Legal Question in Business Law in California

Re: Business

Not sure where you got the 5 years idea. The franchise tax will apply until you dissolve the California LLC (which you might want to consider donig if you no longer do business in California, in which case, if appropriate, you can form a new LLC [or S corp. - did you consider that option first time around?] in your new state).

If you retain the California LLC, you may have to register it as a foreign LLC doing business in that state(s), so you may be subject to more than one level of state taxation and regulation.

Re: Business

No, that's not true. California will tax you forever. The current $800 a year minimum tax is a franchise tax, assessed on the LLC for the privilege of being a California LLC. California is not the only state that taxes business entities on the basis of being formed in and existing under the laws of that state. As far as I know, EVERY state taxes corporations and LLCs formed there and existing under that state's laws an annual franchise tax, including most certainly Nevada and Delaware. It is a fallacy to believe that your LLC is taxed only on the basis of where it operates. Business entities are taxed both where they operate (i.e., generate income) AND where they are chartered. This is because states have the power to tax both income and the privilege of existing. At $800 a year, California is probably among the highest in the nation as far as the minimum franchise tax goes, but then the privilege of doing business here, in a state with more than 30 million inhabitants and a GNP bigger than most Euorpean nations, is worth many times more than the privilege of doing business in, say, tiny Delaware or sparesely-populated Nevada. Of course, you have to pay the $800 (minimum) California tax whether you are chartered here or do business here as an out-of-state LLC, so there is little to gain by not just paying it.