LLC - California Question

[pmedders]

Need clarification. I know if filed to be an LLC for federal, I could still be a sole proprietor and file Schedule C; but for California return, would I be considered a corporation. In doing some research, it looks like can't file as an LLC sole proprietor. Am I incorrect in my findings??

[pmedders]

LLC - California Question

Please disregard my first post - I did further research and found my answer. I was confused by the minimum $800 franchise tax due each year as an LLC, which is the same as an S-Corp.

[Black Bart]

LLC - California Question

the minimum $800 franchise tax due each year as an LLC

Eight hundred bucks? Good grief! I'm never gonna complain about the disadvantages of living in the boondocks again (well, at least for a couple of weeks).

Arkansas tripled our LLC franchise min-fee this year from $50 to $150. I've been moaning long and loudly to fellow tax preppers, all of whom unanimously agreed that it was a @#&$^%# outrage (let's see you bleep that out, Armando). You have no idea how much better you've made us all feel.

$800! It's just astounding how much money you Left Coast people have to come up with just to operate a business. Last year, a man wanted to rent one of my office spaces, but couldn't come up with both the $300 deposit and the $300 first month's rent. The place had been vacant for months and I wanted to rent it, so I called him and said "forget the deposit." Two days later he went into business--it was that close. I guess where you're at, he probably couldn't even have raised the price of a city permit--$30 here. There?

[S T]

Calif and High Fees

Bart, Not only does Calif charge a $800 annual tax for S Corps, Limited Partnerships and LLC's for the privilege of doing business here and filing a tax return, but the businesses that do form an LLC also have a gross receipts tax such as $250,000 to $500,000 = $900 fee, $500,000 to $1,000,000 = $2,500 fee, $1,000,000 to $5,000,000 = $6,000 fee and $5,000,000 + = $11,790 fee. (2004 Fees) This is all in addition to the $800 minimum fee, then income tax on the pass through to the members from there.

California is not a very business friendly State. Consequently LLC's are not the choice here unless you can stay under the $250,000 to avoid the gross receipts tax. But the $800 annual tax fee is still due. They also have a totally separate LLC form to complete.

We just heard that Nissan is moving its operations out of California and going to where is it Tennessee, Arkansas or Kentucky. One of those states! So California lost another large employer. For years now, Large employers like TRW (now Experion?) some of SBC (was Pacific Bell), and other well know large Corporate having been moving all or part of their operations out of California due to the high cost of doing business. They can go to Texas, Tennessee, Arkansas, Kentucky and other States and "cut" deals and reduce their operation costs, purchase property at less cost, less property tax, etc.

Forgot the City Permit issue, no they average probably about $125 depending on the city, but then some of the City's also have a sliding scale on Gross Receipts. I have a Retail Client that has over $6 Mil in Gross Receipts and his annual City License is around $1,600 per year and keeps going up. Another client that is Service Business owner and a spouse pays $137.50 for their permit, additional if they add an employee.

Sandy

[jainen]

not taxation

It is not taxation that limits business in California. It's housing. Here in Santa Cruz houses rent for $3500 and workers need 8 or 10 just for basic living. Companies can't pay that, so they move.

[B C]

California

Ah, the privilege of living in California. Or is it the curse??? In my town there is also a sliding scale for business owners based on the gross income. The more you make, the more you pay in business tax. Kinda sounds like the IRS?. California is in such bad shape now that they will continue to raise taxes and take money away from local cities..

[Black Bart]

V J,

Here in Santa Cruz houses rent for $3500

I'm something like the dental hygienist on this one. Surely you don't mean $3,500 per month?

[Black Bart]

Sandy / B C -- attitude of the average Californian?

Say, guys--a point of curiosity: Not so much about business, but as to politics.

I read in our area newspaper (a liberal outpost in this strongly conservative region) that all of the bills put forth by your Governor Schwarzenegger were defeated at the polls. Our paper's editors were overjoyed, of course, but I was just wondering what people who actually live there really think?

What is your feeling about that vote? Were your "for" or "against" his initiatives? Do you feel it's a reflection of the sentiment of the average California voter? Did the public unions (teachers, etc.) spend so much to defeat them and/or have such a stranglehold on the state that they were able to unduly influence the outcome? Or was that simply the honest result what most people felt? Our paper slants the news strongly to the left and we never know for sure if we're getting the full story or context, so I'd really like to know. Thanks.

