Legal Question in Business Law in California

Re: question on LLCs in CA

Sure. First you incorporate and pay the riling and registration fees in whatever state you want, then you register in CA and pay the fees and taxes here to do business. The $800 in CA is a PRE-payment of your first year minimum taxes.

Re: question on LLCs in CA

No. You must still register and qualify to do business in California and pay taxes on the corporation's California income. However, a new California doesn't pay the $800 minmum for its first tax year. By the time your corporation is in it's second taxable year, you will hopefully be making enough money so that you tax bill is higher than just the $800 minimum anyway. I would incorporate in California to make life simpler.

Re: question on LLCs in CA

Yes, elect a new state legislature or put a referendum on the ballot to reduce or eliminate the franchise tax fee (which is not $800, it's $800 minimum annually, and which is, for an LLC, payable every year, including the first; for a corporation, the minimum is waived the first year [which also begs the question why you have decided for an LLC over a corporation, and whether that is the right choice for your situation]). Otherwise, generally, no, you must pay the franchise fee for the privilege of doing business in California (in which case the NV or CO LLC will only increase your costs and complexity).

Re: question on LLCs in CA

Well, you have a no answer and a sort-of yes answer, so I'll complete the cycle with a maybe answer.

Whether or not you have to pay a California franchise tax depends not on where you live or what states seem to have allure due to low fees, supposed privacy, etc. Whether you have to pay a California franchise tax depends upon whether you are doing business in California.

You are probably not doing business in California so as to have to register and pay the tax if you have only occasional and limited dealings here, such as buying or selling a property in a one-time transaction or taking an occasional order. You probably are doing business in California, however, if you have an address, employee, inventory, bank account or significant business contacts here.

I think one of the purposes of the franchise tax is to separate business founders with real ideas, financing and prospects from wannabe business owners who haven't stepped up to the realities of what it takes to start and run a corporation. I don't believe in wasting $800 a year, but on the other hand if that is a significant factor in a business founder's budget, maybe the business isn't ready for the LLC or corporate world just yet.