blog@cliffdweller

About 17 months ago, in September of 2003 I moved my corporation from California to Oregon. It had been stationed in San Francisco, California, for its entire life, approximately 4 years. I used a lawyer to set it up as a California Corporation. I did my best to keep everything legal and on the up and up. You'd think that wouldn't be too terribly hard.

I moved to Oregon because I decided I'd rather pay $4.56 for a Wendy's #6 combo meal than $7.38. I decided the idea of renting a two bedroom apartment for less than 1/4 what I was paying in San Francisco appealed to me. I was even able to cut the office space lease from $2500 a month to $300 a month. Since I can conduct my business from anywhere, it just made sense to move.

Because I was naive, I didn't shut my California the instant I moved out of the state. For sentimental reasons, or just because I was stupid I let it stay open into 2004. That cost me $800 to keep the company open, even though it did not conduct one single cent of business in California in 2004.

So last spring, when I realized there was a surcharge, I started the movements to switch it to a non-California corporation so the taxes would be paid on what I made and where I made them, instead of just a blanket $800 due every year (that's in addition to hoards of payroll taxes, btw).

This past fall, in 2004, completely out of left field I got an invoice from the City and County of San Francisco for over $4000. They said that since I didn't file a piece of paper that they allegedly mailed to me in February of 2004, I was now liable for fees and interest. Had I actually received the paper so that I knew to file it, it would have cost me $0.37 – one first class stamp with no fees to anyone. Since I never received it I now owe over $4000. Believe me, we're fighting it, but so far it has cost me around $700 in staff time just to try and communicate with City Hall in San Francisco. We have managed to get the $4000 reduce to $1500 or so.

Remember, my company has conducted no business in California since 2003. Also keep in mind that my company is fairly small and $700 or $800 is a fairly major chunk to swallow when you don't have it in the budget.

I finally got all my ducks in a row and got my California corporate lawyer to assemble the paperwork (another $700) to shut the California company down. I sent the paperwork in and everything was received, acknowledged and stamped "filed" on Dec 29, 2004. No more California company! Yay! Finally, no more taxation without representation…

I don't mind actually paying taxes, that's the system we live in. I do mind getting yanked around by bureaucracies and then owing money for nothing.

Then comes yesterday. I received in the mail from the State of California, a notice that my business dissolution had be denied. They returned the paperwork, with the "Filed Dec 29, 2004" stamp whited out. It's now unfiled, 2005, and I have a California Corporation that's gonna owe another $800 because it was in business on January 1, 2005, even though it is not in business doing anything in California.

You see, paragraph 3 of the dissolution papers filed by me said "The corporation's known debts have been actually paid." It was rejected because they wanted it to say "The corporation's known debts and liabilities have been actually paid."

Now I have to ask, because I'm no lawyer, what's the difference between "known debts have been actually paid" and "known debts and liabilities have been actually paid"?

The difference to me is $800 for 2005.

So, real question boils down to "why would anyone have a California corporation?" The only answer I can come up with is that they just don't know any better.

If anyone out there is thinking of starting a small business, contact me, I can give you tips about why you should avoid registering in California. Believe me the list is longer than this blog…

Or if you want to buy mine for $800, I'd be happy to you. Just think, you could get started with a company that already has 5 years of history…