A Boon for New Business
Posted on Dec 18, 2013
George Runner: End to Security Deposit Requirement a Welcome Gift for California BusinessesIt’s no secret that starting a new business in California is tough. With our high tax rates and hostile regulations, we are consistently ranked one of the worst states in which to do business and create jobs.
For years, the California State Board of Equalization has been making this problem worse by demanding security deposits from all new California corporations and LLCs. The required security typically equals half a year’s worth of taxes and ranges from $2,000 to $50,000 per company. This shakedown effectively penalizes new business owners before they can get their business up and running, make their first sale or owe any tax.
Most states do not impose automatic security requirements. In fact, California’s requirements have been among the most sweeping in the nation, catching many new business owners by surprise.
It’s challenging enough starting a new business in California. Forcing new business owners to turn over up to $50,000 of their money does nothing to help them succeed, nor has it proven cost-effective for the state.
Since being elected to Board of Equalization three years ago, ending this onerous practice has been my top priority. That’s why I am pleased to announce that on Tuesday, my colleagues and I voted to eliminate these burdensome security requirements for nearly all new businesses.
The board’s action immediately suspends automatic security requirements for corporations and LLCs registering with BOE. Going forward, the board will require security only when a business has a history of nonpayment or poses a high compliance risk.
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From Noozhawk.com
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