Don’t Hire Remote Employees Living in California
28th April 2022
You’d think that I could simply tell them that I’m not doing business in California and be done with it. No — California defines “doing business” in a number of ways, one of which is to have more than 25% of your payroll in California. Which I had, because I had only one employee.
So now, because I employed one of their residents, I’m fully subject to California regulation. I have to file all of the employment-related forms, including those pertaining to withholding and unemployment insurance (which I expected). I also have to register my company with the California Secretary of State and renew my information every year or face penalties, and apparently I have to file a corporate income tax return
You’d think I’d be able to file a simple return, file zeroes on it, and be done with it. But no — I had to pay my accountant to do it, and the form is literally 42 pages long. That cost a few hundred dollars. And in the end, I still owed them $800. For 2019 alone; I’ll also owe them for 2020 and 2021.
I owe $800 for the “minimum franchise tax”. California charges this fee to everyone for the “privilege” of “doing business” in California, whether they have revenue or not. Only a few states have a business franchise tax, and California’s is wildly higher than anywhere else. This is in addition to California’s generally out of control taxes.