Doing business in California

If you are doing business in California, you are subject to our tax laws.

We consider you to be “doing business” if you meet any of the following:

  • Engage in any transaction for the purpose of financial gain within California
  • Are organized or commercially domiciled in California
  • Your California sales, property or payroll exceed the following amounts:

California sales, property or payroll

Year CA sales exceed (either the threshold amount or 25% of total sales) CA real and tangible personal property exceed (either the threshold amount or 25% of total sales) CA payroll compensation exceeds (either the threshold amount or 25% of total sales)
2018 $583,867 $58,387 $58,387
2017 $561,951 $56,195 $56,195
2016 $547,711 $54,771 $54,771
2015 $536,446 $53,644 $53,644
2014 $529,562 $52,956 $52,956

If you own a partnership, LLC treated as a partnership or an S Corporation, include your distributive share of the property, payroll, and sales from those entities.

Public Law 86-272

Public Law 86-272 potentially applies to companies located outside of California whose only in-state activity is the solicitation of sale of tangible personal property to California customers. Businesses that qualify for the protections of Public Law 86-272 are exempt from state taxes that are based on your net income.

These entities, however, still may be considered to be doing business in California and may be liable for filing and paying the applicable amounts.

For more information download the Application & Interpretation of Public Law 86-272 (FTB 1050).

Apportionment and allocation

A trade or business with income inside and outside of California may be subject to California apportionment and allocation rules.

Visit Apportionment and allocation for more information.