TAX FOCUS: Dang; almost forgot that again. Okay, here's a tip for everybody. Individual taxpayers who don't get an extension this coming year will be required to file their tax returns by April 15th (excluding weekends and holidays). I understand that, as a budget
deficit reduction measure, the prez has proposed summary execution for all non-filers. Those requesting installment plans and OIC's are to be drawn and quartered.

[jainen]

work these things out

It's an interesting question, and the answer is an ironic "none of the above." The governor correctly identified major problems. We do need reapportionment. We need efficiency in managing school personnel. We need better family resources for health care. But we still voted against it all, because a referendum is a lousy way to run a representative democracy. The governor thinks all the world's a stage and he is the star. He needs to go down to the state house and work these things out with everybody else.

[jainen]

very kind

>>Surely you don't mean $3,500 per month?<<

Yes, sir, very kind of you to inquire. Here's a link to our housing authority >>http://www.hacosantacruz.org/statistics/fairmarketrents.html<<.
One-bedroom apartment, $1030. That's for the kind of thing available as Section 8, defined as 40th percentile. The upper range for a one-bedroom apartment is more than $2500. Per month. A small house in town would be a bargain at $3500, if you could find one.

[DTS]

Housing and Arnold

Jainen is correct about the housing prices in many areas here in CA. In my area of Orange Co., an average two/two goes for approximately $2,500 p/mo.

One of Arnold's propositions that was not mentioned was to limit the spending in this State. We have automatic built-in spending increases that, many feel, need to be removed from the State Constitution. With a credit rating of 41, something has to be done. We voted him into office last year, knowing what he wanted to do then did not allow him to do it last week. Not very smart, from my perspective.

Hopefully, next time, Arnold will take his ideas to the people like he did when he was elected and not leave the decision making to the special interest groups.

Dennis

[Black Bart]

Housing

One-bedroom apartment, $1030 Section 8.

upper range one-bedroom apartment $2500 Per month

small house in town bargain at $3500, if you could find one.

Well, umm....let's see; that's twelve times $1030 equals....hmm....$12,360 and at $2500,
then $30,000, annnnd...at $3500, yes that's (is it possible?) $42,000. And you say that's rent. Right?

Gosh, this begs the question. If the pore folks are paying $12K and the middle folks are paying $30K just for a roof, then how much per week does the average worker out there make? I may start commuting--the salary would surely pay the air fare back and forth.

As a point of interest, what do y'all get for a "short (1040A) form" there?

[jainen]

$3500

There are no average workers here. Most people earn two or three thousand a month. Quite a few earn fifteen or twenty thousand a month. Officially that averages to $3500, but nobody at all earns that amount.

Oh, you ask how do people live here? There are four ways. One is to pay $8000 per month rent. Another is to pay $12000 per month mortgage. A third is to pay $1000 per month shared rent (families are not allowed this option, but there are almost none of us anyway since monogamy has been illegal for the last twenty years). The other way is to buy your house in 1976.

[Black Bart]

Houses by jainen

Yes, sir, very kind of you to inquire.

Oh, at first I thought you were being your usual sarcastic self, but now, I realize, you're practicing being polite, aren't you? Very commendable. But, somehow, it just doesn't seem to be you. Tell you what; why don't you just skip the "pretty please" bit and go back to the in-your-face, blunt trauma approach? That way, I think we'll both feel more comfortable. You can play offense and I'll play defense.

About those 1976 houses; I did a tax return for a house sale back in the late seventies for Californians who came back here for a while. Luckily, they had a 1099 or I wouldn't have believed their story that they sold a small bungalow (they had a picture of it) that would have brought maybe 15 to 20 thousand here for over $140,000 or so out there. I was just astounded that they didn't have the cash to pay the tax (also beat me out my fee).

Interesting note, however. Although fully aware that I knew they were a married couple, he brazenly admitted to me (in his wife's presence) that he'd blown all their money on "a young filly"-- as he put it -- with the odd name of "Sandra Anita." Apparently, some Californians have bizarre ideas about the sanctity of marriage.

[Black Bart]

Say, jai

If it's not too much trouble, my cousin Twin (the real-estate mogul) requests that I ask if you could possibly find out from UPS/Fedex/whoever what it might cost him to air-freight a "shotgun" house to Santa Cruz from Dogpatch?

Thanks in advance,

Bart