Businesses in California are required to pay taxes annually. Companies must pay an annual LLC tax known as the Franchise Tax Board (FTB).
Not many people know how to properly file with the FTB for an LLC, but learning how is simple when you have suitable sources of information.
And if you’re still reading this article, the search is over because you finally have the right source of information.
This article will tackle the important things you need to know about the California LLC tax due date.
So let’s get started.
California LLC Annual Franchise Tax
If you have just created a limited liability company, your first tax filing due date will be due after the third month of the current tax year. This means that if you have just formed an LLC on January 10, your subsequent filing due date will be April 10.
After that initial three-month period, the California FTB requires LLCs to file an annual corporate tax return.
If your company was formed on January 10, your due date to file taxes is on April 10, and every tax year after that until you decide to dissolve. The due date for the return is April 15, even when it falls on a weekend.
Does My California LLC Need to File Form 3522 (Limited Liability)?
To pay the California Franchise Tax, LLCs must file Form 3522 (LLC Tax Voucher) with the California Secretary of State. This form is an LLC Tax Voucher that includes information on your liability for this tax year.
If your business did not make any profits or had losses in a tax year, you will need to indicate it in Box 9 of Form 3522.
There are also different Tax Credit options available on the form, which you can file so long as it applies to your business.
If you do not wish to use Tax Credit options for this Tax Return, write “0” in Box 9 of your voucher.
You need to submit Form 3522 with the California FTB yearly, but you can also do it any time before the June 30 due date.
If you are self-employed, this Tax Voucher needs to be mailed to FTB with your Tax Return form (Form 568) and the Tax Penalty due.
You will receive a copy of Form 3522 if you wish to use it for Tax Credit purposes or Tax Penalty payments.
So does your California LLC need to file Form 3522? Yes, it is required by the California Tax Board every Tax Season.
Does My California LLC Need to File Form 3536 (Estimated Fee for LLCs)?
Form 3536 pays an Estimated Fee for LLCs that make more than $250,000 in annual gross receipts. In addition to paying Franchise Tax Board Franchise tax, LLCs with more than $250,000 business income must file Form 3536 every year.
This additional fee depends on how much an LLC company makes.
If your LLC does not earn that much in annual gross receipts (total revenue), you need not file Form 3536 (Estimated fee for LLCs). This form is first due by the “15th day of the 6th month” after your LLC is approved.
After the first due date, any future Estimated Fees due date is June 15 each tax year.
The Franchise Tax Board (FTB) recommends filing and paying this form as soon as possible because:
- If you pay it late, penalties and interest will accrue after the due date.
- Estimated Fee Payments are not deductible for State Income Tax purposes (though the LLC may pay franchise tax in installments).
- There is no minimum Franchise Tax payment while your LLCs estimated fee payments are current.
What is Form 568?
Form 568 is a California tax return form, and its typical due date is March 15 or April 15 each tax year. All California LLCs must file Form 568.
Filing a Limited Liability Company Return of Income (Form 568) to the California Franchise Tax Board registers your California LLC with California.
California collects LLC fees, California taxes, California LLC fees, California LLC taxes, California Secretary of State filing fees, and more.
All California Limited Liability Companies are required to file Form 568. If your company has done business or had a taxable income source in California during the calendar tax year, even if your California company did not make a profit during the tax year, you must file California Form 568.
Is the 800 LLC fee deductible for California?
If your business is located in the state of California, you must pay an $800.00 LLC fee to both the Secretary of State and the Franchise Tax Board every tax year your company operates. This fee is not deductible from federal income tax.
It is also non-deductible for California taxes since businesses must keep track of all money they spend on their business-related expenses throughout the tax year.
The LLC fee is not considered a deduction because it does not represent any expense but rather the cost associated with incorporating in California, which includes being responsible for all business-related expenses.
What Happens if You Don’t Pay $800 California LLC Tax?
