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Setting up a corporate entity (any kind) in California gives you a mandatory minimum $800/yr bill from the CA Franchise Tax Board.

So if you are planning to incorporate in CA, be sure you are serious and don't mind an automatic $800 on the expense side without anything on the revenue side.

Please correct me if I am wrong on this.

Also, does anyone know why this is the case? I haven't seen this in a few other states where I have resided. What does this buy my company in terms of benefits? Was there some ballot proposition that got passed to levy/enforce this fee?

+1. They dipped in my business account and took backed CA LLC fees plus interest.

Yes, that's correct - although for corporations, you typically don't have to pay it for the first year (as long as you foreign qualify in CA for that year). So at least you get a small reprieve there :)

Actually you don't have to pay it for the first year, even if your business is resident in California.

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