5 ms·

Woah, you have to pay $800/yr to keep an LLC in California? What for?

by microcolonel 6y ago

jassmith87 6y ago
You might not make any money and then California wouldn't get any money!
- jesselawson 6y ago
  California's FTB charges $800 minimum annually regardless of whether you made a profit or not.
manquer 6y ago
Various fillings you need to do. While different states have different requirements and fees . It will not cost zero anywhere . While it looks high, if the biz cannot afford the $800 fees annually then perhaps LLC is the not the structure for it ? LLC come with many requirements for corporate governance and accounting this typically means you need accountants and lawyers and they cost lot more than $800 .
- jccooper 6y ago
  It has nothing to do with filings. It costs the state next to nothing. It's a very-slightly-disguised franchise tax, on top of their actual franchise tax if you make any money. There are 9 states with no annual LLC fees. And almost all of the rest are $50 or under. LLCs have almost no requirements for corporate governance. That's why they're attractive.
  - manquer 6y ago
    Compared to public company LLC have less requirements yes. Howver you still need a board and resolutions and you have submit your LLC annual returns have seperate bank accounts at the minimum. None of that is required for a sole proprietor. > costs the state next to nothing How are you concluding this ? Cost to the state is just not storing few bits somewhere . Even just applications they have to build maintain those bits will cost the state a lot of money. The non tech part of the government which needs your data. every bank , credit worthiness, every other biz which needs to work with you, every dept that needs to regulate what you do , every small biz schemes you would like to benefit from. Healthcare, employee taxes, courts etc .... All of these reference your corporate entity "ID" the government needs to maintain and service them. Heck even apple will ask your DUNS number when you register non personal developer account. It may or may not cost $800, but it certainly isnt next to nothing. other states maybe absorbing the costs and are trying to attract new biz, doesn't mean that california has to be cheap too. Like I said there are other entity structures which are cheaper and designed for businesses that cannot afford 800 dollars a year in filing fee.
    - dingaling 6y ago
      > Heck even apple will ask your DUNS number That's a great example; after paying the annual $800 fee an LLC then has to go to a private entity, Dun & Bradstreet, to get a unique identifier...
    - adventured 6y ago
      > Howver you still need a board and resolutions and you have submit your LLC annual returns have seperate bank accounts at the minimum. LLCs do not need to have boards. If you're going to operate a simple single member LLC for example, there is typically no great reason to have a board. https://info.legalzoom.com/article/does-llc-have-board-directors https://info.legalzoom.com/article/does-llc-have-board-direc... https://smallbusiness.chron.com/singlemember-llc-need-board-directors-55403.html https://smallbusiness.chron.com/singlemember-llc-need-board-...
    - paul_f 6y ago
      A single member LLC dopes not have to file a tax return - same as a sole proprietorship. Unless there is a partnership, or you need to have some sort of corporate veil for legal reasons, then there is little value in an LLC if a sole owner.
  - gamblor956 6y ago
    If you physically do business in California with an LLC, you need to register it whether or not it is legally organized in CA.
- musingsole 6y ago
  To my knowledge, the only simpler filing for a company than an LLC is a sole proprietorship. LLC's requirements for governance are essentially "have governance", unlike s-corp's dictating specific hierarchies and roles. An LLC in North Carolina costs ~$200/year to maintain. Delaware is supposed to be cheaper. Point is, "if they can't pay it, they shouldn't be a business" reasoning which your argument is derived from is flawed and allows for all sorts of death by a thousand cuts situations for businesses. Even if there is an alternative filing type.
  - manquer 6y ago
    Should not be an LLC is not the same as not being a businesses. Propertiorship are perfectly good way of running a small biz. Each category has additional paper work and regulations which protect the people like customers, vendors, employees and investors who they deal with. The "limited liability" part of LLC benefit comes with the cost of following some governance and having seperate finance and agreeing to follow additional regulations as required . Very small businesses should opt for propertiorship just as small business should not go public and become a PLC. The benefit giving access to retail investors comes with cost of deeper regulation in that case.
- manigandham 6y ago
  > "if the biz cannot afford the $800 fees annually" This kind of thinking leads to unlimited taxation without accountability. It's not a question of affordability but about value provided. The marginal cost of a new filing is pretty much $0. You gain nothing from these fees as a business and all it does is reduce the amount of economic activity in the first place. California also extracts these fees from any corporation that operates in the state, regardless of where it's incorporated. Again with no discernible benefit commensurate to the tax.
pessimizer 6y ago
For the limited liability that you're granted by the state government. If there's no benefit to having an LLC, you shouldn't pay the fee.

