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In the following scenario does the company need to register, declare, or pay taxes within California?

Company (LLC) registered in Florida with a single active member (other members are non-active) residing in California. The member works from home in California, and from various client locations across the USA.

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  • Where are the sales being made? You may owe taxes there, and your own state may claim a share or may allow for taxes already paid. Check the tax codes in both locations. (Example: if I buy something via the Internet I may either owe sales tax there or may be supposed to declare the purchase an pay tax here, depending on the rules if the two states in question.)
    – keshlam
    Sep 23, 2016 at 14:26
  • it's a services only company
    – Chris Morgan
    Sep 23, 2016 at 18:27

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If the single active member lives in California and works at home, then you likely need to register in CA and pay the annual $800 franchise tax. California is quite aggressive about enforcing registration of LLCs.

A foreign LLC needs to register if it is "doing business" in California. Here is a blog post that covers it in some detail. It looks like you meet at least one of the criteria for doing business in California, such as:

  • Any of the LLC’s members, managers, or other agents conducts business in California on behalf of the LLC.
  • The LLC is commercially domiciled in California (i.e., California is the place where realistic control of the LLC’s functions is centered).
  • The amount paid in California by the LLC for compensation exceeds the lesser of $50,000 or 25% of the total compensation paid by the LLC. [Depending on your compensation.]
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California is very aggressive about enforcing LLC franchise taxes. The only correction I'd make to Kekito's answer is that the fee is $800 minimum or some percentage of the LLC's total business volume in the state. What's killer about it is that the tax is dependent not on what your LLC's profit is, but what its revenues are! Here's a good link explaining how the tax is calculated:

California LLC Franchise Tax Rates

Be very careful about making sure you comply with every dot in the California codes or else you really won't like what happens. It's one of the reasons so many companies avoid locating operations in California if at all possible.

I hope this helps.

Good luck!

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