Message Font: Serif | Sans-Serif
No. of Recommendations: 1
Doesn't CA levy a minimum tax on corps whether or not there is any activity?

Yep. $800 per year. And the $800 also applies to LLCs and limited partnerships as well.

The good news for the OP is that the minimum tax is not applied to the first year of a corporation. (But it does apply to the first year of an LLC or an LP.)

And to confuse matters a bit further, for corporations the $800 is a minimum tax. S corps are taxed at 1.5% of net income, C corps at 9.3%. So you pay the larger of the two - the percentage or $800.

LPs pay the $800 and they're done.

LLCs get a gross receipts fee in addition to the $800. That starts with a $900 fee when gross receipts hit $250k, and tops out at a $11,790 fee for gross receipts in excess of $5 million.

So there's a significant cost to using an entity to limit your liabilities in CA.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.