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Tax.appeal.168
Tax.appeal.168, Tax Accountant
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Experience:  3+ decades of varied tax industry exp. Tax Biz owner
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I live in California and started an LLC in 2014. I have not

Customer Question

Hello,
I live in California and started an LLC in 2014. I have not used it since. I actually totally forgot about it until now. Do i need to pay the California $800 Franchise LLC tax for the years up to now if I made 0 dollars and did nothing with it? I am planning on finally starting my LLC but do not want to start of with $2400 owed. I researched a little and found a few sites mentioning something about a Ralite Case and that you could possibly just walk away from the LLC because the LLC is liable and not the Member. By the way, this is a single member LLC. Could I walk away and start a new LLC? Could I dissolve it? For some reason its not suspended or anything because it does say its active. Not sure what to do. Trying to find the cheapest way out of this. Cant believe I forgot it. Please do help.
Thank you!
Michael
Submitted: 1 year ago.
Category: Tax
Expert:  Tax.appeal.168 replied 1 year ago.

Based on the following, as you are registered as an LLC in the state of California, you are required to pay the $800 fee for each year. SEE BELOW:

What is the limited liability company annual tax?

The limited liability company annual tax is $800. To be subject to the tax, the limited liability company must, for a least one day during the year, be:

  • Doing business in California, and/or
  • Registered with the California Secretary of State.

"Doing Business" is defined as actively engaging in any transaction for the purpose of financial gain or profit.

The limited liability company fee must be paid by the original return due date of the partnership return.

REFERENCE SOURCE:

http://www.taxes.ca.gov/Income_Tax/limliacobus.shtml

Let me know if I can be of further assistance to you regarding this matter. If all is clear, please be so kind and positively rate my response 3 or more stars so that I can receive credit for assisting you this evening.

Customer: replied 1 year ago.
Thank you for the detailed response! So if all i did was is create an llc and did absolutely nothing under it since then I should be fine correct? I havent had any transactions for the purpose of financial gain or profit. If this is correct and I start adding DBA's below the LLC would I then just pay the Franchise tax for the 2016 year?
Expert:  Tax.appeal.168 replied 1 year ago.

Hello again,

You are welcome. Following is the statement again;

  • Doing business in California, and/or
  • Registered with the California Secretary of State.

The key word being the word "or" . This means that if you are registered with the CA Secretary of State and the LLC has not been officially dissolved, whether you did business or not, you are required to pay the $800 annual fee for the years that the LLC has been registered. I know, it doesn't seem fair, but these are the rules.

Customer: replied 1 year ago.
How about the Ralite Case? If I was to just walk away from the LLC? Wouldnt it be the LLC and not the members problem? Not saying I am going to do that. I have just seen a bunch of site that said this is a way some have done so.
Expert:  Tax.appeal.168 replied 1 year ago.

I have no idea about the Ralite Case and respectfully, ***** *****'t have time to look at the case.

Take a look at the following blog. It might shed some light on the matter for you.

http://www.avvo.com/legal-answers/is-it-wise-to-walk-away-from-llc-to-avoid-paying-3-1015808.html