If you are an LLC in California, you need to know what the LLC fee is all about.
LLC, short for limited liability company, is a business structure that has become popular in recent years due to its flexibility and tax benefits.
If you start to operate an LLC business in California, you need to pay the first $800 fee in the 4th month after the approval of your LLC.
After that, you will also need to pay another $800 in annual tax due date on April 15th every year.
To pay that, you need to file Form 3522, called the annual LLC Tax Voucher.
California Annual Franchise Tax for LLCs
Every LLC company in California is required to pay the California Annual Franchise Tax of $800 whether their company has an income or not within a tax year, including gross receipts.
On the other hand, LLC companies that make more than $25,000 or more during the tax year will have to pay a $900 additional fee.
You will have to file a return called Form 3536 (Estimated Fee for LLCs).
Remember that as your income increases, this fee will increase as well.
However, if your company makes less than $25,000 during the minimum franchise tax year, you don't have to worry about this additional fee to conduct business as usual.
Due Date for the First Year California Annual Franchise Tax Payment
The tax fee must be paid in the fourth month after filing for LLC, which is around six to ten months after registering your business.
And this minimum franchise tax payment will be during the fourth quarter of every tax year.
For example, if you filed your LLC application in January 2022, you need to pay your annual fee by October 15, 2022.
Now, you need to remember that even if your LLC annual California franchise tax's due date is on April 15, you should not send it at that time.
What you should do instead is to file for an automatic extension with the California Secretary of State first before paying the fee.
The required Form 3536 must be filed to the California Secretary of State by mid-March so you can get an automatic 6-month extension until October 15.
If you are wondering why the fee should not be sent to the Franchise Tax Board before filing for Form 3536, it is because there is no way for them to accept your payment if you do not fill out this form first.
The annual $800 would have a due date every April 15 during the next four years until your company has to file for renewal.
This would be done by filing form 3538 and submitting it to the California Secretary of State on or before the 15th day of the 4th month after any fiscal year ends on March 31.
California LLCs are obligated to pay taxes in full every year even if they still owe money from the previous taxable year.
Failure to include the tax fee on your tax filings would mean not only late fees but also eventual suspension of your company's status as a legal business entity in California.
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Finding a California Accountant
If you are looking for an accountant to handle your minimum franchise tax, you can find the one best suited for your business with Thumbtack's free online service.
Hiring an accountant within Thumbtack helps provide transparency throughout the hiring process, allowing you to see reviews of each professional before making a final decision.
By using Thumbtack's free service to hire an accountant for legal services, you can ensure that your company gets the best service for the lowest price.
How to Pay the $800 Franchise Tax
Paying the $800 Franchise Tax is a crucial obligation for California LLCs. To fulfill the annual California franchise tax requirement, LLCs have various payment options.
For online payments, LLCs can choose from electronic methods and provide the necessary information, including the taxable year and LLC details.
Mail-in payments require specific forms and documents, with payments sent to the designated mailing address. It is important to note that the first-year annual tax for newly formed LLCs may differ from subsequent years.
To ensure accurate payment and compliance, we encourage you to seek help from tax professionals, maintain records, and stay updated on tax-related changes.
California Franchise Tax Board Contact Info
To contact the Franchise Tax Board, you can call 1-800-852-5711 or visit their website.
They are responsible for processing minimum franchise tax returns and issuing tax refunds in the state of California, including non-residents who work in the state.
They are also responsible for processing estimated tax payments and tax forms, including the California State Personal Income Tax Returns (Form 540) and California Fiduciary Income Tax Returns (Form 541).
FAQs
Do All LLCs Have to File a Return?
In general, most states require LLCs to file various returns, such as the Federal tax return.
The state uses these returns to ensure that California LLCs comply with state laws and regulations, including those that govern limited liability companies' taxation.
Is the 800 LLC Fee Deductible for Franchise Tax?
No, the $800 fee is not deductible for tax purposes.
What Happens if You Don’t Pay California LLC Tax?
If you neglect or refuse to pay your California LLC tax dues with impunity, then your business entities will most probably face the consequences.
For instance, the state could dissolve your LLC. This is one of the direst results of failing to pay the minimum franchise tax before the extended due date.
Other possible implications are fines or penalties, though these are not as severe as dissolution. When this happens, consider hiring legal services like a law firm for legal help in this situation as your legal representation.
Annual California Franchise Tax $800: Final Thoughts
Overall, it's critical to pay all of your franchise and net income taxes on time, particularly whether they're an LLC fee or a yearly tax.
It is essential to pay your tax and obey the taxation rules given by the country where your LLC is located to safeguard your business from penalties.
Consider getting a tax professional or a law firm to help with the estimated tax payments.
