Assembly Bill 85 exempts California LLCs, LLPs, and LPs incorporated after January 1, 2021 and before January 1, 2023 from minimum franchise tax in their first tax year.
SAN LUIS OBISPO, California (PRWEB)
March 29, 2021
Effective January 1, 2021, California law temporarily exempts limited liability companies, limited partnerships, and limited partnerships from paying the California minimum franchise tax of $ 800 for the first year of operation. Corporate attorneys for Toews Law Group, Inc. of San Luis Obispo report that this exemption significantly reduces the formation costs associated with starting certain businesses.
Typically, a California business entity (such as a corporation, LLC, or limited partnership) must pay a minimum franchise tax of $ 800 each year that it operates. Companies (such as S-Corps and C-Corps) are exempt from paying the minimum tax in the first tax year. However, companies like LLCs, LLPs, and LPs must pay the minimum tax of $ 800 in their first tax year. The minimum franchise tax is due regardless of the income the company has made that year.
With the implementation of Assembly Bill 85, California LLCs, LLPs and LPs formed after January 1, 2021 and before January 1, 2023 will be exempt from minimum franchise tax in their first tax year. Bill 85, passed by Governor Newsom on June 29, 2020, was designed to make it easier for individuals to start new businesses.
Forming an LLC is a common way for individuals and companies to limit their liability. If you own a rental property or run a business, you have likely considered forming an LLC to protect your personal assets. With the recent $ 800 minimum franchise tax exemption, now is a good time to start your LLC, LP, or LLP. For more information on the benefits of limited liability and the potential benefits of incorporating an LLC, see the Toews Law Group, Inc. article, “What Are the Differences Between a Business and an LLC?”
If you are preparing to start a new business, firm, or LLC, the seasoned corporate attorneys at Toews Law Group, Inc. of San Luis Obispo can help.
If you’d like to speak to a seasoned business lawyer about forming an LLC, call Toews Law Group today for free one-hour business incorporation advice. The company advises entrepreneurs and companies on all aspects of commissioning and operation. Toews Law Group, Inc. can help you create the best legal entity, take the steps to get funding, protect your business, choose the right business insurance, and more.
This information was produced by Toews Law Group, Inc for informational purposes only and is not intended as legal advice. The transmission of this information is not intended to create a relationship between the lawyer and the client. Contacting us does not create a relationship between lawyer and client. Contact an attorney for advice on your individual situation.
Toews Law Group, Inc.
1212 Marsh Street, Suite 3
San Luis Obispo, CA 93401
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