What a minimum llc tax means for your filings

Weigh it before you pick a state, because in states that charge it, it is often the biggest recurring state cost of owning an LLC. For a small side business, the tax alone can settle the choice.

If you are comparing states, make a short table with three columns: filing fee, yearly report fee and minimum tax. Total each row over three years. The state with the smallest total, not the smallest filing fee, is the cheaper one to keep.

Check this list first: only 3 states charge a minimum tax, and each is quoted below in its own words about the amount and the timing. If your LLC is formed or registered in one of them, add the figure to your yearly budget today, because it is owed even when the company earns nothing. A state that is not listed has no such tax.

• California: $800 a year minimum LLC tax to the Franchise Tax Board (Form FTB 3522), separate from the Statement of Information.
• Kentucky: Limited Liability Entity Tax: a $175 minimum each year to the Department of Revenue.
• Rhode Island: $400 a year minimum tax to the Division of Taxation (Form RI-1065), owed whether or not the LLC makes a profit.

You will use it in these guides: How to form an LLC: guide by state, Registered agent guide by state, Register your LLC in another state: guide by state.