Legal Question in Business Law in California

Doing Business in California

I just incorporated my company in Nevada (August 2008) but operating out of California. Currently, I am in the stage of making some initial capex investments into my new software related business. There will be no income generated for the company this year as we plan to sell our software only next year. Question is, do I have to register myself as a foreign entity doing business in California for this year where I have no income?


Asked on 8/25/08, 9:20 pm

1 Answer from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Doing Business in California

Yes. The requirement to register and pay the minimum franchise tax has little or nothing to do with making sales and generating revenue. The minimum franchise tax is not a sales, gross receipts or income tax; it is a tax assessed "for the privilege of doing business," and if you really aren't doing any business at all you probably don't trigger the requirement -- but some enterprise-formation activity such as lining up financing and doing R&D might be considered "doing business" so as to require registration and payment of the tax. If you don't sign up and pay, keep a low profile!

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Answered on 8/25/08, 10:17 pm


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