need form a corporation. i am not in a position to pay 800 dollars yearly. looking for a cheaper way to incorporate. and cheapest way to renew
Do not take this the wrong way but it is apparent you are not considering the significant differences between each of these entities, and you really need to research some more.
You’re not going to avoid the $800 minimum tax by choosing one or the other.
If $800 a year is making or breaking your business then you really should consider just being a sole proprietor and making sure you have insurance.
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Only a sole proprietorship does not require an annual payment to the Franchise Tax Board since it is not a separate "legal entity". It's just another name for yourself.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts...
Congratulations on your new business! There is a wonderful radio show every Saturday afternoon at 1:30, which you can listen to via your computer, that talks about the right and wrong reasons to start businesses, business plans and other important information. It’s on KION Power Talk radio and the show is called “Business Cents Radio”. You could get a lot of practical free advice that would help you at this stage of your business planning. www.iheart.com/live/power-talk-1460-and-101-fm-4639/ If you can’t afford $800 a year, you may need to save some money before starting your business. To answer your question, the only format of business that doesn’t have an annual fee is a sole proprietorship. However, sole proprietorships do not provide any legal protection so, if your business (or, really YOU) are sued, your personal assets are exposed because the business is not separate from you. You literally are the business, so it’s money is your personal money. The business’ liability is your personal liability. There are very important reasons why people incorporate and form LLCs. Those people see the $800 per year as a way to protect their personal assets from seizure. Listen to Business Cents Radio on Saturday afternoons and, if you still want to start a new business, I suggest you get some legal advice from an attorney in your area. Best wishes!
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The $800 is in California. Other states have lower or no franchise tax. That tax and other burdens have to be considered in your business plan and you need to be able to recover them via sales, otherwise you do not have a business.
This is not legal advise nor it forms attorney client relationship.
If you want to form a multi-person legal entity without having to pay the FTB $800 per year, then your only choice is a general partnership, because a GP does not need to register with the state.
However, a GP is a bad idea, because (a) each partner has unlimited personal liability, and (b) any partner can create liability for all of the partners.
If you are proceeding on your own, then the only way to avoid $800 per year is to operate as a sole proprietor.
However you decide to proceed, it would be prudent to obtain commercial general liability insurance and, perhaps, other types of insurance, depending on the nature of the business.
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