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California LLC - Annual LLC Franchise Tax

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Step-by-step instructions: https://www.llcuniversity.com/california-llc/annual-llc-tax/ California charges an $800 Annual LLC Franchise Tax on LLCs. This tax is due by ALL LLCs regardless of income or business activity. This is a "prepay" tax, meaning it pays for the current year. Failure to file before the deadline will result in the State charging late fees and penalties, and they will eventually dissolve your LLC if you do not pay the $800 Annual LLC Franchise Tax. This is not a popular requirement for California, but it is mandatory, and it is the cost of doing business in the State. There is no way to get around this tax. If you want to form an LLC in California, you have to pay this $800 tax within 4 months after you file your LLC and then again by April 15th of each year. [=================================] -- FORM 3522: 2016 CA LLC $800 TAX VOUCHER -- • https://www.ftb.ca.gov/forms/2016/16_3522.pdf • All LLCs must file. • Due by the 15th day of the 4th month after your LLC is filed. • Then by April 15th every year going forward. [=================================] -- FORM 3536: 2016 ESTIMATED FEE FOR CA LLCs -- • https://www.ftb.ca.gov/forms/2016/16_3536.pdf • Only needed if your LLC makes greater than $250,000. • Due by the 15th day of the 6th month after your LLC is filed. • Then by June 15th every year going forward. [=================================] -- FORM 568 – 2015 CA LLC RETURN OF INCOME -- • https://www.ftb.ca.gov/forms/2015/15_568.pdf • All LLCs must file. • Due by the 15th day of the 4th month after the end of your taxable year. • This will most likely be April 15th if you run your tax year January to December (which 99% of our members do). [=================================] -- CA FRANCHISE TAX BOARD CONTACT INFO -- HOURS: Monday – Friday, 7am – 5pm PT PHONE: 888-635-0494 (Collections, option 3, option 3, option 0) 800-852-5711 (Main = Taxpayer service center, general questions) WAIT TIMES: Wait times can be quite long if you call during the middle of the day. Get up early and call them at 7:00am to save yourself time. LIVE CHAT: https://www.ftb.ca.gov/aboutFTB/Live_Chat.shtml MAIN WEBSITE: http://www.ftb.ca.gov/ [=================================] -- DISCLAIMER -- This information is provided for educational purposes only and in no way constitutes legal, tax, or financial advice. For legal, tax, or financial advice specific to your business needs, we encourage you to consult with a licensed attorney and/or CPA in your state. LLC University® is a registered trademark of LLCU Media Group, LLC. © LLCU Media Group, LLC. All rights reserved. https://www.llcuniversity.com [=================================]
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Text Comments (58)
LLC University (4 months ago)
Hey folks, make sure to check the site for most up-to-date information: https://www.llcuniversity.com/california-llc/annual-llc-tax/. Or select your state and start forming your LLC with our free guides: https://www.llcuniversity.com/
Ryan Roth (19 days ago)
So if you file your articles of organization on January 1 and say if it gets approved by the 15th, your $800 franchise tax is due March? Then again again on April 15?
LLC University (19 days ago)
Hi Ryan, nope. If your LLC is approved on January 15 2019, January is "month 1". The 2019 payment will be due by April 15th 2019. The second payment will be due by April 15th 2020. However, if you file your LLC online, you can choose your effective date ("future file date"). We're pushing an update live on this page within the hour: https://www.llcuniversity.com/california-llc/forms/. You'll be able to find the instructions there. Hope that helps :)
Healthy With Hilary (3 months ago)
So what if I form my LLC in the month of February? Would I need to pay the annual tax that same year in April, along with the initial filing fee?
LLC University (2 months ago)
Hey Hilary, if you form an LLC in February 2019, no, your first payment is not due on April 15th. Your payment for 2019 is due by May 15th, 2019. Then the following year (2020) and all years following, it'll be due by April 15th. Hope that helps.
