Do I have to file back taxes on my inactive corporation?
I started a California contracting corporation in 2005 after which I began to attend school out of state. I never used the corporation during the 2005, 2006, 2007 years. I am now filing back taxes on the corporation and reporting zero income. Are there any taxes due?
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Even if your corporation earned no income, many states have what they call "minimum franchise taxes." This is like an annual fee/tax for the privilege of being able to say you are an incorporated entity in the state.
There are also reporting requirements, like filing annual taxes -- again, even if just to show that you did no business. Once formed, a corporation has ongoing maintenance requirements even if you're out of state and not using it. Speak to a local accountant familiar with business issues to see if there's a way to streamline the tax filing process (in light of the lack of activity) and to avoid any penalties and interest that might have accrued.
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