Hey everyone. I formed my LLC in Wyoming last year because I heard it was cheap and good for privacy. I live in California and run a small Etsy shop. Now I just got a notice that I owe California's $800 franchise tax minimum AND Wyoming's annual report fee, which is like $60. So I'm paying two states just to exist. Is this normal? Can I just not pay California if I don't have a physical presence there? Any way out of this or did I screw up?
LLC Filing
I registered out of state and now I'm dealing with two annual fees
You probably screwed up. California is aggressive about this. If you're running the business from your apartment in CA, that's physical presence. They want their $800.
Wyoming annual report is only like $60, right? That's nothing Compared to the CA franchise tax. Consider it a cheap lesson.
I did the same thing a few years ago. The first year CA didn't catch me, but then they sent a bill with penalties. It was a mess. You might want to talk to a CPA before you ignore it.
Wait, do you actually owe the $800 if you're an LLC? I thought that was only for corporations. Or is it both?
LLCs tooo. It's a franchise tax. Sucks.
If you're doing Etsy, maybe you don't need an LLC at all. You could dissolve it and just use your own name. Unless you have liability concerns, but for a small shop it's often overkill. That doesn't help with the current bill though.
I called the CA FTB once and they were actually helpful. They told me about the first-year exemption. Did you file your first-year return? You might be able to claim exemption if you qualify. Not sure if you do.
Seriously, just pay the Wyoming fee. It's cheaper than the late penalties. And don't ignore CA. They'll garnish your bank account.
also, if you registered as a foreign LLC in CA or not, you still have to pay if you're doing business there. You might need to register as foreign anyway. Double check that.