What does Minimum LLC tax mean?

Why should I care?

Count it in the budget for every year the LLC exists in those states, income or no income. The amount does not follow profit, so a dormant LLC still owes it until it is properly closed, and a quiet year saves nothing.

When the LLC has outlived its purpose, dissolve it with the state and get written confirmation that the tax ends. Closing the business alone does not stop the charge.

How do states differ?

Does your state charge a minimum tax? Only 3 do, and each is quoted below in its own words. If yours is on the list, add the figure to your yearly budget now, because it is owed even when the company earns nothing. A state that is not listed has no such tax.

• California: $800 a year minimum LLC tax to the Franchise Tax Board (Form FTB 3522), separate from the Statement of Information.
• Kentucky: Limited Liability Entity Tax: a $175 minimum each year to the Department of Revenue.
• Rhode Island: $400 a year minimum tax to the Division of Taxation (Form RI-1065), owed whether or not the LLC makes a profit.

Where does this come up?

You will meet it in these answers: How do I form an LLC where I live?, Registered agent rules: your state's answers, Does my LLC need to register in the new state?.