>Also, I don't think you realize that foreign LLCs are required to pay the franchise fee in California in order to be licensed to do business (meaning, having employees, facilities, or activities in CA).
No, LLC's file an LLC-5 form and pay the $70 filing fee. The business will not be liable for the Franchise Tax if the entity is dissolved or cancelled before the liability is encurred (Franchise Tax Due Date) if the LLC is dissocled after the Tax is still owed.[1]
>Thus, if you're in CA, your suggestion really just amounts to paying franchise taxes (or their equivalents) to two states instead of just one, and then committing tax fraud in two states instead of none.
Not remotely, most states don't even have franchise taxes not all even have annual report requirements.
>I strongly suggest you delete this post and your followup post, because it can be used against you in a court of law.
I think you are reading a lot of facts into my post that aren't there and ignoring the facts that are there, for starters I wasn't asked for advice and I didn't give advice. As one lawyer to another, if you are going to suggest I delete my comment due to liability going so far to expressly state criminal liability, I ask you show me a single case where the California Franchise Tax Board has gone after anyone for tax evasion for dissolving their LLC and creating a new one, because I can show you plenty of instances where the CA secretary of state disolves an LLC prior to 4/15 and then opens a new LLC with similar name (sometime exact same) immediately
thereafter.
[1] https://www.ftb.ca.gov/businesses/faq/ab2341faq.shtml
Edit:
BTW the specific form for this type of action is Certificate of Cancellation Short Form (LLC-4/8) and it negates the Franchise Tax when:
1) being filed within twelve (12) months from the date the Articles of Organization were filed with the Secretary of State;
2) The domestic LLC has no debts or other liabilities (other than tax liability);
3) The known assets of the domestic LLC remaining after payment of, or adequately providing for, known debts and liabilities have been distributed to the persons entitled thereto or no known assets have been acquired;
4) The final tax return or a final annual tax return has been or will be filed with the Franchise Tax Board;
5) The domestic LLC has not conducted any business from the time of the filing of the Articles of Organization;
6) A majority of the managers or members, or if there are no managers or members, the person or a majority of the persons who signed the Articles of Organization, voted to
dissolve the domestic LLC; and
7) If the domestic LLC received payments for interests from investors, those payments have been
returned to those investors
To conclude I never advised anyone to do this, but acknowledged it is possible and LLCs for side projects that don't justify an $800 minimum franchise tax are a good example of when something like this might be done.