Legal Question in Business Law in California

What you are reading on the internet is only a half truth. A California business that incorporates in Nevada still has to pay California taxes on business originating from California (including the annual $800 franchise tax). Based on your description, you will see very little benefit from incorporating in Nevada.

Mr. Jefferson is correct. Taxation is based on the source of the income, not the location of the corporation. If you could only pay taxes in the state of incorporation, Delaware would be passing out money to its citizens instead of taxing them, the way Alaska does with oil severance tax revenue, except they'd be giving each citizen millions. Every business incorporated in another state that does business in California must register as a "foreign" corporation, and pay all the same taxes and fees as a "domestic" California corp.

You would get the same liability protection of incorporating in California. From what you have said, it is unclear that you would receive any tax benefit from incorporating in Nevada and could, in fact, be worse off as you would make your tax reporting significantly more complicated.

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