Woah, you have to pay $800/yr to keep an LLC in California? What for?
While it looks high, if the biz cannot afford the $800 fees annually then perhaps LLC is the not the structure for it ?
LLC come with many requirements for corporate governance and accounting this typically means you need accountants and lawyers and they cost lot more than $800 .
There are 9 states with no annual LLC fees. And almost all of the rest are $50 or under.
LLCs have almost no requirements for corporate governance. That's why they're attractive.
> costs the state next to nothing
How are you concluding this ?
Cost to the state is just not storing few bits somewhere . Even just applications they have to build maintain those bits will cost the state a lot of money.
The non tech part of the government which needs your data. every bank , credit worthiness, every other biz which needs to work with you, every dept that needs to regulate what you do , every small biz schemes you would like to benefit from. Healthcare, employee taxes, courts etc ....
All of these reference your corporate entity "ID" the government needs to maintain and service them. Heck even apple will ask your DUNS number when you register non personal developer account.
It may or may not cost $800, but it certainly isnt next to nothing. other states maybe absorbing the costs and are trying to attract new biz, doesn't mean that california has to be cheap too.
Like I said there are other entity structures which are cheaper and designed for businesses that cannot afford 800 dollars a year in filing fee.
LLCs do not need to have boards. If you're going to operate a simple single member LLC for example, there is typically no great reason to have a board.
https://info.legalzoom.com/article/does-llc-have-board-direc...
https://smallbusiness.chron.com/singlemember-llc-need-board-...
That's a great example; after paying the annual $800 fee an LLC then has to go to a private entity, Dun & Bradstreet, to get a unique identifier...
An LLC in North Carolina costs ~$200/year to maintain. Delaware is supposed to be cheaper.
Point is, "if they can't pay it, they shouldn't be a business" reasoning which your argument is derived from is flawed and allows for all sorts of death by a thousand cuts situations for businesses. Even if there is an alternative filing type.
Each category has additional paper work and regulations which protect the people like customers, vendors, employees and investors who they deal with.
The "limited liability" part of LLC benefit comes with the cost of following some governance and having seperate finance and agreeing to follow additional regulations as required .
Very small businesses should opt for propertiorship just as small business should not go public and become a PLC. The benefit giving access to retail investors comes with cost of deeper regulation in that case.
This kind of thinking leads to unlimited taxation without accountability.
It's not a question of affordability but about value provided. The marginal cost of a new filing is pretty much $0. You gain nothing from these fees as a business and all it does is reduce the amount of economic activity in the first place.
California also extracts these fees from any corporation that operates in the state, regardless of where it's incorporated. Again with no discernible benefit commensurate to the tax.