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Comment by la6471 | Hacker News Reader

The absolute horrible thing about forming a Llc in California is the $800 FTB tax, that you have to pay irrespective of wether you have any income or not. This is really discouraging for any individual who is trying to start a business and is unsure of the outcome in the initial years.

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Also, it’s on the calendar year, not a rolling 12-month calendar. And it isn’t prorated. File your paperwork in early December? That’s $800 now and $800 in a few months.

Wait until January if you’re close to the end of the year and can afford to hold off.

I’m sure they do this on purpose, but if you read the fine print you don’t have to pay the tax the first year so you do get some time to figure it out if you incorporate early in the year.

That’s ~$67/mo to stay in business. I don’t see how this can be considered a horrible thing.

In the UK I paid a £13 a year to file accounts online to keep my dormant company running.

When you're a very small business losing money the first few years of operating and California sticks you with an $800 bill on top of local taxes that are also levied regardless of income (business personal property), it's a giant slap in the face that makes you want to move your business to pretty much any other state.

Then move. But remember, if you do business in California, you must still pay the franchise fee if you have a company that is NOT a sole proprietor or general partnership. Incorporating in another state will not save you, you must register with Secretary of State as a foreign entity.

I closed my business last year and was about to move prior to COVID shutting everything down. California tax policies are the #1 reason I'm leaving.

Probably not much for a brick and mortar store or a software consultant, but think about the vendors selling pizza or hotdogs on the street.

Alternatively, if you are involved in a few startups with losses, it can add up really fast.

Not quite. It's $67/month to just be able to try to stay in business. What benefit does that tax provide to start-ups, and why isn't it a function of the product the business produces instead of the flat rate that's imposed?

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