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Comment by nodesocket | Hacker News Reader

Welcome to the world of New York bureaucracy and regulation. These sorts of stories are common and it’s why businesses are always complaining about New York and California.

I used to have a California LLC. As a side note, if you were unable (forced) to operate your business due to Covid restrictions, California made no exceptions for the $800 LLC fees. It’s outrageous.

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I would argue that the actual outrage is the $800 fee in the first place. It’s a regressive tax that hurts small businesses and is absolutely meaningless for large businesses. CA should reduce it to some nominal value that covers their costs, e.g. $50/year. Major bonus points if CA included registered agent services so that small businesses could save a couple hundred more dollars per year.

Insane.

I just setup a company where it will take a few years to build something in Ohio. It's $99 once and no annual fees. Zero dollars a year.

https://bsportal.ohiosos.gov/

From my non legal perspective, if you aren't yet generating revenues it pays to incorporate outside of California.

Only issue is if you live in California and pay yourself you’re still subject to most of the California specific business laws as a company doing business in California, so it’s difficult to escape by incorporating elsewhere.

If you aren't generating revenues and want to incorporate to hold the IP then why throw good money away on a state that requires annual fees? As I understand it, you can always transfer the IP to another entity before it has any market value. This can let you and others start building with a relatively low cost.

I am not the one who posted the comment above.

Whoever downvoted the comment (at the time of me writing this) above - can you add a comment why? This seems like a reasonable comment.

I see more and more reasonable comments simply being downvoted, with no reasons or counter-point provided, which is not helpful.

I did not downvote the comment, but I do find it a little silly, so here I go:

1. Assuming your business is going to employ anyone at all, $800 is only 1-2 weeks of pay even at minimum wage.

2. I am not aware of any type of business California has forced to shut down completely (i.e. literally no way of making money) for the entire year.

3. If this business is just a side project you're trying out on top of your main job and it fails, you can disband it within 1 year of creation and are exempt from the fee (Source: https://www.ftb.ca.gov/file/business/types/limited-liability... - See section "Short form cancellation").

We could argue about whether it discourages starting small business in California, or if the CA government should have waived the fee this year to help with COVID-19; but acting like this is some insane requirement that is killing small businesses is ridiculous. Business that cannot afford this fee are already failing and almost certainly can't even afford to pay their employees. (For the record, I find it to be a pretty regressive tax, and should just be reduced to whatever overhead exists for managing LLC filings.)

For #1, let's not assume the business is employing anyone. Maybe it's one or two partners making no revenue, trying to develop some software on the side. I did this for a few years in CA, and the $800 was my biggest yearly expense. Flushed it down the CA toilet, just to exist.

I have a property I rent out for $800/mo for 11 months/yr, and wanted to out it in an LLC for liability reasons. At $800/yr, the LLC would be my second largest expense by a large amount, so the confiscatory fee effectively made it impossible to do this.

My only option is to use an out of state LLC, for which California gets less than nothing - not only do they not get my fee, but they get less reporting and regulatory control as well.

Every dollar and every minute drive marginal behavior. By definition, you will never know what efforts have been killed dead by casual bureaucracy.

It’s like Round Up, except for business!

The only way is to vote with your feet, and leave former political preferences behind in the states that where destroyed by them. I've heard Texas is a popular choice nowadays.

California has been destroyed?

He has 14 employees some of which can't move. His point is he doesn't want to screw them.

The problem apparently is that the NYC has a department called the DCA, where you can't do anything without directly interacting with _people_ in the DCA, and the DCA refuses to interact with people.

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