5 ms·

Why was this downvoted by people. Seriousquestion raises a good point. $800 a year is a massive cost. Lets say the llc is a cleaning service, and they are only

Why was this downvoted by people. Seriousquestion raises a good point. $800 a year is a massive cost. Lets say the llc is a cleaning service, and they are only pulling in $20k a year anyways. Operating as an LLC is 1/20th of their income to do it legally. This is a valid point, and is on topic.

gnopgnip 5y ago
It isn't an $800 charge, it is a minimum of $800 in state tax. For an actual business with $20k in revenue the cost is much lower than $800, maybe zero
- seriousquestion 5y ago
  You would think so, but it is an $800 charge even if you make $0. This yearly tax will be due, even if you are not conducting business, until you cancel your LLC. https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html https://www.ftb.ca.gov/file/business/types/limited-liability...
- rewgs 5y ago
  Incorrect. I own a single member LLC in CA and very simply must pay an $800 charge to operate. This is a charge completely separate from taxes owed. I know because for a couple years I didn’t owe any state business taxes and thought I didn’t have to pay the $800. I was wrong and had to back pay those charges plus interest. It sucked.
  - aylons 5y ago
    What you say in the second paragraph seems to confirm what the parent comment says.
    - _archon_ 5y ago
      It's a fee separate from state business income tax. Possibly deductible, but separate.
athms 5y ago
Can we stop with the hyperbole? The fee isn't that much for California. I could see it as expensive if it was in a cheaper state. Also, if somebody is only making $20K annually running a cleaning service in California, they need to run it as a sole proprietorship, find another line of work, or move to a different state. I made $15K in the late 1980s in California while living paycheck to paycheck. I don't see how anybody can live on $20K in 2021. This hypothetical person would make more money working at McDonald's.
- deleted 5y ago
  [deleted]
- athms 5y ago
  For the idiots down voting me: The California state minimum wage is $13 for employers with 25 or less employees, $14 for employers with more than 25. A person would make more money working full time at a fast food establishment than running a cleaning service if their are making only $20K annually. You would have to go back several years when the minimum wage was less than $10. I ran a consulting business for years as a sole proprietor. It is a viable operating entity, especially for one person. I also had a business liability policy, which you will also want as a single member LLC. It is actual quite easy to pierce the liability protection that an LLC offers, especially for single member companies because many people intermingle assets and debts, such as when personally guaranteeing a loan. If you injure somebody while on the job or engage in professional malpractice, the LLC shield won't protect you. And finally, fraud; if you are using the LLC as a buffer to commit illegal acts, a court will find the company is nothing more than your alter ego and hold you personally responsible. If you are a software developer, run your business as a sole proprietor until you are ready to sell your product or hire employees, then convert the business to an LLC. You will still get the first year waiver.

gnopgnip 5y ago

It isn't an $800 charge, it is a minimum of $800 in state tax. For an actual business with $20k in revenue the cost is much lower than $800, maybe zero

seriousquestion 5y ago
You would think so, but it is an $800 charge even if you make $0. This yearly tax will be due, even if you are not conducting business, until you cancel your LLC. https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html https://www.ftb.ca.gov/file/business/types/limited-liability...
rewgs 5y ago
Incorrect. I own a single member LLC in CA and very simply must pay an $800 charge to operate. This is a charge completely separate from taxes owed. I know because for a couple years I didn’t owe any state business taxes and thought I didn’t have to pay the $800. I was wrong and had to back pay those charges plus interest. It sucked.
- aylons 5y ago
  What you say in the second paragraph seems to confirm what the parent comment says.
  - _archon_ 5y ago
    It's a fee separate from state business income tax. Possibly deductible, but separate.

athms 5y ago

Can we stop with the hyperbole? The fee isn't that much for California. I could see it as expensive if it was in a cheaper state. Also, if somebody is only making $20K annually running a cleaning service in California, they need to run it as a sole proprietorship, find another line of work, or move to a different state. I made $15K in the late 1980s in California while living paycheck to paycheck. I don't see how anybody can live on $20K in 2021. This hypothetical person would make more money working at McDonald's.

deleted 5y ago
[deleted]
athms 5y ago
For the idiots down voting me: The California state minimum wage is $13 for employers with 25 or less employees, $14 for employers with more than 25. A person would make more money working full time at a fast food establishment than running a cleaning service if their are making only $20K annually. You would have to go back several years when the minimum wage was less than $10. I ran a consulting business for years as a sole proprietor. It is a viable operating entity, especially for one person. I also had a business liability policy, which you will also want as a single member LLC. It is actual quite easy to pierce the liability protection that an LLC offers, especially for single member companies because many people intermingle assets and debts, such as when personally guaranteeing a loan. If you injure somebody while on the job or engage in professional malpractice, the LLC shield won't protect you. And finally, fraud; if you are using the LLC as a buffer to commit illegal acts, a court will find the company is nothing more than your alter ego and hold you personally responsible. If you are a software developer, run your business as a sole proprietor until you are ready to sell your product or hire employees, then convert the business to an LLC. You will still get the first year waiver.