Your franchise tax call is set. What to gather | Steven Palmieri

Question 1

I do not own a franchise, so why am I getting franchise tax notices?

Accepted Answer

Because the state is charging for the privilege of doing business there as a registered entity, and it picked a word that has been confusing owners ever since. The franchise in question is your LLC or your corporation, which is why a notice can turn up in a year you barely made anything.

Question 2

Is this only a Texas franchise tax problem?

Accepted Answer

No. Texas is the version most owners have heard of, California runs its own on both LLCs and corporations, and a long list of other states charge something equivalent under a different name and a different base. Texas reports are due in mid May, while a Delaware corporation's annual report and franchise tax come due in early spring.

Question 3

What is the Texas franchise tax Public Information Report?

Accepted Answer

It is the Texas form, numbered 05-102, that puts on record the officers, directors or managers behind your entity. Corporations, LLCs, limited partnerships, professional associations and financial institutions organized in Texas or with nexus there file one every year, on the same due date as the annual franchise tax report in mid May, and an entity at or below the no tax due threshold still files it.

Question 4

Does California charge franchise tax on an LLC or a corporation that made nothing?

Accepted Answer

Yes. California treats it as an annual minimum owed for being there at all. An LLC organized in California or doing business there owes the annual tax even in a year it conducts no business, until the LLC is canceled, and a corporation incorporated, registered or doing business there owes a minimum franchise tax, with a narrow exception for a newly incorporated corporation's first taxable year.

Question 5

My report is already late. What happens now?

Accepted Answer

First you find out what the state's own record says about your entity, because late, never filed and forfeited are three different positions with three different routes back. We will not promise you waived penalties or an automatic reinstatement.

Question 6

Why did my tax person never mention any of this?

Accepted Answer

Preparing a federal return and running an entity's state obligations are two different jobs, and only the first one was on the invoice you paid. Most owners are introduced to the second job by a state envelope.

Question 7

Who actually does the work?

Accepted Answer

Steven Palmieri and his team. The same people keep the monthly books, watch the state calendars, do the planning, and prepare and file the returns. We do not perform audits, reviews or compilations of financial statements.

The call is set. Now gather the state's paperwork.

Gather these before the franchise tax call