Is there a way to reduce the CA franchise tax if my business is not operating or generating sales/income?

Asked over 2 years ago - Palo Alto, CA

Can I reduce the CA franchise tax or receive some kind of tax credit if my business isn't earning any income (and not even operating yet). I'm planning on registering as an LLC but if I don't sell anything, monetize, or generate any sales, is there a way to circumvent this tax? There will be expenses involved.

Attorney answers (3)

  1. Michael Charles Doland

    Contributor Level 20


    Lawyers agree

    Answered . It cannot be reduced below the minimum annual franchise tax of $800.

    The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may... more
  2. James Elliot Pratt

    Contributor Level 12


    Lawyers agree


    Answered . If you choose to form an LLC you cannot avoid the minimum $800. If $800 is a crippling expense you may consider a sole proprietorship to avoid that tax, but you would lose any limited liability otherwise available under an appropriate business entity. You need to analyze any risks associated with your business an potential liability exposure. You may want to meet with a lawyer to be properly advised.

    DISCLAIMER & IRS Circular 230 DISCLOSURE: The information in this answer is for general information purposes... more
  3. Andrew Kevin Jacobson


    Contributor Level 17


    Lawyers agree

    Answered . The state is providing service: allowing the creation of an entity that limits the liability for its owners. That is what the $800 is for. That's a good buy, considering that that sum has not changed in more than 20 years (and possibly, much more). 510-208-5500. This answer does not create an attorney-client relationship. It is not legal... more

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