporations the right way the first time, matching your entity choice to your actual plans, drafting an operating agreement for your specific partners, and building a structure that won't crack as the business grows.
LLC vs. S-Corp vs. C-Corp: Which Entity Fits Your Business?
For most California small businesses, the choice between an LLC and an S-corporation comes down to taxes and formality. An LLC offers flexible management and simple pass-through taxation. An S-corporation election can reduce self-employment tax for profitable businesses, but requires payroll, corporate formalities, and shareholder limits. A C-corporation suits companies raising outside investment.
Here's the comparison our clients ask for most:
| LLC | S-Corp | C-Corp | |
|---|---|---|---|
| Best for | Owner-operators, real estate holding, flexible partnerships | Profitable operating businesses seeking self-employment tax savings | Companies raising venture capital or planning many shareholders |
| Taxation | Pass-through by default; profits taxed on your personal return | Pass-through; owner takes a salary plus distributions, which can reduce self-employment tax | Corporate-level tax, plus tax on dividends ("double taxation") |
| Ownership limits | Flexible — people, trusts, other entities | Max 100 shareholders; generally U.S. individuals and certain trusts only; one class of stock | Unlimited shareholders; multiple stock classes allowed |
| Formalities | Light — operating agreement, state filings | Moderate — payroll, bylaws, minutes, resolutions | Highest — board, bylaws, minutes, stock records |
| Watch out for | Weak template operating agreements | Losing the election through a disqualified transfer | Double taxation on a future sale |
This table is a starting point, not an answer. The right choice depends on your revenue, your partners, your exit plans — and whether real estate is involved. That's a conversation.
What Formation With an Attorney Actually Includes
An online service files a form. That's it. Here's what you get when an attorney forms your entity — and why each piece matters:
A real operating agreement
Not a template. One that answers the hard questions: What happens when a member wants out? Who breaks a 50/50 tie? Can a member sell to an outsider? This means that the worst day in your partnership is governed by a document, not a shouting match.
Vesting for co-founders
If a partner walks after six months, should they keep half your company? Vesting says no. This means that equity is earned over time, not granted on day one and regretted for a decade.
Multi-member structure done right
Voting thresholds, capital contribution rules, distribution waterfalls — the machinery that keeps co-owners from deadlock.
Registered agent, EIN, and state filings
The Articles of Organization (or incorporation), a registered agent designated to receive lawsuits and official state documents, the initial Statement of Information with the California Secretary of State, and your federal EIN — the tax ID number the IRS requires before the company can open a bank account or pay anyone. Filed correctly and on time.
Name check, licenses, and registrations
A name search to confirm your company name complies with California naming rules and doesn't conflict with an existing entity — plus a flag on the local business licenses and permits many Bay Area cities require after formation.
Holding structures for real estate
If your company operates out of property you own, we structure the entities so the building and the business are separated and properly leased to each other.
One more thing the online services never mention: liability protection isn't automatic. An LLC shields your personal assets only while the corporate veil holds — separate bank accounts, clean records, no commingling of personal and company money. Let those habits slide and a court can treat the LLC as your "alter ego" and reach your personal assets anyway. We advise on the right habits up on day one.
Frequently Asked Questions
Do I need an attorney to form an LLC in California?
California does not require an attorney to form an LLC. Anyone can file articles of organization with the California Secretary of State. An attorney adds value in the decisions the form does not cover: choosing between an LLC and a corporation, drafting an operating agreement for multiple members, structuring vesting, and separating real estate from the operating business.
So if you only need the filing, save your money. If you have partners, property, or a real plan for growth, the filing is the least important part of formation — and it's the only part the online services do.
LLC or S-Corp for a California small business?
For a California small business, an LLC generally fits owners who want flexibility and simple administration, while an S-corporation election generally fits profitable businesses whose owners want to reduce self-employment tax. An LLC can also elect S-corporation tax treatment, combining both structures. The right answer depends on profit levels, payroll tolerance, and ownership plans.
One default worth knowing: a single-member LLC is taxed as a "disregarded entity" — profits land on your personal return as if the LLC didn't exist — while a multi-member LLC is taxed as a partnership unless it elects otherwise. We'll run your actual numbers with your CPA rather than guessing. The wrong election is expensive to unwind; the right one usually pays for the legal work in year one.
What is the California franchise tax?
The California has a minimum annual franchise fee that LLCs and corporations registered in California must pay to the California Franchise Tax Board, regardless of profit. LLCs with higher gross receipts pay an additional fee on a tiered schedule.
The franchise fee is separate from the one-time filing fee paid to the Secretary of State when the Articles of Organization are filed. It's a real cost of doing business as an entity in California — and one more reason not to form entities you don't need, or to consolidate ones you've outgrown.
Set It Up Right the First Time
Formation is cheap. Repair is not. Whether you're starting fresh, adding a partner, or pulling your building out of your operating company, we'll structure it right, explain it plainly, and quote the fee before we start.
