Tax Consequences for Businesses in California

Despite the high cost of living, California remains a top designation for places to live. People are attracted to the natural beauty and warm weather. Also, with the tech boom of the 2000s, some people are drawn to California for tech jobs. The magnetic aspects of California make it a potentially attractive location to do business. However, there are other factors to consider when planning to start a business in California, or if you already have a business there and seek ways to keep as much of your revenue as possible. One key factor that all businesses in California have to address is business taxes. Preserving California's beauty and managing all the challenges of earthquakes and droughts requires substantial financial revenue. Taxes on businesses are a vital source of that revenue, and businesses need help to navigate California's complex tax system.

CA Sales Tax Rate Compared to Other States

The California sales tax rate is among the highest in the nation. This rate can be tough on businesses that are already struggling with other high costs in California – namely property leases and labor costs. High sales taxes also push businesses to raise prices to recoup lost revenue.

CA Excise Taxes

California also places additional taxes on various other items – such as alcohol, cigarettes, and gas. These additional taxes can create more strain on certain businesses.

Double Taxation

California taxes create numerous unique problems for businesses. One notable problem that is not seen in most other states is double taxation. This happens when you set up a business using an LLC or S corporation (pass-through entities); California will charge your business a tax and also charge you a tax on your personal income as the owner of the small business.

Talk with a CA Tax Attorney

If you are working through the complexities of business taxes in California, contact a California Tax Attorney to help you devise a strategic approach that results in the greatest benefits for your business.

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