Woah, you have to pay $800/yr to keep an LLC in California? What for?

jassmith87 6y ago

You might not make any money and then California wouldn't get any money!

jesselawson 6y ago
California's FTB charges $800 minimum annually regardless of whether you made a profit or not.

manquer 6y ago

Various fillings you need to do. While different states have different requirements and fees . It will not cost zero anywhere . While it looks high, if the biz cannot afford the $800 fees annually then perhaps LLC is the not the structure for it ? LLC come with many requirements for corporate governance and accounting this typically means you need accountants and lawyers and they cost lot more than $800 .

jccooper 6y ago
It has nothing to do with filings. It costs the state next to nothing. It's a very-slightly-disguised franchise tax, on top of their actual franchise tax if you make any money. There are 9 states with no annual LLC fees. And almost all of the rest are $50 or under. LLCs have almost no requirements for corporate governance. That's why they're attractive.
- manquer 6y ago
  Compared to public company LLC have less requirements yes. Howver you still need a board and resolutions and you have submit your LLC annual returns have seperate bank accounts at the minimum. None of that is required for a sole proprietor. > costs the state next to nothing How are you concluding this ? Cost to the state is just not storing few bits somewhere . Even just applications they have to build maintain those bits will cost the state a lot of money. The non tech part of the government which needs your data. every bank , credit worthiness, every other biz which needs to work with you, every dept that needs to regulate what you do , every small biz schemes you would like to benefit from. Healthcare, employee taxes, courts etc .... All of these reference your corporate entity "ID" the government needs to maintain and service them. Heck even apple will ask your DUNS number when you register non personal developer account. It may or may not cost $800, but it certainly isnt next to nothing. other states maybe absorbing the costs and are trying to attract new biz, doesn't mean that california has to be cheap too. Like I said there are other entity structures which are cheaper and designed for businesses that cannot afford 800 dollars a year in filing fee.
  - dingaling 6y ago
    > Heck even apple will ask your DUNS number That's a great example; after paying the annual $800 fee an LLC then has to go to a private entity, Dun & Bradstreet, to get a unique identifier...
  - adventured 6y ago
    > Howver you still need a board and resolutions and you have submit your LLC annual returns have seperate bank accounts at the minimum. LLCs do not need to have boards. If you're going to operate a simple single member LLC for example, there is typically no great reason to have a board. https://info.legalzoom.com/article/does-llc-have-board-directors https://info.legalzoom.com/article/does-llc-have-board-direc... https://smallbusiness.chron.com/singlemember-llc-need-board-directors-55403.html https://smallbusiness.chron.com/singlemember-llc-need-board-...
  - paul_f 6y ago
    A single member LLC dopes not have to file a tax return - same as a sole proprietorship. Unless there is a partnership, or you need to have some sort of corporate veil for legal reasons, then there is little value in an LLC if a sole owner.
- gamblor956 6y ago
  If you physically do business in California with an LLC, you need to register it whether or not it is legally organized in CA.
musingsole 6y ago
To my knowledge, the only simpler filing for a company than an LLC is a sole proprietorship. LLC's requirements for governance are essentially "have governance", unlike s-corp's dictating specific hierarchies and roles. An LLC in North Carolina costs ~$200/year to maintain. Delaware is supposed to be cheaper. Point is, "if they can't pay it, they shouldn't be a business" reasoning which your argument is derived from is flawed and allows for all sorts of death by a thousand cuts situations for businesses. Even if there is an alternative filing type.
- manquer 6y ago
  Should not be an LLC is not the same as not being a businesses. Propertiorship are perfectly good way of running a small biz. Each category has additional paper work and regulations which protect the people like customers, vendors, employees and investors who they deal with. The "limited liability" part of LLC benefit comes with the cost of following some governance and having seperate finance and agreeing to follow additional regulations as required . Very small businesses should opt for propertiorship just as small business should not go public and become a PLC. The benefit giving access to retail investors comes with cost of deeper regulation in that case.
manigandham 6y ago
> "if the biz cannot afford the $800 fees annually" This kind of thinking leads to unlimited taxation without accountability. It's not a question of affordability but about value provided. The marginal cost of a new filing is pretty much $0. You gain nothing from these fees as a business and all it does is reduce the amount of economic activity in the first place. California also extracts these fees from any corporation that operates in the state, regardless of where it's incorporated. Again with no discernible benefit commensurate to the tax.

pessimizer 6y ago

For the limited liability that you're granted by the state government. If there's no benefit to having an LLC, you shouldn't pay the fee.