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California LLC’s are subject to an $800 annual franchise tax. The annual franchise tax is prepaid for the privilege of doing business in California, and is due and payable on or before the 15th day of the 4th month after the beginning of the taxable year. Annual California Limited Liability Company Fee. In addition to the annual franchise tax above, every California LLC must pay a fee based on total annual income. (This is similar to a gross receipts tax.) The LLC fee is due on or before the 15th day of the 4th month after the close of the LLC’s taxable year. For taxable years beginning on or after January 1, 2005, the following tax table would be used to compute the fee: If total annual LLC income is:
LOOPHOLE: Your LLC’s can elect to be taxed as a S Corporation and thereby avoid the annual California LLC tax of $800 and the annual LLC fee which can be as much as $11,790 each year. Please note that your LLC taxed as a S Corporation will pay a California minimum franchise tax of $800 per annum beginning in its second taxable year. You’ll recall the LLC pays in its first year. Furthermore, note the following Corporate Tax Rate is based on profits and not gross receipts, as with an LLC. S Corporations, other than banks and financial corporation.................1.5% Close Window | ||||||||||||||||