How to File an S Corp in California: The Recruiter’s DIY Guide
- Evin Wick
- Jun 27
- 3 min read
S Corp for recruiters in California
Filing as an S Corp as a recruiter in California can unlock major self-employment tax savings—but it also means juggling LLC formation, payroll compliance, and recurring state and federal filings. As an independent recruiter or boutique staffing agency, setting up an S-Corp not only reduces your tax bite but also lends credibility with enterprise clients. This step-by-step guide walks you through every form, fee, and best practice—so you can focus on sourcing top talent instead of wrestling red tape.
1. Lock Down a Recruiter-Friendly Name
Branding tips: Incorporate “Search,” “Talent,” “Placements” or “Recruiting” (e.g., “NextGen Talent LLC,” “ExecutivePlacements LLC”).
Check availability: Run a quick lookup on the CA Secretary of State site: CA SOS Business Search.
DBA option: Want a specialty line? File a “Doing Business As” to brand “TechSearch by NextGen” or “FinancePlacements Pro.”
2. File Your Articles of Organization (Form LLC-1)
Online filing: Use the BizFile portal: File LLC-1.
Fee: $70.
Recruiter pro-tip: List NAICS code 561311 (Employment Agencies) so new clients instantly see your official classification.
3. Create a Recruiter-Tailored Operating Agreement
Why it matters: Even single-member LLCs need it. Banks, clients, and temp-staff vendors will request it.
Recruiter clause ideas:
How placement fees and retainers are split among members
Candidate guarantee periods (e.g., refunds if a placement leaves within 90 days)
Handling non-compete or non-solicitation provisions
4. Submit Your Initial & Biennial Statement (Form LLC-12)
Timeline: Due within 90 days of formation, then every 2 years.
File online: LLC-12 on BizFile
Fee: $70; late penalty up to $250 + risk of suspension.
Keep it fresh: Update whenever you add new recruiters, open a satellite office, or change your registered agent.
5. Get Your EIN (Employer Identification Number)
Why it matters for recruiters: Use your EIN on client W-9s, 1099 filings for contract recruiters, and all payroll/tax forms.
Fast & free: Apply at the IRS: Get an EIN
6. Elect S Corp Status (Form 2553)
Perks: Only your salary incurs Social Security & Medicare taxes; distributions are tax-free.
Deadline: Within 2 months + 15 days of LLC formation.
File here: About Form 2553
Recruiter note: Missing the deadline means paying ~15.3% on all your net placement income instead of just on your payroll.
7. Register for Local Permits, Licenses & Bonding
Business Tax Registration (BTRC): Most cities require it—fees vary.
EDD & staffing bonds: If you run W-2 payroll, some counties require a workers’ comp bond or EDD employer account.
Employment-Agency Surety Bond: California law (Civ. Code § 1812.503) mandates every private employment agency maintain a $3,000 surety bond filed with the Secretary of State—protecting clients and jobseekers against fraud or non-performance. You can typically secure this bond for about $200, covering a two-year term.
Local rules: Check via CalGOLD: CalGOLD Permit Assistance
8. Open a Dedicated Business Bank Account
Use your LLC name + EIN.
Modern banks: Rho or Mercury integrate with Gusto, QuickBooks, and let you issue recruiter expense cards instantly.
9. Implement Bookkeeping & Payroll
Software picks: QuickBooks Online, Xero, or free platforms like Puzzle.
Set a “reasonable salary”:
Research avg. recruiter compensation on Glassdoor or Payscale.
Pay yourself that salary through payroll.
Distribute net profits as dividends.
Payroll service: Gusto (from $49/mo + $6 per W-2). It handles federal & CA withholding, 940/941 filings, and year-end W-2s/1099s.
10. Master Your Tax Calendar
Tax Type | Form | Due Dates |
Federal Estimated | 1040-ES | Apr 15, Jun 15, Sep 15, Jan 15 |
CA Estimated | 540-ES | Same as federal |
CA Franchise (min) | FTB-3522 | Apr 15 |
CA Gross-Receipts Fee | FTB-3536 | Apr 15 (if > $250K revenue) |
S-Corp Return | 100-S & 1120-S | Mar 15 |
Biennial Statement | LLC-12 | Every 2 years, within 90 days post-anniversary |
Self-Employment Tax Saving: Only salary (not dividends) is subject to the 15.3% FICA tax—putting more profit back in your pocket.
11. Stay Compliant & Scale Your Firm
Calendar reminders: Set alerts 30 days before each deadline in Google Calendar or your CRM.
Grow smart: As you add recruiters or expand into contract staffing, revisit your Operating Agreement and local permit requirements.
Ready to Spend More Time on Placements, Not Paperwork?
Setting up and managing an S-Corp takes work—but the long-term tax savings and professional polish are worth it. If you’d rather focus on building client relationships and closing searches, our S-Works team can handle formation, payroll, and ongoing compliance—so you can scale your recruiting business with confidence.
Evin Wick JD, LLM is a Georgetown-trained tax lawyer and co-founder of S-Works, where he channels two decades of small-business tax expertise into streamlined S-Corp, bookkeeping, and payroll solutions for solo consultants.
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