Clarita CPA Group(661) 627-1099
Business Formation in Santa Clarita

Business Formation Services.

Choosing an entity is a tax decision with a decade of consequences. We help you make it deliberately — and then set the business up so it runs correctly from day one.

Most new business owners pick an entity in an afternoon, from a website, based on a comparison chart. The filing is the easy part. What matters is whether the structure you chose actually fits how you earn, what you will owe California every year, and what you will be responsible for filing once the business exists.

At Clarita CPA Group, we approach formation from the tax side. We look at your expected income, how you will pay yourself, whether you will have employees, and what you plan to do with the business in five years. Then we recommend a structure and explain the reasoning in plain terms — including the years the numbers do not favor a change.

We prepare and file your EIN application and, when it makes sense, your S corporation election. We register you for payroll, set up your books and chart of accounts, and hand you a written calendar of every federal, state, and Secretary of State deadline the new entity creates.

We are CPAs, not attorneys. Our work is the tax and accounting side of forming your business. For operating agreements, bylaws, and shareholder agreements, we will refer you to a Santa Clarita business attorney or work alongside the one you already have.

Who We Help

For owners at the start — and owners who structured it wrong the first time.

Formation work is not only for new businesses. A lot of it is fixing a structure that stopped fitting.

  • First-time business owners
  • Sole proprietors outgrowing Schedule C
  • Freelancers and contractors going full-time
  • Consultants and coaches
  • Real estate investors and agents
  • Contractors and trades
  • Medical, dental, and other licensed professionals
  • Online and e-commerce businesses
  • Partners going into business together
  • Existing LLCs considering an S corporation election
Entity Selection

The right entity depends on your numbers, not on a comparison chart.

Here is how we think about each structure, from a tax perspective.

Sole proprietorship

No filing, no separate return. Income lands on Schedule C of your personal return. Simple and cheap, but all net profit is exposed to self-employment tax and there is no separation between you and the business.

Single-member LLC

A separate legal entity that is still taxed as a sole proprietorship by default. You get the legal separation without changing how the income is taxed. In California, that separation carries an annual price, and that is the part people underestimate.

Multi-member LLC / partnership

Taxed as a partnership on Form 1065, with a K-1 to each owner. The allocation of income, deductions, and distributions is where these get complicated, and where a poorly drafted arrangement causes problems years later.

LLC taxed as an S corporation

Keeps the LLC, changes the tax treatment. You go on payroll at a reasonable salary, and remaining profit passes through without self-employment tax. This is the structure that saves the most money for the right business, and costs money for the wrong one.

S corporation

Same pass-through treatment, with corporate formalities. Requires payroll, a separate Form 1120-S, and reasonable compensation for owner-employees. California still taxes S corporation net income at 1.5%, with an $800 minimum.

C corporation

Taxed separately at the entity level, with a second layer of tax on dividends. Rarely the right answer for a small local business, but it can be for companies raising outside capital or retaining significant earnings.

Professional corporation

California does not allow many licensed professionals, including physicians, dentists, attorneys, and CPAs, to operate through an LLC. If you hold a professional license, the entity question is narrower than the internet suggests.

What California Actually Costs

The filing fee is the smallest number involved.

Most formation websites quote you the Secretary of State fee. These are the numbers that follow it.

  • $70 — Articles of Organization (Form LLC-1). The one-time Secretary of State fee to form an LLC. Corporations file Articles of Incorporation instead, at $100.
  • $20 or $25 — Statement of Information. Due within 90 days of registering. LLCs file Form LLC-12 every two years. Corporations file Form SI-550 every year.
  • $800 — California annual tax, in year one. This is the number that surprises people. The temporary first-year waiver applied only to LLCs formed between 2021 and 2023, and it has expired. An LLC formed today owes the $800 for its first year, due the 15th day of the 4th month after formation.
  • $0 in year one, for corporations. Newly incorporated corporations are not subject to the minimum franchise tax in their first taxable year. That asymmetry between LLCs and corporations is a real planning consideration, and almost nobody mentions it.
  • $900 to $11,790 — the LLC fee. Separate from the $800, and based on total California income rather than profit. It is a cliff, not a slope: nothing under $250,000, then $900, $2,500, $6,000, and $11,790 as you cross $250,000, $500,000, $1 million, and $5 million. A business at $260,000 of revenue pays the same $900 as one at $499,000.
  • 1.5% — California's tax on S corporation net income, with the same $800 minimum. The federal savings from an S election are real. The California cost of one is also real, and both belong in the same calculation.
  • $0 — an EIN. The IRS does not charge for one. Any site that bills you for an EIN is charging you for a free form.
The S Corporation Question

An S corporation election is not automatically a good idea.

