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A lot of people think of a franchise and they think of McDonald's, or a fast food restaurant,
or some other type of franchise. Franchise tax has nothing to do with franchising, instead
it's a privilege fee. It's a privilege to be incorporated in a state which you're incorporated.
The state, in other words, gives you access to the legal system in that state and it's
a fee that's paid to that state regardless of income. So it's not dependent on your total
business in the state or your total business anywhere; it's just on whether you continue
to be in good standing as a corporation or LLC of that particular jurisdiction. They
call it a franchise tax, which is really just an annual report fee whether or not you're
doing business; just for the privilege of keeping the company going. If you fail to
pay the franchise tax, you will lose good standing status, which means you'll lose the
corporate shield to protect your company, plus you may end up paying late fees and penalties
and interest in order to renew your company. So we suggest you pay on time your franchise
tax whether or not you're using the company, as long as you plan on continuing to use it
in the future. Thank you.