USA Foreign Corp Issue

[dixonc]

Foreign Corp Issue in California / Wyoming?

My advertising/marketing business operates in CA. I don't have any tangible goods that I sell. I just advertise other companies websites.

A few years back my business went downhill and I decided to not focus on it as much. My profits were under $500 for the last several years and so it didn't make sense to have a CA corp and pay the minimum tax of $800. I closed my CA corp and got a WY corp that same year. It was under my assumption (based on my limited research online a few years back) that I didn't need to file CA corp taxes. WY doesn't have corp taxes so I just did what was appropriate in WY. My assets in my CA bank account for the new corp is close to $1K and I never took out money as income, thus never filed income taxes.

I'm reading some recent articles about foreign corps now and I'm getting the idea that I made a mistake, but I need some clarification. A few years back, I thought foreign corps were only for out of the country corps, not out of the state. Now I have a CA state letter saying I didn't file taxes for the corp (which wasn't registered as a foreign corp in CA).

I'm also planning on closing my WY corporation as well this year.

What should I do, what should I have done, and what are the possible penalties if any?

 

[David Bolenbaugh CPA]

The problem is the corporation operates in CA and you have physical presence there. I don't know which corp that they sent the letter to you for, but if for the CA corp it's possible you did not close the corp with the CA secretary of state. You may want to check that.

If you plan to stay in CA you may want to consider your next business structure to be an LLC, as there would be no state corporate income tax. You may want to talk to an attorney.

It's hard to state what the penalties are without looking at the notice. You may want to hire a CPA (such as myself) to help you.

 

[rafaelwebsites]

The problem is the corporation operates in CA and you have physical presence there. I don't know which corp that they sent the letter to you for, but if for the CA corp it's possible you did not close the corp with the CA secretary of state. You may want to check that.

If you plan to stay in CA you may want to consider your next business structure to be an LLC, as there would be no state corporate income tax. You may want to talk to an attorney.

It's hard to state what the penalties are without looking at the notice. You may want to hire a CPA (such as myself) to help you.

This is good advice -- but I'd also add that California is a terrible not known as a business friendly State in the least. Probably better off moving elsewhere.