Photo 1 - Company registration in California

About California

California is the largest state on the West Coast of the United States, known for its cultural diversity, innovative spirit, and economic potential. Major industries include technology, entertainment, tourism, agriculture, and manufacturing.

The state attracts businesses due to its innovative ecosystem, access to capital, talented workforce, favorable climate for startups, large consumer market, and growing interest in sustainable business practices.

California boasts the largest economy of all US states and ranks fifth globally, surpassing countries like the United Kingdom and India. This provides a huge market for potential customers and partners. As a result, technological giants like Google, Apple, Facebook, and many others are headquartered here, making the state particularly attractive to technology and innovation entrepreneurs.

Advantages of registering a company in California:

California ranks first in the world in terms of investments in IT projects. There are many professional investors here who, if not investing in your project, will advise on how to do it correctly and better.
Numerous events on technology development, discussion, and study are constantly held in California. Even just having the opportunity to constantly participate in this community greatly enhances all IT entrepreneurs and developers.
The state has established a favorable infrastructure for startups, including incubators, accelerators, and venture capital funds, providing entrepreneurs with access to financing, mentoring, and resources necessary for successful business launch and development.
This state provides access to major US and global markets due to its geographical location and years of experience in international trade.
California is known for its biotechnology and pharmaceutical industry, particularly in the research and development of new drugs and medical technologies.
Hollywood in California is defined as a global hub for entertainment and media. Companies operating in the film, television, video game, and other creative industries are also highly popular and developed here.
Although California has relatively high taxes, as it is one of the wealthiest states in America, there are programs and incentives for small businesses, startups, and innovative companies that can alleviate the financial burden.
Company registration in California does not require a personal visit to America and is possible through online processes.

Forms of companies

Non-residents can register a company in California in several forms:

Corporation - a separate legal entity with separate legal liability and the ability to attract investments through the sale of shares.
Limited Liability Company (LLC) is a more flexible form of business than a corporation, providing its owners with limited legal liability as well as certain tax advantages.

The choice of company form depends on various factors such as legal and tax obligations, management structure, personal liability, as well as the goals and nature of the future business. For example, if reducing administrative work is important, an LLC may be the preferred choice as it requires less formality and reporting compared to a corporation. However, corporations may be a more suitable choice if large investments need to be attracted through the sale of shares.

Opening a company in California: requirements

LLC in California:

Authorized Capital: There are no requirements; the total amount of shares issued to LLC members is determined individually. This can be expressed in monetary terms or in the form of services or property.
Ownership Shares: Specified in the LLC agreement for each member, reflecting the share of profits, losses, and the right to manage the company.
Members: An LLC may have one or more non-resident members. If the company is created solely, you can choose taxation as a sole proprietorship.
Directors: There is no formal director structure in an LLC, as in a corporation. Instead, management can be carried out by LLC members or managers (if appointed).
Anonymity: California maintains confidentiality of company owners, not disclosing data publicly. Information about owners must be provided within 3 months after incorporation.
Reporting: The company must maintain financial records and provide them annually to state and federal tax authorities. If LLC taxation is chosen, individual tax returns are filed.
Office: A registered office in the state of California is required, which can serve as a place for processing legal mail. It can be a physical or virtual office.

C-Corp in California:

Authorized Capital: There is no minimum; the authorized capital determines the total amount of shares that can be issued by the corporation. This can be expressed in dollars or in the number of shares.
Shares: Common or preferred, which may have different voting rights and dividends.
Shareholders: Shareholders may be non-residents without ties to their place of residence.
Directors: The corporation must have a board of directors responsible for managing the company's affairs. Directors are elected by the corporation's shareholders.
Anonymity: The beneficial ownership register ensures confidentiality of information about owners. Updating beneficiary information once a year.
Reporting: Filed annually and includes a balance sheet, profit and loss statement, cash flow statement, and statement of changes in equity.
Office: A registered office in the state of California is required, which will serve as a legal mail recipient.

Taxation

Corporations and LLCs in California are taxed differently depending on the chosen tax model.

Corporations in California are subject to Corporate Income Tax at both the federal and state levels.

LLCs, on the other hand, are not required to pay federal corporate income tax. Instead, the profits and losses of an LLC are passed directly to its owners/members and taxed at the individual income level. LLC members report their share of profits and losses in their individual tax returns. Additionally, LLCs in California may be subject to income tax just like corporations if they choose corporate tax status.

Company form

Federal Corporation Income Tax

CA Income Tax

CA Sales Tax

LLC

It depends on the structure of the LLC. Profits are passed to the owners of the LLC (members) and taxed at the level of their individual tax returns.

10% - $0-$10275

12% - $10275-$41775

22% - $41775-$89075

24% - $89075-$170050

32% - $170050-$215950

35% - $215950-$539900

37% - $539900+

If income is derived from the state of California, the state corporate income tax rate is 8.84%

7,25%

Corporation

21%

Franchise Tax in California amounts to 800 USD, but companies are entitled to an exemption – exemption from such tax in the first year of operation. Subsequently, the franchise tax is paid annually by April 15th.

It is important that every company in the USA, after the incorporation process, must register with the tax authorities, which includes obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

Features

Silicon Valley is a special region in the state of California, renowned for its high concentration of technology companies specializing in computer and component manufacturing, including microprocessors, as well as software, mobile devices, biotechnology, and other spheres.

Specifically, Silicon Valley boasts around 8 thousand companies, including Adobe Systems, Advanced Micro Devices, Apple Inc., Cisco Systems, Dolby Laboratories Inc., eBay, Google, Hewlett-Packard, Intel, National Semiconductor, Nintendo, Oracle Corporation, SanDisk, Sun Microsystems, Symantec, Yahoo. This region also hosts a large number of venture capitalists ready to invest in promising startups.

Therefore, Silicon Valley is a place where dreams can come true. If you have a great idea, determination, and hard work, there are all the chances to succeed in this region.

However, despite all the advantages, registering a business in California has its peculiarities, which should also be taken into account when creating a company here:=

High cost of living: California is one of the most expensive states in the USA. This applies to real estate rent, cost of living, taxes, etc.
Regulation: The state has quite strict business regulations, which can create additional difficulties and risks for entrepreneurs.
Competition: The region experiences very high competition in many industries, requiring companies to constantly improve and innovate.

Nevertheless, for many entrepreneurs, the huge market potential and access to innovations outweigh these few drawbacks.

Join successful entrepreneurs and register your companies in California with professional support from Campio Group!

You can also contact us regarding other states in order to open a business in the USA in the region that is most favorable for your business.

Discuss your project

Leave your question and we will call you back