Doing business in California is a smart move for any company looking to expand their reach and take advantage of the many opportunities the state has to offer. With a population of over 40 million people, California is full of potential customers and networking opportunities. Trade shows and conferences such as Dreamforce and Oracle OpenWorld attract thousands of people from technology companies across the country. The climate in California is also an attractive feature for businesses.
Southern California enjoys mild temperatures all year round, with average winter temperatures in Los Angeles reaching the sixties. This means that businesses won't have to worry about inclement weather affecting their productivity. California has also seen an influx of people with higher incomes and better education in the past 10 years, making it easier to find qualified employees when hiring. Additionally, the population that supports businesses in California has more money to spend than the average consumer.
Before forming a company in California, it's important to have a clear business plan and understand the legal and licensing requirements associated with different types of entities. It's also important to be aware of the tax obligations that come with doing business in California, as the Franchise Tax Board has filed cases against companies that failed to comply with their tax liabilities. Investing in a company such as a limited liability company may also require filing tax liabilities, even if the principal company is not located in California. Corporations, LLCs treated as corporations, and S-corporations are required to provide their partners, members, or shareholders with their proportional share in California and full ownership, payroll, and sales in CA Schedule K-1 so that their partners, members, or shareholders can determine if they are doing business in California.
California is a state that promotes long-term business growth, making it an attractive option for corporations looking to expand. Companies that are permitted to exclude from California source income their distributive interest, dividend and profit from the sale of qualifying investment securities of a qualifying investment company will also exclude those amounts from the share business test set forth in RTC 23101 (b).Finally, when doing business in California you are more likely to encounter valuable business partners due to the state's talented and intelligent population.