What Tax Forms Do I File for a California LLC? (Full Guide)
As a business in California, you are responsible for filing the correct tax forms and complying with state law. The business structure and the LLC's taxation election will determine which forms are required when it registers with the Franchise Tax Board.
With over a decade of practice as a corporate attorney, I assisted business owners and entrepreneurs with LLC formation, organization, and taxation.
After extensive research and collaboration with our team of tax professionals in the state, we'll provide you with all the information you need regarding which taxation forms are required to file for a California LLC.
Quick Summary:
- The tax forms that you need to file for a California LLC would depend on how your business entity is classified.
- Single-member limited liability companies are required to file form 568, multi-member LLCs must file Schedule K-1 (568), and corporations need to submit Forms 100 and 100S.
- The California employer tax rate of 3.4% is according to the California Employment Development Department (EDD).
- Since the maximum penalty for unpaid taxes can amount to 25%, I ensure that my taxes are settled before they are due.
Tax Forms a California LLC Should File
The tax forms a California LLC should file will depend on the business structure and organization of the company.
Here are the following tax forms that need to be filed:
1. Tax Forms for a Single Member LLC in California
The single-member LLC in California is treated as a disregarded entity by the IRS. It must file Form 568 (LLC Return of Income), which details the company's financial activity for the year. Additionally, we had to file Form FTB 3522 (LLC Tax Voucher), and pay an $800 franchise tax for a California company [1].
If your LLC's annual gross sales exceed $250,000, you will be required to pay an additional franchise tax.
Read our article for more information about the costs of starting an LLC in California.
2. Filing taxes for a Multi-member LLC
A business in California with multiple members is treated as a partnership for tax purposes.
This means that each member must report their share of profits on a separate Schedule K-I (568), Partner's Share of LLC's Income, Deductions, Credits, etc., filed with the member's California personal income tax return.
Like single-member LLCs in California, multi-member LLCs need to pay their franchise tax to the California Franchise Tax Board.
3. Tax returns for an LLC Corporation in California
Single-member and multi-member LLCs in California can opt to be taxed as a corporation by filing Form 2553 with the IRS.
An LLC opting to be taxed as a C corp should file Form 100 whereas an S corporation classification needs to submit Form 100S to the California Franchise Tax Board [2,3].
"While some people might find it distasteful to pay taxes, I don't. I find it patriotic."
- Mark Cuban, American Businessman & Film Producer
Keep in mind that there's a difference between an S corporation and a C corporation in how they pay the taxes.
You pay federal income tax on your C corporation profits, as well as any money you earn as a business owner or employee. The owners of S corps, on the other hand, report the LLC's revenue on their personal tax returns as personal income.
Most business owners I am acquainted with prefer an S corp tax status to avoid double taxation.
Employer Taxes
If your business entity has employees, you must withhold and pay employment taxes, that cover social security and medicare.
We had to file the appropriate forms with the IRS and state agencies to report and pay each tax. According to the Internal Revenue Service (IRS), as of 2021, over 30 million businesses in the United States are responsible for filing employment tax returns.
Employer taxes are payable to the California Employment Development Department (EDD) after completing your registration, either online or through Form DE-1.
Withholding taxes are paid every quarter through Forms DE-88ALL and DE-9.
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FAQs
What Is the Minimum Tax for a California LLC?
The minimum tax for a California LLC is $800 which covers annual franchise tax. You may also be required to pay other state taxes, such as sales and use tax or excise tax. For more information, consult the California Franchise Tax Board's website.
Do You Have to Pay Taxes on a Foreign LLC in California?
You have to pay taxes on a foreign LLC in California for $800. The tax can be filed and paid online, and you will receive a confirmation number for your records.
References:
- https://www.ftb.ca.gov/file/business/types/limited-liability-company/single-member-llc.html
- https://www.ftb.ca.gov/file/business/types/corporations/c-corporations.html
- https://www.ftb.ca.gov/file/business/types/corporations/s-corporations.html
