How do you set upa company in California.
Teamed forms your California entity, handles the franchise tax and filing fees, and runs payroll compliance from day one.
At a glance
California entity setup at a glance
Forming a corporation or LLC in California means filing with the Secretary of State and paying a registration fee of $70. After that, you carry a minimum franchise tax of $800 a year, a flat amount from the Franchise Tax Board that applies no matter how much the entity earns. Most companies also register separately for state payroll tax before they can legally run payroll. Teamed can either set this up and hand it to you, or skip the entity entirely and employ your team on your behalf through our EOR.
- Minimum franchise tax
- $800
- Franchise tax basis
- flat
- Formation / registration fee
- $70
Formation
How you actually form the entity
California requires formation documents filed with the Secretary of State before you can legally employ anyone in the state. Teamed prepares and files these documents, pays the $70 registration fee on your behalf, and hands you the stamped confirmation so you can open a bank account and register for state payroll tax.
Formation is only the first step. You also need a registered agent for service of process, an EIN from the IRS, and ongoing state filings to keep the entity in good standing. Teamed keeps track of these so nothing lapses quietly while you're focused on hiring.
Ongoing tax
The franchise tax you can't avoid
California charges every corporation and LLC a minimum franchise tax of $800 a year, and the Franchise Tax Board applies it as a flat amount, not as a percentage tied to revenue or profit.
This tax is due for as long as the entity exists in California, whether it employed one person or fifty. Factor it into your budget before you incorporate, because winding the entity down later does not erase tax owed for a year the entity was active.
Payroll and compliance
What running payroll in California actually involves
Once the entity exists, you still need to register separately for state payroll tax withholding and unemployment insurance before you can pay a single employee legally. California also has its own rules on wage statements, meal and rest breaks, and final pay timing that differ from federal defaults.
Teamed can run this compliance layer for you inside your own entity, or you can let us employ the team under our own California-registered entity while you decide whether a permanent presence makes sense.
The honest take
When an EOR beats an entity in California
If you're hiring one or two people to test the California market, or the headcount is still moving month to month, paying the franchise tax and running formation before you've proven the market rarely pays off yet.
Talk to a member of the team about your specific plan, and if you want to see the math for yourself, run it through the crossover calculator, since the right answer depends entirely on salaries and how long you intend to stay.
GEMO
Your own entity, when it's time. We set it up, migrate you in, and hand it back intact.
When you're ready to hold your own California entity, Teamed's Global Entity and Employment Operations service, which we call GEMO, sets it up, migrates your employees from our EOR into it without breaking continuity, and hands you full control. We run the same service across 100+ countries, so the process looks the same wherever you expand next.
In California specifically, GEMO handles the Secretary of State filing, the registered agent setup, and the transition of payroll registration, then walks you through what the $800 minimum franchise tax means for your ongoing filings so there are no surprises after handover.
Before you commit
Sometimes an employer of record is the better fit
An employer of record is sometimes the better answer in California, not a lesser one, especially for a small or still-changing headcount or when you're testing whether the market is worth the commitment. Talk to a member of the team about where you are, and use the crossover calculator to see the numbers for your own salaries and timeline.
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.
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.
In California specifically, GEMO handles the Secretary of State filing, the registered agent setup, and the transition of payroll registration, then walks you through what the $800 minimum franchise tax means for your ongoing filings so there are no surprises after handover.
They set up our EU entity and moved hires across without missing a payroll.
Questions
California entity setup questions
Do I need a California entity to hire employees there?
Not necessarily. You can employ staff in California through an employer of record like Teamed without forming your own entity, which avoids the registration fee and the ongoing franchise tax until you're ready to commit.
How much is the California franchise tax?
California's Franchise Tax Board sets a minimum franchise tax of $800 a year for corporations and LLCs. It's a flat amount, not calculated as a percentage of revenue or profit, and it applies regardless of how the business performs.
What does it cost to register a business in California?
The California Secretary of State charges a $70 registration fee to file your formation documents. This is separate from the annual $800 minimum franchise tax you'll owe once the entity exists.
Can Teamed's EOR let me skip forming a California entity?
Yes. Teamed can employ your California team under our own registered entity, so you skip the formation fee and the franchise tax while you decide whether a permanent entity makes sense.
When should I switch from EOR to my own entity in California?
It depends on your headcount, salaries, and how long you plan to stay in the state, not on a fixed number of employees. Run the crossover calculator or talk to a member of the team to see where the franchise tax and formation costs start paying for themselves.
Where these figures come from
Sources
These figures 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 Entity Setup 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.