California LLC Annual Fees
All LLCs operating in California are liable to the $800 annual fee. Payment is expected by the fifteenth day of the fourth month after your LLC’s fiscal year finishes. The deadline moves to the next working day if it falls on a weekend or holiday. Earnings from your LLC will calculate personal tax. You may use the official fee calculator on the California FTB site to get the exact $800 cost.
The filing fee for submitting your Statement of Information is $20 yearly within 90 days after state approval of your LLC. Afterwards, submit it every 2 years before your LLC’s approval date. Download the form and mail it with the fee to the Secretary of State Statement of Information Unit.
Fee Waiver for New LLCs
People forming a limited liability company or partnership in California from 2021 through 2023 won’t pay the annual $800 minimum business tax the first year. The waiver applies only to those formed during that period.
The IRS treats single-member LLCs as sole proprietorships for tax purposes. So the LLC itself does not pay taxes or file a return with the IRS.
Annual Franchise Tax
When an LLC that has formed or is doing business in California is in its second tax year, it must begin to pay the $800 annual minimum franchise tax each year until it formally dissolves.
With the enactment of SB154, California is waiving the initial formation and qualification filing fees for corporations, limited liability companies and limited partnerships from July 1, 2022, to June 30, 2023.
Tips on California LLC Taxes
To avoid the $800 tax in your LLC’s first year, understand that the California LLC franchise tax exemption from Assembly Bill 85 only covers the LLC’s first year. Your LLC needs to pay the $800 franchise tax payment starting in its 2nd year.
For your 1st year, your California LLC doesn’t need to file Form 3522, but it will need to be filed in the 2nd year. However, every LLC that is doing business or organized in California must pay an annual tax of $800 until you cancel your LLC.
Final Considerations
The Franchise Tax Board will continue to charge you the $800 fee until the LLC is dissolved. The tax is variable and applicable depending on the total income of the LLC for each fiscal year. If you don’t pay the $800 California LLC tax, you may face penalties, suspension of your LLC’s registration and business activities, and loss of your LLC status and benefits.
Note that LLCs that have elected to be treated as corporations for tax purposes do not pay the $800 franchise tax but instead pay a 6.65 percent AMT. LLCs that did not conduct any business in California during a tax year of 15 days or less do not need to pay the franchise tax, nor do LLCs canceled within one year of organizing.
Those who set up an LLC or partnership in California won’t have to pay the annual $800 minimum tax their first year if formed from 2021 through 2023.
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