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Tax Season: A Guide for New California LLCs

Tax season can be a complex and daunting period for new LLC owners in California. Navigating the myriad of legal and financial responsibilities is crucial to ensure compliance and avoid potential penalties. This comprehensive guide is designed to assist new LLCs in California in understanding the specific tax filings and deadlines required during this critical time.


Federal Income Tax Return:

  • All LLCs are required to file an income tax return with the IRS.

  • The form varies depending on the classification of your LLC (disregarded entity, partnership, or corporation).

  • For a single-member LLC, Form 1040 Schedule C is generally used.

  • Multi-member LLCs usually file Form 1065, while those taxed as corporations file Form 1120.


California State Income Tax Return:

  • California LLCs must file Form 568 with the California Franchise Tax Board (FTB).

  • This form reports income, deductions, and credits of the LLC.

  • Even if your LLC had no activity, a return is typically required.


Annual Franchise Tax:

  • All LLCs in California must pay an annual minimum franchise tax.

  • This tax is paid to the California FTB.

  • The current minimum franchise tax fee is $800 (as of my last update in April 2023).


LLC Fee:

  • LLCs with California sourced income over a certain threshold are subject to an additional fee.

  • This fee is based on total income and is reported on Form 568.


Employment Taxes:

  • If your LLC has employees, you must withhold and pay employment taxes.

  • This includes federal income tax withholding, Social Security, Medicare, and California state taxes.

  • Periodic filings may be necessary depending on the size of your payroll.


Key Filing Deadlines for California LLCs

  1. Federal Income Tax Return:

  • Generally, the deadline is April 15th.

  • If April 15th falls on a weekend or holiday, the deadline is the next business day.

  1. California State Income Tax Return:

  • The deadline aligns with the federal deadline, usually April 15th.

  1. Annual Franchise Tax:

  • This is due by April 15th each year.

  1. Employment Taxes:

  • These deadlines vary based on the specific taxes and the amount owed.

  • Refer to IRS and California Employment Development Department (EDD) guidelines for specific dates.


For new LLC owners in California, understanding and complying with tax filing requirements is crucial for the successful operation of your business. Failure to comply can lead to penalties and legal issues. It is always recommended to consult with a tax professional or a business attorney to ensure that all obligations are met and to stay informed of any changes in tax laws.


Keep in mind that tax laws and regulations can change, and it's important to stay up-to-date with the latest information. Staying proactive and informed is key to navigating the tax season successfully as a new LLC in California.

 


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