Understanding California Franchise Tax for LLCs
To avoid back-to-back California Franchise Tax payments, you can hold off on forming your business until January or include a "future file date" on your articles of organization or incorporation when you file. If you do not pay your minimum LLC tax of $800, the FTB will charge you a penalty, and eventually, if you do not pay the tax, your LLC will be suspended.
Important California LLC Tax Information
California LLC tax rates are: $800 for LLC tax, an LLC fee that ranges from $0 to $11,790, and FICA tax at 15.3% of taxable wages. Every LLC that is doing business or organized in California must pay an annual tax of $800. This yearly tax will be due, even if you are not conducting business, until you cancel your LLC. You have until the 15th day of the 4th month from the date you file with the SOS to pay your first-year annual tax.
Consequences of Not Paying California LLC Tax
If you don’t pay the $800 California LLC tax, you may face some serious consequences, such as late fees and suspension of your LLC’s registration and business activities until you pay the tax or file an application for reinstatement. You will also lose your LLC status and any benefits associated with it, such as liability protection and tax deductions.