Akoben Renaissance (3 months ago)
California is a God damned RACKET! (smh)
LLC University (2 months ago)
It is quite an expensive state.
SunshineCloudyMusic (4 months ago)
man.. the tax people do not!.. want to help the people in need.. im a very positive person, but its been hours, and hours and i still haven't finished my shit!!
LLC University (4 months ago)
Bummer to hear that. We recommend calling as early as possible for the shortest wait times. People are usually friendlier at that hour.. and same things goes for calling on a Monday or a Tuesday morning. Hope that helps.
Cesar Velasquez (5 months ago)
Does everyone with a LLC need to fill out form 720 for IRS?
LLC University (5 months ago)
You're welcome Cesar :)
Cesar Velasquez (5 months ago)
Thank you! I appreciate your help with all your advice and videos!
LLC University (5 months ago)
Hi Cesar, we're not too familiar with the details of the logistics industry, so I recommend reaching out to an accountant. Some recommendations on finding one are here: https://www.llcuniversity.com/how-to-find-an-accountant-for-your-llc/. I believe the tax details (if they are owed, what's filed, how much, etc.) are around whether you are purchasing new, the weight of the vehicle, if modifications are made, and there may be a tax on highway usage. Hope that helps.
Cesar Velasquez (5 months ago)
So I am in the process of becoming owner operator and buying a truck. Will I need to file for form 720 for that type of work? Thank you!!!
LLC University (5 months ago)
Hi Cesar, no. Form 720 is for those who have businesses that need to pay excise tax.
Joshua Bluegreen (7 months ago)
Huge Thanks for this Very Helpful Video!
LLC University (7 months ago)
You're very welcome Joshua!
Ashley Quinter (9 months ago)
So i have never \had to this this becuase my business does under 100,000 in califronia... did miss something here ?
LLC University (9 months ago)
I'm not 100% sure, but it would have been nice that you were properly informed. Apologies to hear :( But also glad you've found out now... and it didn't go to long unnoticed (I'm an optimist ;) I recommend calling the California Franchise Tax Board and ask for a review of your account and to see how much you owe and what needs to be filed. I recommend calling them early in the morning to avoid longer hold times. Hope that helps.
Ashley Quinter (9 months ago)
when legal zoom set my llc for me in 2015 wouldnt they have provided me this information?? im so annoyed im just learning this? no letters or nothing asking me for money... what is a person supposed to do or think when they see this???
LLC University (9 months ago)
Hi Ashley, you still have the pay the $800 Annual Franchise Tax every year (Form 3522) regardless of income or activity. If you make less than $250,000, then you don't have to file the Estimate Fee (Form 3536). Note, you must also file CA LLC Return of Income every year (Form 568). You can find more details here: https://www.llcuniversity.com/california-llc/annual-llc-tax/. Hope that helps.
Blinking Brake Lights (11 months ago)
Mind doing a video on how to dissolve a “LLC”?
LLC University (11 months ago)
You're welcome!
Blinking Brake Lights (11 months ago)
LLC University thank you for the prompt reply.
LLC University (11 months ago)
We have dissolution items on our list, but they won't be out for a while. Here's the instructions though. Use form LLC-4/7 (if all LLC Members agree to shut down). You can find that form here: http://bpd.cdn.sos.ca.gov/llc/forms/llc-3--4-7.pdf (pages 6, 7, and 8). There is no filing fee with the Secretary of State, however, you must file a final return with the CA Franchise Tax Board. Hope that helps.
Edgar Gonzalez (1 year ago)
Hello, I have a quick question. If I file for an LLC right now (January) will I have to pay the Annual Franchise Tax twice ($1600) or once ($800)? Thanks in advance.
LLC University (1 year ago)
Hi Edgar, nope, you won't have to pay $1,600. It'll just be $800. You'll be making your 2018 payment the "15th day of the 4th month" after your LLC is approved. So if you're LLC is approved in January, January will count as "month 1". Meaning, your 2018 payment (of $800) will be due by April 15th, 2018. You'll then make each year's payment by April 15th. So 2019's payment will be due by April 15th, 2019, and so on. If your LLC is approved in February, your 2018 $800 payment will be due by May 15th, 2018. Hope that helps!