If you have recently started a California LLC and neglected to pay the 800 annual tax, make sure to read this vital part. Ignoring the 800 yearly state franchise tax fee for an LLC incurred by California law can have serious consequences.
The 800 Franchise annual tax in California's due date is on or before January 1 of each tax year. If the 800 annual tax is not paid before the tax extension due date, there are serious consequences. This happens four months after the original due date.
Penalties for not paying 800 annual fees of LLC in California include:
- A penalty of 10% of the 800 annual income tax is due. This penalty will accrue every month until 800 is paid in full.
- A fee of $800. This fee is due immediately upon the 800 annual tax not being paid by April 15, the extended due date for 800 LLC tax.
- As of May 1, unpaid 800 fees are subject to an additional 10% penalty per month on the 800 unpaid balance.
Not only will you incur a penalty, but your LLC in California cannot be approved for a FEIN number until 800 is paid in full. 800 delinquency also triggers the automatic annual fee of 800 that will have to be paid to stay active.
- An 800 delinquent balance can become tax debt with the Franchise Tax Board.
- The Franchise Tax Board may even dissolve your LLC without your knowledge, and they will report this to the California Secretary of State.
If you are a California taxpayer, you must meet the requirements of The Franchise Tax Board. It applies even to quarterly estimated tax payments like payroll taxes.
Form 565-B-S, also known as The Business Entity Annual Information Return, will be sent to all business entities every tax year after April 15.
If this form was not filed on time, or if it was filed but incomplete, then a penalty fee might be issued within 90 days from the day when this form was due.
This statement is usually referred to as SOS Penalty. You can check your eligibility for SOS Penalty by requesting an Email from the Business Office of FTB and by looking at your Form 565-B-S through their website.
To avoid paying extra bucks for filing tax forms late, it is always better to do it months before the tax filing due date.
All California businesses must file their first Statement of Information with the Secretary of State within 90 days of filing the original Articles of organization.
The penalty for a late filing due date is $250 per month, with a maximum penalty of $7500. Late income tax filings may have additional penalties from the Franchise Tax Board.
The Statement of Information is filed with the Secretary of State to provide the public record information on the legal name and address of an LLC’s resident agent, principal office, or any parent entity. It includes a list of the names and addresses of all managers or members.
The Statement of Information may be filed online or by mail, as long as they fall before the due date.
An LLC may change its Statement of Information at any time by filing a new statement online through the Business Entities Online Filing Center. A $50 fee is charged for paper filings.
The Franchise Tax Board will then assess a penalty for the late filing due date or failure to file tax forms. The penalty amount varies depending on the entity.
Domestic and foreign corporations - $250 penalty; applies for any corporation, both domestic and foreign-based, that had never filed a return before or was out of business for more than five tax years.
Domestic nonprofit corporations - $50 penalty; applies if the corporation is tax-exempt and did not hold membership meetings during the tax year; excludes close corporations and charitable trusts with net incomes over $100,000 in California income tax returns or comparable amounts from federal income tax returns processed by FTB.
Domestic and foreign limited liability companies - $250 penalty.
A suspended LLC is also referred to as ‘Out of Business LLC.
A suspended LLC results from a founder who has neglected to file Statements of Information with the Secretary of State or file returns with or pay amounts due to the Franchise Tax Board, or both of the previous.
The status “suspended” only means that they can no longer operate in California, but it does not mean that the state has canceled their business license.
If an entity has never filed any return in California before, then FTB will notify it after five tax years have passed from its formation due date.
Suppose an entity did file returns before but never met all requirements of filing returns correctly or fulfilling other requirements such as paying estimated quarterly taxes on time. In that case, the Franchise Tax Board will send it a notice after three tax years have passed from the due date for filing these returns.
It is safe to say that foreign LLCs should also pay attention and be aware of these notices because they may affect them as well, even though they might not be required to file any return in California yet.
