Senate Governance and Finance Committee Approves Calderon Legislation Aimed at Easing Tax Burdens on New Businesses

Wednesday, August 8, 2018

SACRAMENTO, CA – Assembly Bill 1085, a measure authored by Assembly Majority Leader Ian Calderon which would allow new small businesses, limited partnerships, and limited liability companies to be exempt from paying the minimum franchise tax for their first year of operation, was approved today by the Senate Governance and Finance Committee with bipartisan support.

“While California has adopted multiple programs to incentivize businesses to operate within the state, there’s still more we can do to boost the economy,” stated Majority Leader Calderon. “AB 1085 will help alleviate the financial pressures placed on new startup businesses during their first year of operation.”

Currently, California imposes an annual minimum franchise tax of $800 on all corporations incorporated or licensed to do business and also imposes an amount equal to the minimum franchise tax on all limited liability companies (LLC), limited partnerships (LP), and limited liability partnerships (LLP) that are also qualified to do business. The state exempts all corporations from the minimum franchise tax during their first year in operation. However, the state does not extend that same exemption to small businesses – those that register as LLCs and LPs.

California has the opportunity to spur economic growth and create jobs for its residents by alleviating the cost restraints new businesses face during their first operating year.  AB 1085 is a long term solution for California’s business economy and encourages small business owners to explore their entrepreneurial capabilities.

Contact: Lerna Shirinian (562) 692-5858