annual franchise tax

Annual franchise tax is a fee that certain states impose on businesses solely for the privilege of being registered and doing business within their jurisdiction. It’s not based on income or profits but often on factors like the company's size, value, or number of authorized shares. This tax helps states maintain and regulate business activities, fund government services, and ensure companies comply with legal requirements. Even if a business doesn't generate revenue, if it's registered or incorporated in the state, it may be subject to this annual fee.