Where should I set up my company?

"I live in California, but I'd rather not pay the taxes or the cost of doing business here." How many times do I hear that every day?

There are 2 things to consider here.

One is where is your nexus of operation.

The other is what would you pay tax on.

An S corporation or an S company is a flow through entity: all income flows down to you as W2 or distribution, so you will pay taxes on all the income in CA regardless of where you earn it.

That is because you are a CA resident, and CA reserves the right to tax residents on all income they make worldwide. If you can make a case that your nexus of operation is all over the US, you can incorporate anywhere, but you will still be taxed on all the income in CA anyway.

If you have a partner in the company who is earning outside CA, we need to talk.

A C corporation or a C company is different. And for a C it makes a lot of difference where you put it. In the C, you will still be taxed in CA on W2 income, but the company itself will pay its own taxes on profits in whatever state it is incorporated in. Big difference.

pssst - the only practical way to minimize your state taxes is to change states.