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Comment by guelo | Hacker News Reader

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guelo·

Companies that do business in California must pay California taxes no matter where they are incorporated.

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Correct. This fact seems misunderstood by many people but the rules are very clearly written.

Define do business.

If an LLC, say software services, incorporated in DE provides some consulting to a firm in California, that counts?

Depends on a lot of things, including where that LLC has its principal place of business, whether it owns property in a California, where its employees perform their duties, etc. Talk to a CPA or better yet a tax attorney with California experience

Not the franchise tax.

> All LLCs (not classified as a corporation) that are doing business in California, or file an article of organization or certificate of registration with the Secretary of State must file Form 568, Limited Liability Company Return of Income, pay the annual minimum franchise tax of $800, and LLC fee (if applicable).

https://www.ftb.ca.gov/businesses/Structures/Limited-Liabili...

Yep. The limitation though is that a foreign entity only has to pay the tax on its California receipts. So if 10% of your $1 million annual profits are derived from California, you pay the 1.5% (min $800) on that $100,000 and not the whole thing.

And btw that’s the rule in every state. They all want to tax whatever revenue is generated in that state (unless they don’t have a business tax at all, which is somewhat rare)

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