California LLC $800 Franchise Tax Due Date (Full Guide)
If you plan to establish a limited liability company in California, you should conform to business state and taxation laws. California LLCs are required to pay franchise taxes to continue operating legally in the state.
As a seasoned corporate attorney who worked with numerous clients, I assisted several business owners with taxation and the filing process.
After extensive research and consulting with experts in California, our team will share our insights on the process, due date, and payment methods to help you properly file your LLC taxes in the state.
Stay tuned as we delve into the critical details that could save you time and money, ensuring your business not only complies with the law but thrives under it.
Quick Summary
- A California LLC has to pay an \$800 franchise tax four months after being formed, and every April 15th in the succeeding years.
- To accomplish this, you have to file Form 3536 with the California Franchise Tax Board.
- According to California's Economic and Statistical Research Bureau, there were a total of 300,381 qualified LLCs during the tax year of 2022.
- To ensure accurate payment and compliance for your franchise tax filing, I encourage clients to seek help from tax professionals, maintain records, and stay updated on tax-related changes.
Deadline for the California Annual Franchise Tax Payments
California franchise tax must be filed and paid every April 15th of each year. However, for newly-registered LLCs, the members are required to pay the fee on the 4th month after the company was officially registered and launched [1].
To illustrate, the Secretary of State approved a client's LLC in May, and they had to pay the initial franchise tax on August 15 of that year.
The LLC may be exempt from paying California annual tax if the company did not conduct business during the year and their registration was approved 15 days or less of the taxable year.
However, it would be important to note that if your company makes more than \$250,000, you need to pay a corresponding fee due on the 15th of the 6th month.
California Annual Franchise Tax For LLCs
Every LLC company in California is required to pay the Annual Franchise Tax of \$800 by filing Form 3536 (Estimated Fee for LLCs). This is mandatory, whether their company has a net income or not within a tax year.
In the context of California's economic climate, it's notable that employment in California has grown at an annualized rate of 2.6% over the five years to 2022, slightly underperforming the national average of 3.7%, according to Ibis World data [2].
On the other hand, LLC companies that make between \$250,000 and \$499,999 during the tax year will have to pay a \$900 additional fee [3].
Remember that as your net income increases, this fee will increase as well. You can get more information about the tax bracket from the State of California Franchise Tax Board.
"There's nothing wrong with the younger generation that becoming taxpayers won't cure."
- Dan Bennet, Founder of Salus Ventures
You can file your franchise tax online or by mail [4].
To file online, follow the steps:
- Visit the California Franchise Tax Board's official website and click on "Web Pay Business."
- Select LLC as your entity type and enter your business ID.
- Once your business identity is verified, click Form 3536, then pay the corresponding fee.
To file by mail, you can download the form online and send it to the following address along with a check or money order:
Franchise Tax Board
PO Box 942857
Sacramento, CA, 94257-0531
The application may take up to 3 months to process. That's why I prefer filing online since it's more convenient and efficient.
For inquiries and verifications, you can contact the Franchise Tax Board by calling 1-800-852-5711 or visiting their website.
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FAQs
What Happens If You Don't Pay \$800 California LLC Tax?
If you don't pay \$800 in California LLC tax, you will be subjected to a 5% penalty each month for unpaid tax.
Do Foreign LLCs Pay California Franchise Tax?
Foreign LLCs pay California franchise tax in order to operate in the state.
References:
- https://www.ftb.ca.gov/forms/misc/3556.html
- https://www.ibisworld.com/united-states/economic-profiles/california/
- https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html
- https://www.ftb.ca.gov/file/ways-to-file/
