Under California’s LLC Act, foreign LLCs must register with the state if they conduct business within its borders. When a company establishes a physical presence in California, it must also collect sales tax on its sales to residents of the state. If your company deals with financial information, consumer data, or engages in the sale of consumer data, it is important to ensure compliance with California privacy laws and corporate registration requirements.
Foreign LLC Registration Process
A California foreign LLC will enable you to conduct business in California if you initially formed your company in another state. Registering as a foreign LLC is an expansion of your existing LLC into another state. This guide covers everything you need to know about registering your business as a California foreign LLC.
In California, sales tax is levied at a flat rate of 7.25% on the price of tangible goods and services sold within the state. LLC members are typically able to decide how they wish to be taxed. LLC taxation varies between single or multi-member LLCs, or LLCs that elect taxation as corporations.
Taxes for LLCs in California
The California corporate tax rate is 8.84% (flat rate). This tax rate applies to LLCs that elect to be treated as corporations and report net taxable income. Without a profit, they pay a flat alternative minimum tax (AMT) of 6.65%.
All domestic and foreign LLCs in California must pay an annual franchise tax of $800 to the California Franchise Tax Board. LLCs taxed as S-Corps are subject to a 1.5% corporate tax rate. C-corp LLCs pay a 8.84% corporate tax rate plus an annual franchise tax of $800.
For more information on due dates and instructions to file and pay this fee, contact the California Franchise Tax Board at 800-852-5711, Monday through Friday from 8am to 5pm Pacific Time.
Each LLC is treated by California either as a sole proprietorship when it only has one person, or as a partnership when there are two or more members. The net income is taxed as self-employment income at 15.3 percent, plus federal and state taxes.
Corporations that don’t report a net income profit pay the Alternative Minimum Tax (AMT) instead of the corporate tax. The AMT in California is 6.65%.
In California, sales tax is levied at a flat rate of 7.25% on the price of tangible goods and services sold within the state.