Franchise Tax
Franchise Tax
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Franchise Tax is an annual tax levied on your corporation. What do you get in
return for this honor? You earn the right to exist or do business in the state.
Creating jobs and generating income and sales tax revenue is just not enough. In
California at the time that you initially file your Articles of Incorporation to
form a new corporation you pay a filing fee to the Secretary of State's
Office and a separate $800 to the California Franchise Tax Board. Although it
appears to be the minimum franchise tax for your first year of operations, be
forewarned. You must pay another $800 to the California Franchise Tax Board a
short time later. Perhaps, the first payment is a tax for the privilege of
paying taxes. A forfeiture of your corporate charter and involuntary
(administrative) dissolution of your corporation can result from a failure to
pay the franchise tax.
Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.
Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.
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