If you are physically present in California you will end up paying CA Franchise taxes (and corporate income taxes on revenue generated in CA). The additional administrative requirements for a SubS are at most an hour a year for a small firm.<p>Please don't confuse revenue and profits, it's possible to generate revenue, pay the CA LLC Franchise tax on it, and still have a loss on the year if expenses exceeded revenue. With a SubS you only pay tax on profits, which I agree for early years may be close to zero.