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Guide to Taxes for New California LLCs

Congratulations on your new business! As a new business-owner, you will be encountering a myriad of business, tax, and legal issues related to your new business. This sheet is intended to give you an overview of the tax matters that could apply to you.  This sheet is not and should not be considered legal advice, as it does not consider the unique circumstances of your business and business activities. If you need legal advice concerning your business activities, please contact us and we will be more than glad to assist you.

  • State LLC Taxes.
    • LLCs Taxed as Corporations. If you have elected to be taxed as a corporation, you must file California Form 100. The California Form 100 must be filed by the 15th day of the 3rd month after the close of the LLC’s taxable year. The LLC will be taxed at the corporate tax rate of 8.84 percent and will be subject to a minimum tax of $800.  If the Limited Liability Company is classified as a corporation and files California Form 100, the following estimated tax guidelines apply.
      • The estimated tax is payable in four installments.
      • Installments are due and payable on April 15, June 15, September 15, and December 15.
      • Corporations complete Form 100-ES to report their estimated taxes.
      • Additionally, members may have to make estimated tax payments for their own reporting purposes.
  • LLCs Taxed as Partnerships or Disregarded Entities. In California, LLCs that are taxed as partnerships (2 or more members) or disregarded entities (1 member) must pay a minimum of $800 in tax fees to the California Franchise Tax Board annually (Form 568). In addition, if your LLC’s net annual income exceeds $250,000, you may be required to pay an additional “fee” with your annual tax return. To get more information, please click here:  https://www.ftb.ca.gov/forms/2013/13_568bk.pdf.  California Form 568 must be filed by the 15th day of the 4th month after LLC forms, and then annually thereafter. You have the option to pay the LLC tax fees online, but generally not initially.  To register to pay online, click here: https://webapp.ftb.ca.gov/MyFTBAccess/iRegistration.aspx

If the Limited Liability Company is classified as a partnership or disregarded entity and files California Form 568, the following estimated tax guidelines apply:

  • Estimated LLC fee is due by the 15th day of the 6th month.
  • Members may have to make estimated tax payments for their own reporting purposes.
  • The LLC treated as a partnership may be required to withhold taxes if the partnership distributes California source taxable income to a nonresident member.

 

  • Non-Residents of California. In addition, LLC members who are not residents of California must file FTB 3832, Limited Liability Company Nonresident Members’ Consent with Form 568. FTB 3832 is signed by the nonresident individuals and foreign entity members to show their consent to California’s jurisdiction to tax their distributive share of income attributable to California sources. The LLC must pay the tax for every nonresident member who did not sign a FTB 3832.
  • Property Taxes. Property taxes may be owed pursuant to county assessment, state-assessed property, private railroad car, and timber yield. For more information about property taxes, please click here: http://www.boe.ca.gov/proptaxes/proptax.htm
  • Employment-Related Taxes and Insurances. If you have employees or will be hiring employees, you will need to comply with California laws relating to Payroll taxes, Worker’s Compensation Insurance, Unemployment Insurance Tax, and Disability insurance. For more information on labor law requirements for hiring employees, please see the California Employer’s Guide: http://www.edd.ca.gov/pdf_pub_ctr/de44.pdf
  • Special Taxes and Fees. If your business is involved with alcoholic beverages, tires, tobacco, fuel, telephone/mobile telephone, energy resources, fire prevention, hazardous wastes, marine invasive species, lead, oil, water, underground storage tanks, or similar activities, you may be subject to special taxes. Please click here for more information: http://www.boe.ca.gov/sptaxprog/tax_and_fee_programs.htm

WHERE CAN I GET MORE HELP ON TAX MATTERS? We recommend that you consult with a tax professional. Because we are not tax lawyers, we are not qualified to provide tax advice. Your CPA will have the best information about you and your company’s unique tax situation to be able to answer your tax questions. This sheet is intended as an overview only to give you a roadmap about the tax issues that could apply to you.

 

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