Murali Krishna (1 year ago)
Hi, I have a doubt about franchise tax, my company doing staffing business incorporated in Texas we don't have any franchises in California but some of the employees worked from CA state (W-2 employees and 1099) please let me know do we need to file a franchise tax for CA state.
LLC University (1 year ago)
Hi Murali, we cannot offer tax assistance, as this is not our area of expertise. We recommend speaking with an accountant (or a few). We have more information here: https://www.llcuniversity.com/how-to-find-an-accountant-for-your-llc/.
Dave Hansen (1 year ago)
Does CA charge residents that are out of state business owners? I heard that even though no business is conducted in CA, if you live in CA you must pay...
LLC University (1 year ago)
Hi Dave, we're unable to answer tax questions like that and I'm honestly not sure. The CA Franchise Tax Board can be strict. I'm sorry to leaving you hanging and wish I could be more specific. I recommend giving our "knights of the roundtable" strategy a go. Details are here: https://www.llcuniversity.com/how-to-find-an-accountant-for-your-llc/
L M (1 year ago)
Is the $800.00 annual fee due by the 4th month of the initial LLC registration (From LLC-1)? or by the 4th month from the filing of the Statement Of Information (Form LLC-12)? Both forms are not always filed together it seems.
LLC University (1 year ago)
Your Articles of Organization should just have one "FILED" stamp. The 12-digit number at the top is your California Secretary of State File Number. So in your case, I'd assume your LLC was approved in May and your payment is due by August 15th. Hope that helps. If you're not sure, just file in August anyway. Worse case: it's a little early ;)
N P (1 year ago)
Hi, I noticed that most articles refer to 4th month from 'filing' but you talked about 'Approval' so can you clarify for me - a) I submitted my forms at the end of May. It was stamped 'Filed' in May. b) I believe approval was granted first working week of June (there's a second stamp with a June date above the SOS signature on the final page of the document) My question is - when is the $800 due for me - August or September? Thanks
LLC University (1 year ago)
It is the 4th month after the approval of your Articles of Organization (LLC-1). So if your LLC is stamped today (June 26th), June is "month 1". So the first $800 payment (which pays for the 2017 year) is due by September 15th 2017. In 2018, it's due by April 15th. In 2019, it's also due by April 15th. And so on for every year going forward.
TechKool Kool (1 year ago)
Hi, I'm little confused about form 568. If I form my LLC in April 2017, do I wait for year 2018 to file my first form 568 for my LLC along with normal tax return filing? Thanks,
LLC University (1 year ago)
Yes, if your LLC is formed in 2017, then Form 568 is due in 2018. Please also speak with an accountant about all filings needed with the FTB.
My wife and I are treated as disregarded entities and I filed schedule C in my Federal taxes. Does she still need to file form 568?
LLC University (1 year ago)
Most likely yes, but please do double check with your accountant. Thank you.
MrTroll328 (1 year ago)
I formed my LLC March 17, 2017 do I still have to another tax the upcoming April 15 date?
LLC University (1 year ago)
The first payment of the CA Franchise Tax is due the 15th day of the 4th month after the LLC is formed. March is considered "month 1", so your first payment is due by June 15th 2017. This pays for the 2017 tax year. Then your next payment will be due by April 15th 2018. Then it's just April 15th every year going forward. Hope that helps!
daisyhinojosa23 (1 year ago)
My member & I founded our LLC in oct 2015 but closed it in dec 2016. We didn't file taxes for 2015. We haven't done any business or made any profits throughout the life of the llc. Aside from paying the franchise tax board, what other fees or penalties should I expect? We didn't make any money so I'm also not sure how to report it. I'm not sure whether we should file it as a corporation or a llc-partnership etc. What's your advice?
