So I registered my LLC in Wyoming because it was like $100 and no annual report, but I live in California and operate entirely online. Now my accountant is telling me I might have to register as a foreign LLC here and pay the $800 franchise tax anyway. Did I screw myself? I literally picked the state with the cheapest fees and didn't read anything else. Please tell me I'm not the only one.
LLC Formation
I picked a state based on fees and ignored everything else
You're definitely not the only one. This is probably the single most common LLC mistake people make. The 'cheap state' thing is a trap if you actually live and work somewhere else.
lol I did the same thing with Delaware because I heard startups do it. Then I found out Delaware is only useful if you're raising VC money. I was selling handmade candles.
California is aggressive about this. If you're physically in CA managing the business, you likely need to register as a foreign entity and pay that $800 minimum franchise tax regardless of where the LLC was formed. Wyoming doesn't shield you from your home state's rules.
Ugh. So I basically just paid Wyoming for nothing? Can I just dissolve the Wyoming one and start a CA LLC?
Dissolving is an option but check Wyoming's dissolution fees and requirements first. Sometimes closing costs as much as opening.
Not necessarily for nothing - if you ever do business in Wyoming or want privacy from CA's public records, there's some value. But for a typical online service business? Probably overkill. Talk to a CPA before you dissolve anything though.
Privacy from CA public records is the only reason I'd consider it. CA shows your name and address on the Secretary of State site. That freaks some people out.
Wait, CA does that? I never even thought about that part. Now I'm annoyed.
Yeah and CA's $800 is due every year whether you made a dollar or not. Wyoming's annual report is like $60. The math changes fast.
Well this thread has been a rollercoaster of regret. Calling my accountant tomorrow. Thanks all.