How do I avoid California Franchise Tax?
The only way to avoid the annual $800 California franchise fee is to dissolve your company, file a ‘final’ income tax return with the FTB and to submit the necessary paperwork.
Once your company no longer exists, neither does your liability protection..
What happens if you don’t pay California Franchise Tax?
The California Franchise Tax Board imposes a penalty if you do not pay the total amount due shown on your tax return by the original due date. The penalty is 5 percent of the unpaid tax (underpayment), plus 0.5 percent of the unpaid tax for each month or part of a month it remains unpaid (monthly).
Do I owe franchise tax California?
California corporations without taxable income are subject to California’s franchise tax. California corporations with taxable income are subject to the state’s corporate income tax and, potentially, the state’s alternative minimum tax. … Your corporation will not owe the franchise tax to the state.
Do you have to pay the $800 California S Corp fee the first year?
The First-Year Franchise Tax Exemption In the second year and beyond, corporations are subject to the annual $800 minimum franchise tax rule. The first-year exemption only applies to S corporations, C corporations, LPs, LLPs and LLCs that elect to be taxed as a corporate entity.