I keep hearing about having to pay $800 to the California Franchise Tax Board every year just because I formed an S Corporation or an LLC. True?

Not only is it true . . . it’s worse than you think.

When it comes to LLCs [link to what is an LLC], the FTB collects a tax (the FTB calls it a [ahem] “fee”) above the $800 if the LLC’s revenues meet or exceed $250,000. Here’s a link to the graduated fee scale. The fee is capped at $11,790 when revenues meet or exceed $5,000,000. You should be so lucky, right?

For S corporations, the news isn’t much better. Click here. Here’s the short version: California collects 1.5% of an S corporation’s net income.

Ultimately, this state-level tax becomes one of many considerations when you’re thinking about an entity for your business.

Pencil it out.