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My husband and I have a small LLC registered in Arizona. In…

My husband and I have...
My husband and I have a small LLC registered in Arizona. In 2017 we had a few clients which are based in California and our tax consultant told us that we need to file a CA non-resident tax return and also may have to register a foreign LLC in California. He advised us to get in contact with an attorney in California to find out if we really have to register or not.
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Answered in 5 minutes by:
2/23/2018
Roy Hadavi
Category: Business Law
Satisfied Customers: 1,241
Experience: Attorney at Law Offices of Rosenstein & Associates
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Hi. My name is ***** ***** I am a licensed California attorney with extensive business law experience. I would be happy to provide assistance. Please keep in mind that our conversation does not include an attorney-client relationship and this is for general information purposes only.

Answer: Yes, you tax consultant is correct. Any time that you conduct business in a different state than the state your LLC is registered in you have to register in that state as a foreign corporation. If you do not intend to conduct further business in that state, you can then file paperwork to de-register.

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Customer reply replied 2 months ago
Dear *****,Thank you very much for your super quick response. I just need to dig in a bit deeper:I was hoping to get out of the obligation to register a business in California because I believe that we do not meet the conditions for "transacting intrastate business in California”. I searched online and according to a couple of websites a foreign entity will be deemed to be doing business in California for a taxable year if any of the following conditions are satisfied:1. The taxpayer is organized or commercially domiciled in this state.
2. Sales of the taxpayer in this state exceed the lesser of five hundred thousand dollars ($500,000) or 25% of the taxpayer’s total sales.
3. The real property and tangible personal property of the taxpayer in this state exceed the lesser of fifty thousand dollars ($50,000) or 25% of the taxpayer’s total real property and tangible personal property.
4. The amount paid in this state by the taxpayer for compensation, exceeds the lesser of fifty thousand dollars ($50,000) or 25% of the total compensation paid by the taxpayer.The answer to all these questions is actually NO. We are software developers and don't have a store, office or warehouse in California. We rented an apartment in Los Angeles for three months in 2017 and worked in our home office for 3 months.So even if we don't answer yes to all these questions, a California nonresistants income tax return form 540NR is not enough?Thank you so much,
Stephanie
Customer reply replied 2 months ago
The reason I am trying to avoid registration is because the form LLC-5 Application to register a Foreign LLC says" Registered LLC's in California may have to pay minimum $800 tax to the California Franchise Board each year". Of course I am not happy about that. This year I might just send a $4000 invoice to a California client or maybe I won't do any business in California at all. I don't want to pay $800 for that....

Apologies. I was away from the computer. I am reviewing the information you provided and will provide a response now.

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Hi Stephanie. Yes, if all the answers to the above criteria are no, and you did not conduct any business while you were in California, then you would not need to register. Also, the "may have to pay a minimum $800" is actually a will have to pay. The minimum tax for an LLC in California is $800.

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Customer reply replied 2 months ago
Thank you again for your answer. I will give you a review when I am back at my desk tomorrow and I might call you. Good night

You are very welcome.

Roy Hadavi
Category: Business Law
Satisfied Customers: 1,241
Experience: Attorney at Law Offices of Rosenstein & Associates
Verified
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