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Comment by tardo99 | Hacker News Reader

The $800 annual tax is worth people knowing about.

FYI (and standard IANAL/IANACPA stuff too):

If you do business in CA, which is to say you earn revenue in CA (and file a corporate/partnership tax return in CA), you’re paying the $800 annual fee regardless.

So even if you form a Delaware LLC or Delaware C-Corp or Florida LLC and you earn money in CA, you’re paying the franchise tax.

This. Forming a company in CA is stupid, no other state has this insane tax.

Most states have minimum franchise taxes. CA charges on the higher side because CA offers the biggest market. In effect, CA is taking advantage of the libertarian free market principle of supply and demand. They have the largest supply of potential customers, and there is a large demand of businesses wanting access to those customers, and the minimum franchise fee reflects that.

You're free to set up shop in South Dakota (no minimum) and see just how many customers you find there...

You can incorporate in any state, it doesn't matter where your customers are. Most CA companies (and most companies, across all states) form in Delaware for legal reasons. CA is not a popular place to incorporate in.

But if they're located in CA, which many of them are, they still have to pay the $800.

This should be top comment!

I gave up the LLC protection after a couple years of this price gouging.

I gave up on writing Apps because of this. Too high a risk of a patent shakedown without LLC protection for a few fun apps.

The LLC wouldn’t have provided much protection anyway.

https://ipbreakdown.com/blog/owner-liable-for-his-companys-c...

In general, most people misunderstand then “limited liability” of LLC’s.

Yes definitely. I tried to highlight it in the "Before you begin" section of the post.

There is also an LLC fee once you hit a certain income threshold.

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