Call Us Now: +1 (877) 330-2677 Live Chat: ONLINE NOW            
https://d25eic0jctudgb.cloudfront.net/images/site/general/answers-to-answers-8743d0241f5d8c2c996225efe2063f89
https://d25eic0jctudgb.cloudfront.net/images/site/headlines/articles.jpg-5fa541d76bf4be9016b1176147b3bc96

Operating a software consulting business in California

Asked by: Paul McLaskey - 5 January, 2011
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 My operation is software consulting, primarily in CA.
1. If I set up LLC or S corp. in DE., am I obliged to set up Foreign Entity in CA?
2. In terms of SE consideration, is straight LLC, LLC set up as S corp. or straight S-corp. best?
3. I'm not quite clear about Franchise Tax (CA.)...Is it $800 minimum & a further $900 for receipts $250K to $500K?
4. Is corp. tax for LLC in CA. nonexistent?

Many thanks indeed
Answered by: Alec Green - 5 January, 2011
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/2.jpg-d85fc946de818bb769fdd6ce8cd95478
Paul,

If your company operates primarily in California then you should register a foreign entity in that state. Otherwise your company may be subject to tax penalties and even a prohibition on transacting business in California.

I'm not entirely clear on what you are asking in your second question, but we recommend that you set up an LLC for your small business. An LLC can choose to be taxed as a partnership, and S-corp or a C-corp. You can discuss the advantages and disadvantages of each with an accountant. We will be happy to recommend an accountant for you.

As far as the franchise tax goes, there is a minimum of $800 in California you are right that the next amount is $900 for $250-$500 thousand in income. You can see a full explanation here http://www.ftb.ca.gov/forms/misc/3556.pdf LLCs must pay the California franchise tax.

We Want To Connect With You!

Social Media is increasingly the preferred method for businesses to connect with their clients, peers and customers. We are dedicated to share information and useful tools to help you grow your business.

Like us on Facebook, follow us on Twitter, and let's begin the exchange to Help Grow America One Business at a Time - starting with yours!

https://d25eic0jctudgb.cloudfront.net/images/site/general/payment-methods-footer-052a63251a379d6e5ece1801f07470fc Official PayPal Seal SecurityMetrics for PCI Compliance, QSA, IDS, Penetration Testing, Forensics, and Vulnerability Assessment