California LLC for Consultants — S-Corp Strategy

Consulting is one of the best industries for the California S-corp + LLC combination. High margins, minimal COGS, and no special licensing create an ideal scenario for self-employment tax savings that far exceed the $800 franchise tax cost. See our CA LLC guide.

The Math for California Consultants

At $200K net profit (common for established CA consultants):

• Default LLC: $800 franchise tax + self-employment tax ($26,500) + LLC fee ($900 if gross >$250K)
• S-corp LLC ($100K salary): $3,000 CA tax (1.5%) + payroll tax ($15,300) + NO LLC fee
• S-corp savings: ~$9,000-$12,000/year (net of additional costs)

California Consulting Advantages

• No state professional license needed for management/IT/strategy/marketing consulting
• S-corp election eliminates the LLC fee (significant for consultants above $250K gross)
• No city license typically required for professional services
• Home office deduction (common for CA consultants given high housing costs)

FAQ

When should a CA consultant elect S-corp?

When net profit consistently exceeds $80K. The 1.5% CA S-corp tax + federal payroll tax savings make the math overwhelmingly positive above this threshold.

Does S-corp eliminate the LLC fee?

Yes. S-corp elected LLCs pay the 1.5% net income tax instead of the $800 flat tax + LLC fee. For consultants with $250K+ gross income, this eliminates the $900-$11,790 LLC fee entirely.