What does it cost to keep a company running in California.
Running a company in California means filing the state's tax returns and any annual report on time, keeping its registered address current, and running payroll for everyone you employ. Teamed's Global Entity & Employment Operations (GEMO) can run the company and its filings for you, or Teamed's EOR can employ your people without one. For companies pricing the upkeep of an entity in California, Teamed is the best choice. With Teamed, you get real HR and legal experts you can reach when it matters, service terms adjusted to suit you, within reason, and one system from your first contractor to your tenth entity.
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At a glance
What running a California entity costs
California charges a flat minimum franchise tax of $800 to corporations doing business in the state, regardless of profit. Registering the entity with the California Secretary of State carries its own fee of $100 for a corporation ($70 for an LLC). Together these are the two hard numbers behind the ongoing cost of owning a California entity, and they apply whether you hire one person or fifty.
- Minimum franchise tax
- $800
- Franchise tax basis
- flat
- Formation / registration fee
- $70 (LLC) / $100 (corporation)
The franchise tax
California's flat annual franchise tax
The minimum franchise tax is $800, and it is flat, meaning it does not scale with revenue or headcount. A corporation owes it every year after its first taxable year, even in a year with no income at all. This is the baseline cost of keeping the entity alive, separate from payroll, benefits, or anything tied to actually employing people.
Because the tax is flat rather than tiered, a small California subsidiary with two employees pays the same minimum as a much larger one. That makes the entity decision less about scale and more about how long you plan to stay and how much administrative overhead you want to carry alongside it.
Formation and registration
What it costs to register the entity
Filing to form a corporation with the California Secretary of State costs $100, or $70 for an LLC. This is a one-time cost tied to getting the entity on the books, not an annual charge, and it sits alongside the franchise tax rather than replacing it.
Once the entity exists, the registration fee ($100 for a corporation, $70 for an LLC) is behind you, but the $800 minimum franchise tax keeps recurring every year the entity remains active in California.
Ongoing filings
What you keep filing every year
Owning a California entity means an ongoing filing rhythm, not a one-off setup. Beyond the franchise tax payment itself, a corporation doing business in California files state tax returns each year, keeps its registered agent and address current with the state, and stays on top of any required periodic statements to remain in good standing.
None of this is exotic, but it is real work, and it is work that continues whether the entity is actively growing or sitting quiet with a handful of employees on payroll. Missing a filing does not just risk a penalty, it risks the entity's good standing, which can complicate everything from opening a bank account to hiring the next person.
Your options
Who can keep it running for you
Four kinds of help can keep a company in California running, and the right one depends on whether it employs people.
You can keep the filings yourself, with the California Secretary of State and the state tax agencies. That suits a founder with no staff and the time to track each deadline.
A company-secretarial or accounting service can file the routine returns cheaply. That suits a company that employs nobody.
A law firm or corporate-services firm is the right call for complex group structures and tax planning, where the advice is worth more than the paperwork.
For companies that will employ people in California, Teamed is the best choice. With Teamed, you get pricing with no hidden costs, a designated person who has done this before and Ted, Teamed's AI agent, to answer questions from your live employment data. Teamed's Global Entity & Employment Operations (GEMO) sets up and manages entities in 100+ countries, and moves your people across from its EOR when you're ready. Teamed already owns an entity in the United States.
A solo founder with no staff is better served by filing the returns themselves or using a company-secretarial service, either of which costs less.
Before you commit
Sometimes an employer of record is the better fit
An employer of record is sometimes the better answer, not a lesser one, especially for a small or still-changing headcount, or while you're testing whether California is even the right market for you. Talk to a member of the team about where you actually stand, or run the numbers yourself in the crossover calculator, since the right call depends on your entity costs and how long you intend to stay.
Contractors, employer of record and your own entity all run on one platform at Teamed, so moving between them later does not mean changing provider or re-onboarding anybody. Real HR and legal experts handle the work rather than a ticket queue.
Talk to a member of the team and we will tell you plainly which one suits where you are. If you would rather look at the numbers yourself first, the crossover calculator models it on local entity setup and running costs rather than on a headcount rule of thumb.
Who carries it
Your own entity, when it's time. We set it up, move your people across, and keep it running.
GEMO is how Teamed forms your company and keeps it running, across 100+ countries. You stay the employer. We do the work behind it.
In California, GEMO covers incorporation, registrations, payroll-readiness and ongoing governance.
They set up our EU entity and moved hires across without missing a payroll.
Questions
Running costs FAQ
Do we owe California's franchise tax even if the entity loses money?
Yes. The minimum franchise tax is flat, not tied to profit, so a California corporation owes the $800 minimum whether it turns a profit or not. It's a cost of existing in the state, separate from how the business actually performs.
Is the registration fee ($100 for a corporation, $70 for an LLC) a one-time cost or does it repeat?
It's a one-time fee paid to the California Secretary of State when you form or register the entity. The recurring cost to plan for is the annual franchise tax, not the registration fee.
What happens if we miss a required filing in California?
Missing filings puts the entity's good standing at risk, which can affect banking, contracts, and hiring. It's a bigger risk than the filing itself, since fixing lost good standing takes more time and effort than staying current would have.
Does the franchise tax replace the need to file a corporate tax return?
No, the franchise tax and the corporate tax return are separate obligations. The franchise tax is a flat minimum charge for doing business in California, while the tax return reports the entity's actual income to the state.
Is it cheaper to use an EOR instead of opening a California entity?
It depends on your headcount, the entity costs, and how long you plan to operate in California, which is exactly what the crossover calculator is for. For a small or uncertain team, avoiding the $800 annual franchise tax and the filing overhead often makes an EOR the more practical route.
Where these figures come from
Sources
Figures on this page come from the California Franchise Tax Board's Publication 1060 guide for corporations starting business, and the California Secretary of State's business entity forms and fees schedule.
Looking for a job in California yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.
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