California turns up the heat on small businesses

This is an update on a previous comment.

The California Franchise Tax Board is stepping up surveillance in response to pressure from the state's elected officials in Sacramento.

Check with your tax professional for details.

Smokey thinks that if you live in California, then the FTB wants you to register every company you own EVEN IF IT IS SOLELY DOING BUSINESS IN ANOTHER STATE. That way, the FTB can be sure that they can collect the $800+ every year as well as make sure that they can tax you on any income you make - from anywhere.

Don't forget - you need a good business reason to incorporate in a specific state. And avoiding taxes is not a good business reason.

The following is a copy of our previous post...

According to a recent article in the LA Times, California businesses are incorporating in Nevada, where there is no income tax. State officials call it fraud and vow a crackdown.“Forget complicated wire transfers to the Cayman Islands or secret Swiss deposit boxes. Californians who want to hide their money from tax authorities are increasingly opting for a simpler alternative: socking it away just over the state line. No need for savvy accountants or high-priced lawyers. Seminars, web casts and radio advertisements bray that it's easy to slash a California tax bill — or eliminate it altogether — by creating a corporation in Nevada, where there is no income tax on businesses or individuals. Set one up online with a few keystrokes and a $395 credit card payment! For a little extra, a Nevada mailing address, telephone number and bank account can be added. Promoters peddling the packages call it good tax planning. California officials call it something else: tax fraud. They say the cash-strapped state's coffers are being drained as even some of the smallest California businesses shift their profits into hastily created corporate shells in the Silver State.”“We want to catch this scam before it gets out of hand," said state Controller Steve Westly. "We think it will cost the state tens of millions of dollars if this continues.”Here is the full story.At Your Entity Solution, we don’t think that a Nevada Corporation is necessarily the only, or even the best answer to setting up a legitimate company structure that addresses your need to manage your tax burden and protect your assets from unwanted liability.Don’t forget – if it seems too good to be true, it usually is.Bye for now, time for a nap.Smokey Says - don’t take any rancid tuna.