The pitch is straightforward. Put yourself on payroll at a reasonable salary, and the profit above that salary avoids self-employment tax. For a business with steady profit well above what the owner's work is worth on the open market, the savings are meaningful and recurring.

The costs are less advertised. You now run payroll, file quarterly employment tax returns, issue yourself a W-2, file a separate Form 1120-S, and pay California 1.5% on net income with an $800 floor. Below a certain level of profit, the added cost of the structure exceeds the tax it saves.

Reasonable compensation is where these elections actually fail. There is no statutory percentage — the 60/40 rule and similar shortcuts have no basis in the code. The IRS looks at your training and experience, your duties, the time you devote to the business, what comparable positions pay, and the profitability of the company. Setting the salary too low is the most commonly examined issue on S corporation returns, and the adjustments come with back payroll tax, interest, and penalties.

We will run the numbers for your situation and tell you whether the election is worth making, including the years when the answer is no.

What We Handle

Formation, and the twelve months after it.

The filing takes a week. Everything below is what determines whether the structure actually works.

At formation

  • Entity analysis based on your projected income and how you will pay yourself
  • A recommendation with the tax reasoning written out
  • EIN application (Form SS-4)
  • S corporation election (Form 2553), when it makes sense
  • Coordination with your attorney on formation documents
  • Fictitious business name guidance for DBAs
  • Seller's permit and payroll registration guidance

Once you are operating

  • Payroll setup and registration with the EDD
  • Owner compensation set at a defensible level
  • Chart of accounts and bookkeeping from the first transaction
  • Separation of business and personal accounts
  • An estimated tax payment schedule
  • A written twelve-month compliance calendar
  • Ongoing tax planning and business tax preparation
Santa Clarita Specifics

A few things that are true here and get repeated wrong everywhere else.

  • The City of Santa Clarita does not issue or require a general business license. The City's own Economic Development Division says so directly. You may still need a Los Angeles County license depending on your activity and location, along with zoning, home-occupation, or building clearances.

  • Check whether you are actually in the City. Stevenson Ranch, Castaic, and Val Verde are unincorporated Los Angeles County, not City of Santa Clarita. The requirements differ.

  • DBAs are filed with the Los Angeles County Registrar-Recorder/County Clerk. A fictitious business name statement must then be published once a week for four consecutive weeks in an adjudicated newspaper, beginning within 30 days of filing.

  • A seller's permit comes from the CDTFA and is free to obtain, if you will sell tangible goods at retail.

  • Payroll registration with the EDD is triggered at more than $100 in wages in a calendar quarter, and is due within 15 days.

Who Does What

Most owners need both a CPA and an attorney.

We handle the tax and accounting side: which entity minimizes what you will owe, the EIN, the S corporation election, payroll, books, and the filings that keep you current with the IRS, Franchise Tax Board, EDD, and Secretary of State. That work continues after formation through business tax preparation, tax planning, bookkeeping, and ongoing small business CPA services.

An attorney handles the legal side: operating agreements, bylaws, shareholder and buy-sell agreements, and questions about liability and governance. We do not draft those documents and we do not give legal advice. If you do not have an attorney, we will point you to one in Santa Clarita. If you do, we will work with them.

The formation websites tell you that you need neither. That works right up until the first year the structure costs you money.

Logan Allec, CPA
From the Logan Allec YouTube Channel

Entity choice and S corporations, explained on video.

Founder, Clarita CPA Group · @LoganAllec

Visit the channel
Common Questions

Questions we get before someone forms a business.

Clarita CPA Group is a certified public accounting firm. We provide tax and accounting services, including entity analysis from a tax perspective, EIN applications, S corporation elections, payroll setup, and bookkeeping. We do not practice law, draft operating agreements or bylaws, or provide legal advice. Fees, tax rates, and filing requirements described on this page are current as of 2026 and subject to change.

Ready when you are

Talk it through before you file anything.

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