LLC Annual Tax: Everything You Need to Know
An LLC annual tax is a necessary tax in some states and you should know if you owe any annual dues because you could face penalties if you fail to file reports.3 min read updated on February 01, 2023
An LLC annual tax is a necessary tax in some states, but you should check your state LLC laws to find out if you would owe any annual dues. Many states require annual report filings, and you could face various penalties if you fail to file reports or pay yearly taxes.
With that, you may be able to avoid or delay paying annual or franchise taxes provided you meet the following conditions:
- File your annual or franchise tax returns with an extension request
- File essential documents with an SOS within one year of the date of the final tax return
- Avoid conducting business in California after the last day of the previous tax year
Franchise taxes in California are usually due on January 1 of every year for LLCs registered in the state, even on ones not doing business.
California LLC Tax
All California LLCs are subject to an annual $800 tax. Moreover, new LLCs created in California have four months from the creation date to honor the annual tax, and the due date is usually on the 15th of the month. To avoid late fees, file Form 3522, which is a tax voucher needed to pay the $800 tax for the year.
Each LLC created in California must also submit Form 3522 with the Franchise Tax Board annually. You will have to submit Form 3522 in most cases if you own a California LLC. With that, you may also have to report fees on Form 568 if your business has gross receipts of $250,000 or more for that year, and you would pay this fee, including the $800 yearly tax.
However, the due date will be on the next business day if the date lands on a holiday or weekend.
If the 15th day of the fourth month for foreign LLCs has already gone before the LLC begins in California, the annual tax must be paid after you start business.
For instance, a Delaware LLC that was created on June 1st, 2017 but registered in California on August 13, 2017, and does business the following day, must pay the annual tax by September 15th, 2017 because business activity for that year is considered a taxable year.
Another example is when an LLC’s short-window (from June 1, 2017, to December 31, 2017) tax return would be due by April 15th, 2018. In addition, an annual payment for a taxable year of 2018 would be completed via Form FTB 3522 would also be due on the same due date.
3522 Voucher Form
A 3522 Voucher Form should have the following:
- Fiscal Term Year
- LLC Name
- Secretary of State Filing Number
- Employer Identification Number (EIN)
- Payment Amount
- Address and Phone Number
Paying Franchise Taxes
To pay the franchise tax, write a money order or check payable to the “Franchise Tax Board.” After, write down the Secretary of State filing number, including the EIN and “2011 FTB 3522” on the money order or check. From there, enclose the payment voucher with your payment and mail to the following address:
- Franchise Tax Board, P.O. Box 942857, Sacramento California, CA 94257-0531
Note: You do not need to mail 3522 if you don’t owe a payment, or if you intend to pay online.
If you fail to make the payment on time, a late fee will be added to the balance, including interest. Interests and penalties begin to build from the due date.
Automatic Paperless Extensions
With that, the Franchise Tax Board grants your filing extension depending on the type of business you’re in.
Corporate entities are allowed an automatic seven-month extension under the following circumstances:
- If the corporation is in good standing with the board and the secretary of state
- If the corporation files the return either before or on the extended due date
LLCs are permitted the same paperless extension at six months from the original due date. For LLCs that have not paid the fee or other taxes by the original due date, the LLC should use the “Payment Voucher for Limited Liability Companies,” which is FTB 3537.
To learn more about LLC annual tax in your state, post your legal need to our UpCounsel marketplace. UpCounsel has a pool of top lawyers that will guide you in all matters pertaining to annual taxes and fees you would owe under your LLC. In addition, our lawyers will help you set up a viable tax system so you can find ways to save money when tax season arrives.