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State Issues that Affect the Survival of your Small Business

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State Issues that Affect the Survival of your Small Business

By JamieD
Published: August 24, 2010

Aside from the economy and your knowledge and operational skills as a business owner, certain outside factors will affect your busines;s success- some of which are based purely on your busines-s location.

Each state has different laws that regulate the types and amount of business taxes you pay, the regulatory cost of business operations, employer health insurance requirements, and other state issues like unionization and local government spending.

In the coming weeks we'll provide you with a guide that shows what and how these regulations and issues affect small business survival across the country. Hopefully these articles will give business owners a better understanding of what to expect from their state when starting a business.

As always, we appreciate your thoughts and feedback on state-specific issues that have affected your business.

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The first two articles about small business survival have been posted! Check out the Small Business Cents blogs on state tax requirements - State Tax Requirements Affecting Your Small Business - Part 1 State Tax Requirements Affecting Your Small Business - Part 2
These are a few of the California-specific things I've seen affect small businesses: * If you're setting up a pass-through tax entity (LLC or S Corp) understand the California taxation of each. S Corps pay minimum $800/year or 1.5% of taxable income, whichever is higher. LLCs...here is where some people are surprised...pay $800/year (I think) plus an annual 'fee' that ranges from zero (<$250K/year in sales) to $2500 (500K-1M) to $6000 (1M-5M) to $11,790 (>$5M). These rates are from a 2007 summary at a website: asktaxguru.com/138-what-annual-filing-fees-californial-based-llc.html. I haven't verified their exact accuracy, but from memory those sound right. * Sales & Use tax - http://www.boe.ca.gov/. They're pretty far reaching, and very aggressive during audits, etc. So make sure you know if your business is required to collect and remit sales and use tax in California. The rules get tricky (e.g. delivery of interior design firm products to a customer is taxable under one scenario but not under another). The good news is that the BOE has lots of good free information available at their website, and while I've heard colleagues say they've had difference experiences, I've found their live phone help to be useful. * Use tax for ALL businesses with > $100K in annual gross receipts: this is relatively new (ugh!) :-) ---> skocpa.com/nl/article-2010-use-tax.htm * All purpose site for permitting etc. in California: http://www.calgold.ca.gov/ * California has its own version of 1099 reporting: http://www.edd.ca.gov/pdf_pub_ctr/de542.pdf Great opportunities in California - I've lived and worked here for years - but it's true...there are LOTS of regulations and costs of doing business that are higher than many other states. Hope that helps. - David DavidSternCFO.com ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

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