First, on terminology, incorporation refers to forming a corporation, not a limited liability company (LLC). Second, I assume you have considered the advantages and disadvantages of LLC vs S corporation vs C corporation; if not, then you should do so before assuming an LLC. Depending on where and how you will conduct your business activities, you may, or may not, need to register to do business in California if you organize your LLC in another state, or vice versa, if you organize your LLC in California. As with the LLC vs. corporation decision, this is fact-dependent, and therefore cannot be answered in the abstract. Applying the law to the facts based on your particular circumstances is what attorneys do, so you should consult with a business lawyer and tax advisor (LLCs, C corps, and S corps are all taxed differently, so this is a legal as well as tax decision) before making any final decisions.

I work with clients all over the state (and am also licensed to practice law in Nevada and Illinois, should by chance those be one of the states you are planning to do business in), if you are comfortable working by telephone/email/fax; if you prefer local counsel, then you should ask friends and colleagues for their recommendations, or failing that, ask your local bar association for one or more referrals.

Based on the limited information provided, no attorney could really answer your question, even if, unlike me, they are willing to provide legal advice to non-clients. Even if you are planning to do the rest yourself - which I would not advise, as the results are usual suboptimal based on my review of many DIY LLC/corporation formations - you may be well served to buy an hour or attorney time to consult regarding your issues and get your questions answered up front before you commit to any particular course of action.

I have read and do not disagree with the previous answer. Nevertheless, I think this can be addressed a little more directly. Your LLC should be formed in, and under the laws of, the state where it will be doing business.

Domiciling businesses in states other than where they do business (e.g., Delaware) has sufficient advantages for large (public) businesses to make it worthwhile, because the additional taxes, fees and accounting work is a drop in the bucket compared with their other revenues and expenses. For a smaller business (grossing under, say, $10 million) it is an expensive nuisance, since it also needs to register and pay taxes or fees, and file reports, where it operates.

Furhermore, the advantages of states like Delaware apply mainly to public companies with registered, traded stock, not little family businesses.

I agree with both the previous answers, but would add that California has an LLC tax and fee structure that makes it a very disfavored business form for profitable businesses with meaningful cash flow (it's a different story where the business will make its money mostly from appreciation of assets such as a real estate investment or development company). So if you want to form an LLC for sure, the other state is probably better.