LLC in California - $800/year annual tax - Posted by Gary

Posted by Mark (SDCA) on May 08, 2000 at 12:03:19:

When you are first starting out, liability insurance is much more important than incorporation.


LLC in California - $800/year annual tax - Posted by Gary

Posted by Gary on May 05, 2000 at 20:19:35:

This can’t be right. I checked out what it takes to register an LLC in California and found that the state franchise tax board FTB charges $800/year annual tax for an LLC. On it’s webpage, the FTB says that its the tax for the ‘privilege of doing business in California.’ Ignoring the uppity statement, this seems rather steep. Is it this expensive in other states? Is it cheaper to form a corporation? I planned to set up an LLC to run my L/O business. Should I bite the annual bullet, start a S corporation instead, or go sole proprietorship?

Re: LLC in California - $800/year annual tax - Posted by Bill (OH)

Posted by Bill (OH) on May 08, 2000 at 21:04:07:

Here in Ohio, this ex-native Californian found a business paradise. Eighty five bucks to incorporate here! Taxes? Based on whatever your income is…
I haven’t been back in almost five years and I don’t miss one thing about that screwed up mess of a state!

Re: LLC in California - $800/year annual tax - Posted by Mark (SDCA)

Posted by Mark (SDCA) on May 08, 2000 at 12:04:54:

Yup… you are right… It IS 800… It IS a ripoff… Either make enough money that the 800 is trivial or do biz in another state…


NEVER , NEVER, NEVER - Posted by Laure

Posted by Laure on May 06, 2000 at 18:02:39:

NEVER NEVER NEVER operate a business as a sole proprietor. If you are gonna play the game, then don’t risk everything you own. Protect yourself.

Laure :slight_smile:

Re: LLC in California - $800/year annual tax - Posted by Bill K. (AZ)

Posted by Bill K. (AZ) on May 06, 2000 at 24:05:16:


After reviewing the FTB web page, it appears that a corporation is subject to this minimum tax after it’s third year in business. So, you’ll save a little in the first couple of years, but, eventually, you’ll be paying the same as the LLC.

Here’s what the site says…

Minimum tax is the amount you must pay the first quarter of each accounting period whether the corporation is active, operates at a loss or does not do business. The current minimum tax is $800. However, for qualified newly formed corporations incorporating between January 1, 1999 through December 31, 1999, and meet certain criteria, the first year’s minimum tax is $500 and $800 thereafter. For new corporations that qualify or incorporate after January 1, 2000, the minimum tax is $0.00 for the first income year, measured for the second income year, and $800 for subsequent years.

Here’s the direct link for more information:

I hope this helps.

Bill K. (AZ)

Re: NEVER , NEVER, NEVER - Posted by The Baze

Posted by The Baze on May 08, 2000 at 10:58:29:


I’m going to strongly disagree w/ you here. Sure, there are some businesses that need to be incorporated, but to say NEVER operate as a sole proprietor is a bit much. I happen to love the sole proprietorship, especially for mom & pop businesses. There are still many ways to protect your assets w/out the costs associated w/ being a corporation. There are ways that little mom & pop businesses can shift income to lower income family members to reduce their tax burden. I recommend to my clients to start as a sole proprietor and see if they make any money before taking on the expenses associated w/ incorporating. You need to make money before you start worrying about protecting it. Just my .02.

Tom Bazley