Paying taxes on a California LLC
In general, LLCs pass the responsibility for paying federal and state taxes on profits and losses to their owners. However, there are 2 other California LLC tax payments annually – a minimum franchise tax and an LLC fee.
California minimum franchise tax
All LLCs registered in California, regardless of income, are required to pay an annual $800 minimum franchise tax. Use California Form 3522 to pay the annual tax.
California LLC fee
An LLC with more than $250,000 of California annual income will pay a fee, in addition to the minimum franchise tax. File California Form 568 online or by mail no later than the 15th day of the 4th month after the end of your LLC’s taxable year.
If you estimate you will owe a fee, you must file Form 3536 to pay an estimated portion of your California LLC tax fee by the 15th day of the 6th month of your taxable year.
Federal taxes for LLC owners
As an individual, you are responsible for paying individual federal self-employment taxes (i.e., Social Security and Medicare taxes) as well as federal income taxes on your LLC income on your personal tax returns. In California, you must also pay individual state income taxes.
Report your earnings from your LLC on Schedule C, an attachment to Form 1040, which is your individual income tax return. Report any money you invest in the business on Schedule C.
LLCs taxable as corporations
You can elect to have your LLC taxed like a corporation, so that the LLC pays taxes on the profits and losses rather than the owners. One benefit of this choice: taxes on the first $75,000 of corporate income are lower than those on the same amount of individual income.
There are other potential benefits and downsides to making this change, so consult an accountant or lawyer with experience in this field. Then, if it makes sense for your business, file IRS Form 8832 to shift to corporate taxation.
LLCs taxed like corporations also file California tax forms. File Form 100 by the 15th day of the 3rd month after the taxable year. If the LLC will owe a fee, file Form 100-ES, and pay an estimated fee in the 1st, 2nd, and 4th quarters of the taxable year.
Tax forms and resources
California state forms:
- A general guide to California LLC taxes
- California Tax Forms 100, 568, 3522, and 3536 (Forms 3522 and 3536 are located inside the Form 568 booklet, and Form 100-ES is inside the Form 100 booklet)