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Comment by gamblor956 | Hacker News Reader

CA has 1 of the highest business taxes.

If you want to do business in California, you will be paying that tax whether you register in California or another state. Consequently, if you're in California there's no reason to consider exposing yourself to the jurisdiction of another state.

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You mind find the "startup mechanics" video from YC's startup school 2017 pretty interesting. The case is made that resolving disputes in Delaware (by being incorporated in Delaware) is greatly preferred to any other state (CA for example).

IIRC it is generally preferable to incorporate in DE for dispute resolution but doing so does not exempt you from paying CA taxes & fees. You will still need to pay the minimum tax amount if you are doing business in CA.

Agreed.

Yes this is correct. I have an LLC in Nevada and I still have to register an LLC in California because I live and work here. It's a foreign LLC entity.

Could you expand on that?

I really don't understand.

In this case, a foreign entity is an LLC that is registered in another state, but does enough business in CA to require registering in CA. In this case you register as a "foreign entity".

If you get to the point of having more than 50% of your employees outside of CA, I believe you can avoid registering as a foreign entity.

Direct link to the video: https://www.youtube.com/watch?v=2_IpVq6vKR0

PS: It seems the original startup school video is gone. This version is linked by their page: https://www.startupschool.org/?course=1

"Do business in California" is nebulous. Many startups are at the stage of being a single-member LLC working out of their own garage. No property rental, no payroll, no customer transactions (yet). Legally speaking such an entity could be registered anywhere. Doing so in California for the first year or two is needlessly inefficient of your scarce resources at that stage.

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