California Business Portal

Are there times when a corporation is still required to pay the minimum franchise tax in its first year of doing business in California?

Are there times when a corporation is still required to pay the minimum franchise tax in its first year of doing business in California?

Yes, there are situations where corporations that incorporate, qualify, or start doing business in California are subject to the minimum franchise tax in their first tax year. 

Examples include:                                                                                                  
  • Corporations not qualified to do business in California are subject to the minimum franchise tax if they do business in California.                                                                                                            
  • Limited liability companies (LLC) whose first tax year in California is taxed as a partnership or a disregarded entity and in a later year checks the box to be taxed as a corporation.

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