Is there a benefit to incorporating in California at the end of the year?

Yes, but you have to time it just right to get the benefit. Every corporation doing business in California, with the exception of banks and financial corporations, must pay a minimum annual franchise tax of $800. But California has a unique law providing that a business that incorporates within the last 15 days of the year does not have to file a tax return for that year or pay the $800 minimum franchise tax either in that year or in the next year. So there is a real benefit to incorporating within the last 15 days of the year and having your business primed to go at the beginning of the New Year. Here’s the caveat: if you file even a day or two outside the 15-day window, you have to file a tax return for the year of incorporation and, while you don’t have to pay the $800 minimum franchise tax for the 16 or 17 days you were officially a California corporation, you do have to pay the tax the next year, which you wouldn’t have to do if you’d just waited the extra day or two. And if you make the mistake of not filing a tax return for the short tax year, or not paying the minimum franchise tax for the first full year, then the penalties can add up. We discussed the applicable California law in Timing Is Everything When Incorporating in California at the End of the Year.