Dana's comments do not apply to most web or internet business. YOUR INTERNET BUSINESS SHOULD BE INCORPORATED IN NEVADA!!!!! HERE IS WHY!
- The INC Fees are lower
- There is very low annual fees versus the CA 800 year
- There is no state income tax, so you could have dual residency and lower your tax burden
- IMPORTANT! Once you grow, chances are you will realize that you can hire less expensive employees in Las Vegas vs San Francisco. The cost of living is lower, so a customer service rep earning $14 per hour in Vegas sees that as a lot more than someone living in San Jose, LA, or any other real city in california
Its very easy to setup shop in vegas, but live in california. Worst case is that you have to pay state income tax on 100% of your income, but you leave room to reduce that amount easily with dual residency, or just by being a Nevada resident all together.
Cost of living in NEVADA is a bargain. I am surprised more entrepreneurs dont take advantage of it.
If you plan on ever having employees, or dont like paying to much in taxes consider Nevada & Wyoming. Nevada is your safer bet, because it offers low cost of living and still a lifestyle that is acceptable (specially in vegas)