When you receive such a notice, the first step you should take is to contact the Franchise Tax Board and ask for more information.
You can then try to send them your personal tax returns, amended returns, or some other documentation that will prove their mistake, and you should also be able to resolve this issue.
Finding an Accountant
One can find an accountant by visiting legal advice sites. If legal matters are your concern, you should visit legal websites or legal services that provide lawyers and support staff.
This account’s assets can range from $100,000 to $10 million and has information on state taxes, international taxation, and other legal issues.
It is good for finding legal representation and backgrounds who specialize in accounting and taxes.
This professional will also provide tax planning services such as business plans, cost segregation studies to determine depreciation deductions for residential real estate properties; individual income tax returns anywhere in the world; workforce programs; retirement plans; employee benefit plans; executive compensation plans - high net worth individuals are allowed to save on quarterly taxes with legal tax termination strategies, wealth management, and estate planning.
One can also ask their legal adviser or lawyer for an accountant in the area who has experience with legal matters related to quarterly estimated tax payments.
There is a website called FindLaw that allows users to search for legal assistance via geographic location. This site offers legal help in 140 areas, including accountants, legal aid options, and legal issues that concern legal professionals themselves.
It is possible to find an accountant by searching online professional association websites.
Associations provide directories where one can search for accountants by name, expertise, or location they are located at.
It is advisable to find an accountant who will give you legal advice and help you with taxation and laws to operate your LLC and pay taxes correctly. An accountant will be a big help for you.
How to Pay LLC Fee Online
If you want to pay the fee on your own, then you should visit the official website of the California Secretary of State.
There is a link on their homepage for this very purpose. First, click on the link, and you will be directed to another page where you can review the payment options.
Now, these are three methods that allow you to pay your LLC fee online:
- You can use your checking account (ACH) or savings account (ACH). It is one of the easiest ways to make estimated tax payments. The advantage of this method is that it is faster, and you will receive a payment confirmation from the state of California.
- You can use a debit or credit card. This method is only applicable if there are no errors on your California LLC formation documents, which you have submitted to the Office of the Secretary of State. If any error is found during submission, your debit or credit card will be used instead.
- You can also use a payment plan to speed up the process of payment and save on interest rates. It is just like a loan, but you have to repay it with an extra fee of $15. This way, you don’t have to collect money from different sources and can pay it all in one go.
After you choose the way of payment, enter your details like name and address, along with your LLC number (which is located on the top right-hand corner of your formation document), and click on continue.
Then you will be asked to provide some more personal information like phone number, email address, etc. You can save your credit or debit card details and use them in the future for paying LLC formation fees online.
After you submit the information, click on continue to print out a payment confirmation page. This is something like your invoice.
Take note of its number and keep the confirmation page safe with you till your status is updated as “approved” by the state of California.
Did California Extend Tax Payment Extension?
Yes. A recent California Franchise Tax Board news release explains that California grants an automatic extension to file a state tax return. No form is required. For taxpayers wanting the maximum amount of time to file, you must file by October 15, 2021. You must also pay your balance due by May 17, 2021 – that’s the same day as the federal deadline.
What Is the Penalty for Filing Taxes Late in California?
As already stated above, the penalty for filing tax returns late in California depends on the amount of taxes owed. Generally, the penalty is 1% per month that your return is filed after the due date, or at least $205 (which may be adjusted annually). However, there are exceptions to this penalty based upon reasonable cause and satisfactory explanation.
Can You Skip Filing Taxes for a Year?
No. As a citizen of the United States, it is your responsibility to file your taxes by the deadline every year. If you cannot afford to file your taxes by the due date, contact the IRS, and they may be able to offer payment plan options or other exceptional circumstances that can alleviate some of these financial burdens.
To sum this article, paying the tax on time is preferable to facing the consequences of paying late or not paying at all. Because taxation is a complicated subject, this article strongly advises you to obtain legal assistance from a reputable lawyer or accountant.