Written by attorney Henry Daniel Lively

Minimum Tax in California

California charges a minimum Franchise Tax of $800 to business entities regardless of whether they made any profit. It is considered the cost of the privilege of doing business in California. This fee is due each year and is required for all S-Corporations, Limited Partnerships, Corporations, and Limited Liability Companies.

When does the minimum tax stop? It continues to accrue and is paid each year until you dissolve the entity. Even if the entity is suspended the tax will continue to accrue. It does not stop until you file the formal paperwork with the California Franchise Tax Board to dissolve the entity.

California now allows the dissolution of an entity without first obtaining a tax clearance certificate indicating that all taxes are paid. However, to dissolve the entity you must take personal responsibility for any taxes that may be due.

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