LLC University (1 year ago)
In this situation, I'd call an accountant. Too many variable here. Apologies I can't be more detailed.
Welby Mariur (1 year ago)
Sir I have a question. Does the state of California require their Residents who are serving in the military that are stationed at a different state to pay state tax?
LLC University (1 year ago)
Hi Welby, this I'm not sure about. Best to reach out to a local accountant. Thank you.
Sanjay Gupta (1 year ago)
Thanks for good info. Quick question , if LLC is formed on OCT 14 2016 then Annual Tax is due to JAN 2017 or Feb 2017. After paying 800$ , when is next payment due ? Is it April 2017 or in 2018 ?
Cliff L Jimenez (11 days ago)
Hello LLC Univ, you’ve indicated two the same due dates, April 17, 2017. Should the next yearly filing due date be on. April 15, 2018? Thank you.
LLC University (1 year ago)
Hi Sanjay, thanks for voicing your concerns. Our CA videos are best viewed on this guide: https://www.llcuniversity.com/california-llc/. They are laid out in a better order. You'll find LLC-12 (Statement of Info) video here: https://www.youtube.com/watch?v=XEzLASCt46k. Regarding 1065 and K1s, we advise you work with an accountant on that. Our video series does not cover taxes due to the wide variation in types of business, where they are located, and how they derive their income. I hope that's helpful. Let me know if you need anything else.
Sanjay Gupta (1 year ago)
thanks a lot. I noticed that you missed quite a few filing requirements. LLC12 which needs to be filed in 3 months with 20$ fee and not filing in 3 months, they will charge 250$ penality. what a way to make money. another is form 1065/ schedule k1. can you please comment on these ?
LLC University (1 year ago)
Hey Sanjay, great question. Yea, the due dates are quite confusing. Since your LLC existing in 2016, you owe a franchise tax for that year (was due Jan 15th, 2017). Then your 2017 payment is due by April 15th, 2017. After that, you'll pay and file it every year, due by April 15th, 2017. You kind of have "back to back" payments because the LLC existing in 2016 for a few months. Hope that helps clarify.
Jason Denney (1 year ago)
Very helpful videos! Wish I had found them when I filed my LLC, as I missed reading the part about paying the Annual LLC Franchise Tax immediately after filing and am several months overdue. I called the CA State Taxpayer service center, and in my case, since it was before the end of my first taxable year the penalty fee should only be $30. If I had missed paying after the first taxable year, it could have increased to $200+. I was told to pay the late $800 tax asap, then wait for a bill to pay the penalty fee. Also, I shouldn't forget to pay for the next years $800 tax as well, obviously. Hope that helps anyone else who might have made the same mistake!
Incubell Valdez (30 days ago)
The same thing happened to me. Mine was about 3 months overdue and i submitted it ASAP... phew!I’m so glad the fee is $30 and not $200!
LLC University (1 year ago)
Hey Jason, you'r very welcome! So glad you caught this now, before things got worse. And thank you for sharing this tip with others. It's very helpful. I'm going to pin it to the top of the comments.
trinhkets (1 year ago)
$250,000 in gross and not net income
LLC University (1 year ago)
Correct. The estimated LLC fee is based on gross, not net income. Thanks for clarifying :)
prettyrification (2 years ago)
Very helpful, good thing I watched your video before filing an LLC! Thank you!
LLC University (2 years ago)
You're welcome! Glad it was helpful! Did you go through all the videos on youtube, or did you follow the course on our site? Just curious ;)
vrcwest (2 years ago)
Very informative. This is one of the best videos that TRUELY answered all my questions about LLC's filing and fees.. Thank you!
vrcwest (2 years ago)
:)
LLC University (2 years ago)
Thanks so much!! These types of comments make my day!!! :) We work really hard to make our information super easy and actionable. So glad it was helpful for you. Our full CA course is here if you need it: https://www.llcuniversity.com/california-llc/ (lessons in sidebar). Let me know if you need anything else!

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