Glossary
Franchise tax
A state tax for the privilege of being an entity in the state, charged regardless of profit. Delaware, Texas, California and Tennessee are the well-known examples, each with different maths.
Franchise tax has nothing to do with franchises. Delaware charges corporations by share count or assumed par value (minimum $175 or $400) and LLCs a flat $300. California charges every LLC and corporation a minimum $800 a year. Texas calls its gross-margin tax a franchise tax and requires a report even when nothing is due. Tennessee charges 0.25% of net worth with a $100 minimum.
The trap is the word "minimum": these are owed in loss years and dormant years. An LLC that was formed and forgotten in California owes $800 for every year it existed until it is formally dissolved.
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