California LLC vs. General Partnership

A general partnership offers zero liability protection. A California multi-member LLC costs $800/year in franchise tax for complete liability protection. The choice is clear for any business with meaningful revenue or risk. See all comparisons.

The $800 Question

Is $800/year worth liability protection? If your partnership has:

• Any revenue over $10K/year: yes
• Any client-facing work: yes
• Any physical operations: yes
• Any employees or contractors: yes

A single lawsuit against an unprotected partnership can cost each partner their personal assets.

FAQ

Does a partnership avoid the $800?

Yes — general partnerships with only individual partners do not owe the $800 minimum franchise tax. But the unlimited personal liability makes this savings irrelevant. The $800 is trivial compared to potential personal loss from one lawsuit.