--- title: "California Entity Running Costs and Filings" description: "What it actually costs to keep a California entity compliant each year, from the flat franchise tax to state registration fees." canonical: https://www.teamed.global/country-hiring-guides/united-states/california/entity-running-costs-and-filings --- ![California business district.](/cluster-assets/country-hiring-guides/united-states/california/entity-running-costs-and-filings/images/hero.webp) # What does it cost to keepa company running in California. Every California entity owes an $800 minimum franchise tax each year, plus a formation fee; Teamed covers this without you opening an entity. Served by Teamed US Inc., Delaware · Payroll via SUNA Solutions Last reviewed 22 September 2026 · California guide 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 $70. 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 basisflat Formation / registration fee$70 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 it exists in California, 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 or register a business entity with the California Secretary of State costs $70. 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 $70 registration fee 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. 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 salaries 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 salaries and employer costs rather than on a headcount rule of thumb. Talk to a member of the team Model the crossover for the United States Who carries it ## Your own entity, when it's time. We set it up, migrate you in, and hand it back intact. Global Entity and Employment Operations, which we call GEMO, is how Teamed forms your company, registers it for tax and payroll, runs it month to month and keeps its filings current, across 100+ countries. You stay the employer. We do the work behind it. For California specifically, that means we handle the registration with the Secretary of State, get the entity current on its franchise tax obligations, and set up the filing rhythm the entity needs to stay in good standing. Then we hand you a clean, fully operational entity with your people already inside it. Entity Management (GEMO) The Graduation Model Employer cost calculator > They set up our EU entity and moved hires across without missing a payroll. *Helene Dubois, COO* Talk to an expert about California 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 $70 registration fee 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, salaries, 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. ## More on entities in California - [Hiring in California, overview](/country-hiring-guides/united-states/california)parent - [California setting up](/country-hiring-guides/united-states/california/entity-setup)sibling - [California tax presence](/country-hiring-guides/united-states/california/permanent-establishment-risk)sibling - [California entity or eor](/country-hiring-guides/united-states/california/eor-vs-entity)sibling - [California moving from an eor](/country-hiring-guides/united-states/california/moving-from-eor-to-your-own-entity)sibling - [Set up an entity, by country](/entity-setup-by-country)hub - [Entity Management (GEMO)](/entity-management)core - [Talk to an expert about California](https://www.teamed.global/contact?from=entity-running-costs-and-filings)CTA