Tax Warning: Don't sell anything to anyone in California....

.. or at the very least, add $800 to the price.

Usually, a company that has no presence in a state is not subject to its franchise and income taxes.   A foreign company should collect and submit sales taxes.  Some do, some don't.

California decided to take things up a notch by 'clarifying' (e.g., an executive act by the Secretary of State) that any foreign corporation or LLC doing any business whatsoever within the State of California is subject to its franchise tax, which carries a minimum of $800.

And if you didn't know this, and did business back in the last few years, they're coming after you with penalties.   We are getting hit with:

$40 underpayment penalty 

$263 in monthly penalties and interest 

$200 'demand penalty' 

$100 'late filing penalty'

 $100 'filing enforcement fee'.


Even though, when asked to fill out a questionnaire by the state in January 2010, we received a letter back from the state in June that said they had received the information and "no further action at this time."
So, that $50 sale to someone in California might cost you $1500 or more.

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Comment by Leonard Knight on February 14, 2011 at 1:37pm
Thanks Steve!  This is good information for our members!  ~Leo


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