The short answer
It depends. California has trade-offs: $800 annual minimum franchise tax, Highest state income tax. For most founders, alternatives like Wyoming or your home state are simpler.
Three deciding questions
1. Do you live or operate in California?
If yes, form here. Out-of-state formation while operating in California costs double, not half.
2. What is the 5-year all-in cost?
$4,420 (filing + 5 × annual report + $50 registered agent + franchise minimums). This is the actual number to compare across states.
3. What are your three real requirements?
- Privacy: 3/10 (weak — members appear on public filings).
- Banking: 9/10 (top-tier — Mercury, Brex, every bank accepts).
- Cost: high 5-year total.
California pros
- Large market
- Strong banking ecosystem
California cons
- $800 annual minimum franchise tax
- Highest state income tax
- Members listed on Statement of Information
Most common alternative
Wyoming for cost + privacy. Delaware for VC-backed startups. Your home state if you operate there. Run the 5-question quiz for a personalized shortlist.