5 ms·

What’s the benefit to the business of that $800 fee? Why is it almost 4 times more than Delaware? Do I get a nice engraved plaque or something? I am being serio

What’s the benefit to the business of that $800 fee? Why is it almost 4 times more than Delaware? Do I get a nice engraved plaque or something? I am being serious: WHY does it cost $800 just to exist?

neo4sure 9y ago
No, you get to do business in the 6th largest economy in the world. If you don't like it don't do any business here.
- deleted 9y ago
  [deleted]
- homero 9y ago
  There's a few businesses I wanted to try but paying $800 was absurd so I forgot it
  - jjeaff 9y ago
    You do know you don't have to form an LLC to try out a business? Just got for it as a sole proprietorship and file an LLC later if it starts working.
    - homero 9y ago
      No you can get sued pretty quick
      - jjeaff 9y ago
        And when you are sued, your one man, tiny operation LLC will offer essentially zero protection. Unless you are selling parachutes to base jumpers, you'll be fine.
- exclusiv 9y ago
  That type of thinking has pushed entrepreneurs and businesses to move to more friendly and competitive states. It's simply a bad policy to start aspiring small businesses in debt. $800 isn't much to many of us on here but it is for a lot of people that want to be entrepreneurs in different fields from different backgrounds. Most businesses have other startup costs as well. California already has the highest state income taxes. The privilege of doing business here is already accounted for. The franchise tax fee is just a bad policy and it's regressive.
  - dragonwriter 9y ago
    > $800 isn't much to many of us on here but it is for a lot of people that want to be entrepreneurs in different fields from different backgrounds. And, so, they start businesses as sole proprietorships, or general or limited partnerships, and reorganize as LLCs or corporations once they've proven the idea. They are exposed to more (and the public exposed to less) risk of unmet business liability, but they can still run a business. We always see entrpreneurs praised for taking risk, why are we hearing so much complaint that California charges for the privilege of offloading risk on to the public?
  - JKCalhoun 9y ago
    > That type of thinking has pushed entrepreneurs and businesses to move to more friendly and competitive states. Or simply get an LLC from another state. Seems like there are states (Utah?) where there is no annual fee/tax. I believe you only need a CA LLC if you hire employees in CA.
    - mark212 9y ago
      Not quite that simple but you’re right that if you can be physically present outside the state and do business for California clients then you’re probably not going to pay the franchise tax. But no state allows you to register any entity for free. Lowest I’ve seen is South Dakota at $50 per year with no other tax on receipts.
      - jjeaff 9y ago
- stickfigure 9y ago
  If you don't like it don't do any business here. Ask Detroit how that worked out for them.
  - neo4sure 9y ago
    Seems to me like all the states where its so easy to do businesses there are no businesses. Maybe that's why they are making it so easy because no one comes there. You are complaining about CA but forget why it grew in the first place. CA governments have been leading the way for many years on what is required to be done for the economy.
dragonwriter 9y ago
> What’s the benefit to the business of that $800 fee? Doing business in California: both local and foreign LLCs doing business in CA pay it. > Why is it almost 4 times more than Delaware? Why shouldn't it be? > WHY does it cost $800 just to exist? You can do business as a sole proprietor or general (or limited, but not limited liability) partnership without the franchise fee. You are paying for the right to do business in CA with a liability shield. The potential value to you (and cost to the public) of such a shield, all other things being equal, is greater in a bigger market. California has more than 30 times the population and 40 times the GDP of Delaware.
mark212 9y ago
Delaware is 5x South Dakota for exactly the same thing, just to exist. At a certain level of receipts it doesn’t matter and the tax rate is more important, or what the corporate law structure is like. But yeah, there’s really no valid reason other than the fact that California can get away with it.

neo4sure 9y ago

No, you get to do business in the 6th largest economy in the world. If you don't like it don't do any business here.

deleted 9y ago
[deleted]
homero 9y ago
There's a few businesses I wanted to try but paying $800 was absurd so I forgot it
- jjeaff 9y ago
  You do know you don't have to form an LLC to try out a business? Just got for it as a sole proprietorship and file an LLC later if it starts working.
  - homero 9y ago
    No you can get sued pretty quick
    - jjeaff 9y ago
      And when you are sued, your one man, tiny operation LLC will offer essentially zero protection. Unless you are selling parachutes to base jumpers, you'll be fine.
exclusiv 9y ago
That type of thinking has pushed entrepreneurs and businesses to move to more friendly and competitive states. It's simply a bad policy to start aspiring small businesses in debt. $800 isn't much to many of us on here but it is for a lot of people that want to be entrepreneurs in different fields from different backgrounds. Most businesses have other startup costs as well. California already has the highest state income taxes. The privilege of doing business here is already accounted for. The franchise tax fee is just a bad policy and it's regressive.
- dragonwriter 9y ago
  > $800 isn't much to many of us on here but it is for a lot of people that want to be entrepreneurs in different fields from different backgrounds. And, so, they start businesses as sole proprietorships, or general or limited partnerships, and reorganize as LLCs or corporations once they've proven the idea. They are exposed to more (and the public exposed to less) risk of unmet business liability, but they can still run a business. We always see entrpreneurs praised for taking risk, why are we hearing so much complaint that California charges for the privilege of offloading risk on to the public?
- JKCalhoun 9y ago
  > That type of thinking has pushed entrepreneurs and businesses to move to more friendly and competitive states. Or simply get an LLC from another state. Seems like there are states (Utah?) where there is no annual fee/tax. I believe you only need a CA LLC if you hire employees in CA.
  - mark212 9y ago
    Not quite that simple but you’re right that if you can be physically present outside the state and do business for California clients then you’re probably not going to pay the franchise tax. But no state allows you to register any entity for free. Lowest I’ve seen is South Dakota at $50 per year with no other tax on receipts.
    - jjeaff 9y ago
stickfigure 9y ago
If you don't like it don't do any business here. Ask Detroit how that worked out for them.
- neo4sure 9y ago
  Seems to me like all the states where its so easy to do businesses there are no businesses. Maybe that's why they are making it so easy because no one comes there. You are complaining about CA but forget why it grew in the first place. CA governments have been leading the way for many years on what is required to be done for the economy.

dragonwriter 9y ago

> What’s the benefit to the business of that $800 fee? Doing business in California: both local and foreign LLCs doing business in CA pay it. > Why is it almost 4 times more than Delaware? Why shouldn't it be? > WHY does it cost $800 just to exist? You can do business as a sole proprietor or general (or limited, but not limited liability) partnership without the franchise fee. You are paying for the right to do business in CA with a liability shield. The potential value to you (and cost to the public) of such a shield, all other things being equal, is greater in a bigger market. California has more than 30 times the population and 40 times the GDP of Delaware.

mark212 9y ago

Delaware is 5x South Dakota for exactly the same thing, just to exist. At a certain level of receipts it doesn’t matter and the tax rate is more important, or what the corporate law structure is like. But yeah, there’s really no valid reason other than the fact that California can get away with it.