A Franchise Tax is a fee that some states charge LLCs for the privilege of doing business there. It is not based on profits, but rather a flat fee or calculation using assets, income, or number of members. Delaware, Texas, and California are among the states with notable franchise taxes. Even if your LLC makes no money, you may still owe this tax. Failing to pay can result in penalties and suspension of your LLC’s good standing with the state.
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