Downtown Los Angeles, California. Photo: Daniel Narinian via Pexels.
California rewrote a remarkable amount of its business and employment law heading into 2026 — one legislative session produced more than 700 new laws. For the owners of the state’s LLCs and corporations, a handful of these changes stand out: new transparency rules that can put ownership information on the public record, the ever-present $800 franchise tax, and higher wage and salary thresholds. Here is a plain-English guide to what matters.
Key takeaways
- • California moved toward public disclosure of beneficial owners — going further than the federal rule.
- • The $800 minimum franchise tax still applies to most entities, profit or not.
- • Minimum wage rose to $16.90/hr; the exempt-salary floor is now $70,304/year.
- • Employers face new written-notice obligations — worth auditing now.
1. The Big Shift: Public Beneficial-Ownership Disclosure
The most consequential change for privacy-conscious owners is California’s move toward public disclosure of who really owns a company. Under SB 1201, California corporations and LLCs were set, beginning in 2026, to report the names and addresses of their beneficial owners on the Statement of Information filed with the Secretary of State — information that would then be searchable by the public online.
This goes a meaningful step beyond the federal Corporate Transparency Act (CTA). The federal regime collects beneficial-ownership information but keeps it non-public, accessible only to certain government and financial entities. California’s approach was designed to make much of that information openly visible. For context, a "beneficial owner" generally means anyone who owns 25% or more of the entity or who exercises substantial control over it.
Why it matters: many California business owners — especially real estate investors and family enterprises — have long relied on the limited privacy of the entity structure. A public-disclosure requirement changes that calculus, and may prompt owners to revisit how their holdings are structured. The law has moved through California’s legislative and rulemaking process, and the federal CTA itself has seen shifting deadlines and enforcement, so the single most important step is to confirm the current, in-effect requirement before you file rather than relying on older summaries.
Concerned about who can see your ownership information? We help California owners understand the new disclosure rules and structure their entities accordingly.
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If you operate an LLC or corporation in California, plan for the $800 minimum annual franchise tax. It is owed by most entities regardless of whether the business turned a profit, and it is one of the defining features of operating in the state. New businesses sometimes qualify for first-year relief depending on the year and entity type, but you should never assume it does not apply — budget for it from the start and confirm your specific situation.
This single cost is why some founders ask whether they should form in a cheaper state. For most people who actually live and work in California, the answer is no: forming in another state generally does not let you escape California’s rules or the $800 tax, because you will typically have to register as a foreign entity doing business in California anyway — adding cost and complexity rather than removing it.
3. Higher Wage and Salary Thresholds for Employers
If you employ people in California, two 2026 numbers matter immediately:
- Minimum wage of $16.90 per hour statewide, for employers of all sizes, continuing California’s inflation-linked annual adjustments. Some cities set even higher local minimums, so check your locality.
- Exempt-employee salary floor of $70,304 per year. To classify a salaried employee as exempt from overtime, you generally must pay at least this amount (in addition to meeting the duties test). Employees below the threshold may be entitled to overtime, and misclassification is a common and costly mistake.
These thresholds ripple through payroll budgets and job offers. If you have salaried staff near the old threshold, this is the year to review their classification.
4. New Employer Notice and Contract Rules
California added new obligations around how employers communicate with workers and what they can require in employment agreements. Among the themes for 2026:
- Stand-alone written rights notices. Employers have been required to give employees written notice of certain workplace protections — covering areas like misclassification, workers’ compensation rights, and more.
- Limits on what contracts can require. Provisions forcing workers to repay training costs or similar debts on termination are, with narrow exceptions, increasingly unenforceable.
- Expanded pay-transparency and pay-equity rules affecting job postings and compensation practices.
For employers, the practical move is an annual policy and posting audit so a small paperwork gap does not become a wage-and-hour claim.
5. What Multi-State Owners Should Watch
Many of the businesses we work with operate across state lines — an Arizona or Texas company doing business in California, or a California company expanding outward. California’s rules generally reach any entity doing business in the state, not just those formed there. If you are registered to transact business in California, expect California’s disclosure, tax, and employment rules to apply to that activity. Coordinating compliance across states is exactly the kind of issue worth mapping out deliberately rather than discovering during an audit.
How a Business Attorney Helps
California’s 2026 changes are less about a single dramatic reform and more about a rising compliance baseline — transparency, wage rules, and employer obligations all tightening at once. The owners who handle this well are the ones who get ahead of it: confirming what actually applies to their entity, structuring ownership with the new disclosure rules in mind, and keeping employment practices current. Licensed in California, Arizona, and Texas, our corporate formation and contracts practices help owners do exactly that — turning a confusing list of changes into a clear, current compliance plan.
Frequently Asked Questions
Key 2026 changes include a move toward public disclosure of beneficial owners for LLCs and corporations on the Statement of Information, the continued $800 minimum annual franchise tax, a statewide minimum wage of $16.90 per hour, and a higher exempt-employee salary threshold of $70,304 per year. Employers also face new written-notice requirements. Because some measures have shifted during the legislative and rulemaking process, confirm current status with counsel before relying on any single rule.
California’s SB 1201 was written to require corporations and LLCs to disclose the names and addresses of their beneficial owners on the public Statement of Information, going further than the federal Corporate Transparency Act, which keeps that information non-public. A beneficial owner generally means anyone owning 25 percent or more of the entity or exercising substantial control. Because the federal and state landscape has been changing, verify the current effective requirement with an attorney.
California charges most LLCs and corporations a minimum annual franchise tax of $800, owed regardless of whether the business made a profit. It is one of the defining costs of operating an entity in California and should be factored into your budget from day one. Certain first-year exemptions have applied at times, so confirm what applies to your entity and year.
Many founders ask whether to form in California or a lower-cost state. If you live and operate in California, forming elsewhere usually does not avoid California’s rules or the $800 tax, because you will likely have to register as a foreign entity doing business in California anyway. The right answer depends on where you operate, your funding plans, and your privacy concerns, and is best decided with counsel.
This article is for general informational purposes only and is not legal advice, and may not reflect the most current legal developments. Laws referenced here have moved through changing legislative, regulatory, and enforcement processes — confirm the current requirements with a qualified California attorney before acting. Reading this article does not create an attorney-client relationship.