Doin' Business in CA
Yesterday was the last day for Gov. Arnold to sign or veto legislation, much of which dealt with issues pertaining to doing business in CA. I didn't think much about most of these proposals, but I did notice some commentary about how certain legislation would make it harder/easier to do business in CA, and this struck me this morning as I was attempting to find information about sales tax exemption for non-profit organizations.
As many of my faithful readers know, I'm the business/technical manager for a non-profit educational theatre troupe that tours plays in French to colleges & universities. We're incorporated in WI as a non-stock non-profit corporation, and I also succeeded in completing the complex process of applying to become a 501(c)3 federal tax-exempt organization.
When E & I relocated to Sacto, the troupe's "entity" moved with us. However, I discovered that we could officially remain a WI organization by applying to become a Foreign Corporation with the right to conduct business in CA. This makes our lives easier in many ways, and a friend in WI graciously agreed to be our registered agent back in MadTown, so our registered office address remains there though our business mailing address is in Sacto with me, of course.
The first catch, however, came when filling out the "Statement and Designation by Foreign Corporation" form for CA. One requirement is a statement of status from the incorporating state that must prove the corporation is in good standing and that it's a non-stock non-profit entity. The WI Department of Financial Institutions web site includes an online request for a document of good standing, so I completed the process and paid my $30 for the document to submit to the appropriate CA department. However, I soon received my rejected application from CA because the online WI document didn't include enough information about the troupe's status. I called both the CA and WI departments to find out what more was necessary and learned that, in fact, CA is the ONLY state that won't accept the document produced via the online process on the WI DFI web site!!! So I had to make a specific request to WI DFI in writing with a note that the document was for CA, and I had to pay another $30 to receive the sufficient WI document for the CA application. Hmm. Seems a wee bit more complicated than it should be, don't you think? And why is CA the ONLY state to require a more specific verification of a non-profit organization's status? Not to mention the fact that the WI person with whom I spoke knew of this oddity but there was no mention of the exception on the WI DFI web site...
However, we did receive approval to be a Foreign Corporation, so now my task is to make sure we're exempt from any state taxes that could be levied against us. On the Franchise Tax Board web site, I downloaded and printed the 24-page instruction and application booklet, and I'm guessing that submitting this application may be almost as time-consuming as the federal application that I completed two years ago!
The second real catch, however, aside from having to go through a separate state tax-exempt process despite the fact that we've already got our federal tax-exempt status, is that CA has no provision for non-profit organizations to be exempt from state sales tax! In WI, we were able to get a tax-exempt number for purchases to exempt us from paying the 5.5% sales tax, which is incredibly helpful for a small non-profit with an equally small budget. In CA, however, this option simply does not exist. Hmm. No wonder I've seen commentary about how hard it is for small businesses to succeed in CA and about how many businesses of any size move out to the surrounding states like OR, NV, or AZ.
So, Arnold, can ya give us a break here? If you really want to revitalize CA and improve the state's fiscal outlook, could you perhaps take some proactive steps to support small and non-profit organizations along with those big corporations whose profits help line the coffers of your campaign fund?
As many of my faithful readers know, I'm the business/technical manager for a non-profit educational theatre troupe that tours plays in French to colleges & universities. We're incorporated in WI as a non-stock non-profit corporation, and I also succeeded in completing the complex process of applying to become a 501(c)3 federal tax-exempt organization.
When E & I relocated to Sacto, the troupe's "entity" moved with us. However, I discovered that we could officially remain a WI organization by applying to become a Foreign Corporation with the right to conduct business in CA. This makes our lives easier in many ways, and a friend in WI graciously agreed to be our registered agent back in MadTown, so our registered office address remains there though our business mailing address is in Sacto with me, of course.
The first catch, however, came when filling out the "Statement and Designation by Foreign Corporation" form for CA. One requirement is a statement of status from the incorporating state that must prove the corporation is in good standing and that it's a non-stock non-profit entity. The WI Department of Financial Institutions web site includes an online request for a document of good standing, so I completed the process and paid my $30 for the document to submit to the appropriate CA department. However, I soon received my rejected application from CA because the online WI document didn't include enough information about the troupe's status. I called both the CA and WI departments to find out what more was necessary and learned that, in fact, CA is the ONLY state that won't accept the document produced via the online process on the WI DFI web site!!! So I had to make a specific request to WI DFI in writing with a note that the document was for CA, and I had to pay another $30 to receive the sufficient WI document for the CA application. Hmm. Seems a wee bit more complicated than it should be, don't you think? And why is CA the ONLY state to require a more specific verification of a non-profit organization's status? Not to mention the fact that the WI person with whom I spoke knew of this oddity but there was no mention of the exception on the WI DFI web site...
However, we did receive approval to be a Foreign Corporation, so now my task is to make sure we're exempt from any state taxes that could be levied against us. On the Franchise Tax Board web site, I downloaded and printed the 24-page instruction and application booklet, and I'm guessing that submitting this application may be almost as time-consuming as the federal application that I completed two years ago!
The second real catch, however, aside from having to go through a separate state tax-exempt process despite the fact that we've already got our federal tax-exempt status, is that CA has no provision for non-profit organizations to be exempt from state sales tax! In WI, we were able to get a tax-exempt number for purchases to exempt us from paying the 5.5% sales tax, which is incredibly helpful for a small non-profit with an equally small budget. In CA, however, this option simply does not exist. Hmm. No wonder I've seen commentary about how hard it is for small businesses to succeed in CA and about how many businesses of any size move out to the surrounding states like OR, NV, or AZ.
So, Arnold, can ya give us a break here? If you really want to revitalize CA and improve the state's fiscal outlook, could you perhaps take some proactive steps to support small and non-profit organizations along with those big corporations whose profits help line the coffers of your campaign fund?
posted by jms | 11:36 AM
1 Comments:
LNJ wonders-
Aren't more small-business owners and non-profits Democratic leaners? I think I read that somewhere once. That could explain Arnie's reasoning. Then again, when has gov't ever been run logically?
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