California: what each business structure costs a year

At $100,000 profit, an LLC taxed as an S corp costs $3,739 a year less than a sole proprietorship in California. All figures are 2026 tax and fees.

$3,739 a year

less as an LLC taxed as an S corp than as a sole proprietorship in California, at these numbers. That includes the state's pass-through entity tax election.

California, 2026: $100,000 profit, single filer

Structure

Yearly cost

vs yours

To set up

Sole proprietorship yours

$26,916

Itemized: $26,916

Self-employment taxirs.gov, 2026 rates	$14,130
Federal income taxirs.gov, 2026 rates	$8,235
State income taxftb.ca.gov, checked Oct 23, 2026	$4,551
Yearly cost	$26,916

Single-member LLC

$27,409

+$493

$70

Itemized: $27,409

Statement of Information (Form LLC-12)sos.ca.gov, checked Oct 23, 2026	$10
California LLC annual taxftb.ca.gov, checked Oct 23, 2026	$800
Self-employment taxirs.gov, 2026 rates	$14,015
Federal income taxirs.gov, 2026 rates	$8,103
State income taxftb.ca.gov, checked Oct 23, 2026	$4,481
Yearly cost	$27,409

LLC taxed as an S corp lowest

$23,177

−$3,739

$70

Itemized: $23,177

Statement of Information (Form LLC-12)sos.ca.gov, checked Oct 23, 2026	$10
Payroll tax on your salaryirs.gov, 2026 rates	$6,407
State disability and paid leaveedd.ca.gov, checked Oct 23, 2026	$520
Payroll service and tax return (estimate)	$1,800
California S corporation tax (1.5%)ftb.ca.gov, checked Oct 23, 2026	$823
California pass-through entity tax, paid by the company (elected)ftb.ca.gov, checked Oct 23, 2026	$5,024
Federal income taxirs.gov, 2026 rates	$8,593
Yearly cost	$23,177

S corporation

$23,188

−$3,728

$100

Itemized: $23,188

Statement of Information (Form SI-550)sos.ca.gov, checked Oct 23, 2026	$25
Payroll tax on your salaryirs.gov, 2026 rates	$6,407
State disability and paid leaveedd.ca.gov, checked Oct 23, 2026	$520
Payroll service and tax return (estimate)	$1,800
California S corporation tax (1.5%)ftb.ca.gov, checked Oct 23, 2026	$823
California pass-through entity tax, paid by the company (elected)ftb.ca.gov, checked Oct 23, 2026	$5,022
Federal income taxirs.gov, 2026 rates	$8,591
Yearly cost	$23,188

C corporation

$32,215

+$5,299

$100

Itemized: $32,215

Statement of Information (Form SI-550)sos.ca.gov, checked Oct 23, 2026	$25
Payroll tax on your salaryirs.gov, 2026 rates	$6,407
State disability and paid leaveedd.ca.gov, checked Oct 23, 2026	$520
Payroll service and tax return (estimate)	$2,000
State corporate income taxftb.ca.gov, checked Oct 23, 2026	$4,829
Federal corporate income tax (21%)irs.gov, 2026 rates	$10,458
Federal income taxirs.gov, 2026 rates	$4,689
State income taxftb.ca.gov, checked Oct 23, 2026	$3,287
Yearly cost	$32,215

What these figures count

State income tax, and state taxes on the business itself: franchise, LLC, S corp, gross receipts and excise taxes.
Social Security and Medicare on both sides of an owner salary, federal unemployment tax and the state's new-employer rate.
The 20% qualified business income deduction with its income limits and the professional-service rule.
Yearly report fees, and a cost you can change for payroll and the business tax return.

Many S corp calculators leave out state taxes and the QBI deduction, which can make the election look better than it is.

When an S corp election pays in California

Electing S corp tax treatment for an LLC starts to pay in California at about $52,500 of profit, with the default salary and $1,800 a year for payroll and the extra tax return.

An S corp in California can elect to pay the state's income tax itself, a pass-through entity tax of 9.3%, and the owner gets a credit for it. The company deducts it on the federal return, so it is not held to the SALT cap. The calculator uses it when it lowers the totalftb.ca.gov.

Profit	Sole prop	LLC	LLC as S corp	C corp
$30,000	$5,514	$6,134	$8,044	$8,379
$50,000	$10,726	$11,319	$11,647	$13,799
$75,000	$17,999	$18,561	$15,631	$21,754
$100,000	$26,916	$27,409	$23,177	$32,215
$150,000	$46,479	$46,973	$39,897	$55,743
$200,000	$66,625	$67,662	$57,750	$78,455
$300,000	$110,789	$111,444	$95,364	$124,590

Single filer, no other income, revenue taken as 1.5 times profit, default salary. The lowest cost in each row is marked.

State fees and taxes in California

	LLC	Corporation
Filing to form	$70Articles of Organization (Form LLC-1)	$100Articles of Incorporation (Form ARTS-GS)	sos.ca.gov
Yearly report	Statement of Information (Form LLC-12), $20 every two years	Statement of Information (Form SI-550), $25 a year	sos.ca.gov
Report due	Within 90 days of formation, then every two years by the end of the registration month	Within 90 days of formation, then every year by the end of the registration month
California LLC annual tax$800	yes	no	ftb.ca.gov
California LLC feeby a table of gross receipts	yes	no	ftb.ca.gov
California S corporation tax (1.5%)1.5% of net income, minimum $800	if taxed as S corp	S corp only	ftb.ca.gov

California taxes personal income in 10 brackets, from 1% to 13.3% (2025, single filer). ftb.ca.gov
C corporations pay 8.84% of net income, with a minimum of $800. ftb.ca.gov
California follows the federal S corp election.
New employers pay state unemployment tax of 3.4% on the first $7,000 of each employee's wages. That applies to an owner's salary from an S or C corp. edd.ca.gov
CA SDI (includes Paid Family Leave): 1.3% withheld from wages. edd.ca.gov
Statement of Information costs $20 every two years.
A new corporation does not owe the $800 minimum franchise tax for its first taxable year (Revenue and Taxation Code 23153(f)). After that, the calculator shows a full year. LLCs get no such first-year exemption.

Not in the calculator: San Francisco charges a gross receipts tax and registration fee, Los Angeles and many other cities charge a business tax or license tax based on gross receipts. Not modelled.

Switching calculators for California

By profession in California

Questions

Is an S corp worth it in California?

On these figures, from about $52,500 of profit. At $100,000 an LLC taxed as an S corp costs $23,177 a year against $27,409 for a plain LLC, $4,232 less. The saving comes from paying Social Security and Medicare tax on a salary instead of on all profit.

How much does an LLC cost per year in California?

The state charges Statement of Information (Form LLC-12), $20 every two years. LLCs can also owe California LLC annual tax and California LLC fee. Forming one costs $70.

Does California recognise the S corp election?

Yes. The federal election carries over with no separate state form. Federal S election applies, but the S corp pays 1.5% of net income with an $800 minimum.

What income tax does California charge?

California taxes personal income in 10 brackets, from 1% to 13.3% (2025, single filer). C corporations pay 8.84% of net income, with a minimum of $800.

How this page models California (1)

California has not published its 2026 income tax brackets, standard deduction and exemption credits yet, so the 2025 figures are used; they will be updated when it does.

Sources checked 2026-10-23. Each figure links to the state or IRS page it comes from.

Other states