California LLC Tax Form: Everything You Need to Know
A California LLC tax form must be filed every year. In order to do your business taxes as an LLC, you will need to make sure your business is first set up correctly to operate in the state of California. 3 min read
A California LLC tax form must be filed every year. In order to do your business taxes as an LLC, you will need to make sure your business is first set up correctly to operate in the state of California.
How to Form an LLC in California
Limited liability companies (LLCs) are business entities that protect personal assets, such as a house or vehicle, from being affected if the business is sued. LLCs are also taxed differently than other companies, preventing the "double taxation" that may happen with an S or C corp.
Your initial step for forming an LLC is to check if your desired company name is available via an online search. The name should be unique from other LLC names in the state. It should also end with a designator. This could be LLC, L.L.C., Limited Liability Co, or a reasonable variation thereof.
Choose a Registered Agent
There are some things to keep in mind when you choose a registered agent within the state of California.
- This person is allowed to legally receive mail on behalf of your business.
- PO boxes are not accepted for registered agent mailing addresses.
- All registered mailing addresses should be street addresses within California.
- A few people can become your registered agent. You can do it yourself, or a friend or family member can agree to accept mail on your behalf. You can also pay for a commercial registered agent service.
Articles of Organization are another part of your filing in California. These can be done in person or by mail; online filing is not possible yet. You can mail your Articles of Organization to the Secretary of State, Business Entities section. Their PO Box number is 944228. The office is located in Sacramento, CA 94244-2280. The process takes 10 to 15 days. The Secretary of State will send you a welcome letter, along with your stamped Articles of Organization.
Your operating agreement is a requirement for starting an LLC, but it does not need to be shared with any state agency. The operating agreement lists the owners along with their percentages of ownership. It tells how the profits and losses of the business will be split between members. The document should also include the plan for payment of business taxes and the management terms for the business.
Obtaining an EIN
An EIN, or Federal Tax ID Number, can be issued to you by the IRS. The EIN is your business' social security number of sorts. With it, you can open a bank account, file your business taxes, or conduct payroll activities.
You can get it by mail (use form SS-4), apply for it on the IRS website, or send a fax to 855-641-6935 requesting your EIN. Foreign nationals cannot apply for the EIN online, but they can use the mail or fax methods. LLCs that are owned by other LLCs or companies also must use the mail or fax methods.
It is important to file your first Statement of Information within 90 days of forming your LLC. This statement tells the state about your business' updated contact details. It costs $20 to file, and you can pay by check or money order made out to the Secretary of State.
A $250 penalty applies if you do not file the statement of information by the deadline. If the statement of information is not filed after a lengthy amount of time past the due date, your LLC can be shut down. A new statement of information is due every 2 years on the anniversary of your LLC's registration. If you need to be reminded of this date, check your Articles of Organization for an approval stamp.
Every LLC in California must pay $800 as a Franchise Tax fee each year. This payment should go to the California Franchise Tax Board. Use Form 3522 to pay this tax. The tax form is due four months after you register your LLC, on the 15th of that month. The franchise tax is due regardless of how much money your business made that year.
If you need help with any California LLC tax form, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.