I'm not licensed in CA, so can only comment in general terms. For the most part, an LLC and a corporation will provide the same limitation of liability. If you are operating in CA, there is probably no benefit to creating an entity in another state, and it only doubles your annual licensing fees, etc.
An S corporation s slightly more favorable from an employment tax perspective. But you can always elect to have the LLC taxed as an association and then make an S election.
I do not know whether this is identical at the state income tax level. Iam aware that LLCs have a minimum tax in CA. I believe it's about $800/yr. If you are successful, that shouldn't matter.
You should consult a competent local business and tax attorney to make this choice of entity determination. There are a lot more details that need to be explored.
This question comes up so frequently that I blogged about it last year - please see the post at the link below.
Yes, it makes the most sense to form your new entity in CA, because you will need to register as doing business here, in any event. (Forming elsewhere would result, unnecessarily, in your paying two states, rather than one, every year.)
Knowing that you expect a sizable income from the start, I think you need a good tax advisor - finding ways to reduce your taxable business income in the context of your overall tax picture may well be more important than the type of entity that you form. (Good problem to have!)
Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.
The correct answer for business tax purposes usually is ...
-- Form an LLC, and allow the LLC to be taxed as a disregarded entity (sole proprietorship).
-- Each year, meet with your CPA before the end of the year to determine whether, going forward, you should elect to have the LLC taxed as an "S" corporation (or perhaps as a "C" corporation, though that seems less likely).
Of course I'm not licensed in CA, and I'm not your lawyer. For that matter, this isn't legal advice. Make sure you check with a local business lawyer (preferably with tax experience) and work with a good tax CPA.
Generally, either and LLC or Corp will prtect you from personal liability for company liabilities. I recommend consulting your tax advisor and having them run a pro forma with your anticipated income as both an LLC and a corp. That will give you an idea of which way you will fare better.