The question of where to form a Corporation or Limited Liability Company, like everything else in law and business, depends on your particular circumstances. For most small and medium size San Diego businesses, incorporating in California makes the most sense. Incorporating in another state requires additional resources in time, paperwork and expense, and access to court and government services is geographically inconvenient. In addition, there’s the possible inconvenience of having to prosecute or defend lawsuits in a foreign state. There is a common misconception that forming a Nevada Corporation is worth the additional cost and inconvenience because businesses can avoid California’s higher tax rates. However, companies doing business in California, no matter where incorporated, are required to register in California as a foreign corporation and are required to pay taxes on their corporate profits. Unless you plan on moving your business to Nevada, there are no real tax advantages for companies that do business solely or primarily in San Diego.
Updated: