Learn about the annual report and tax filing obligations for California limited liability companies.
To establish and operate a California limited liability corporation (LLC), you must prepare and submit a number of paperwork with the state. This article discusses the most significant continuing reporting and state tax filing obligations for California limited liability companies.
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Initial and biennial information statements
California requires you to submit an initial information statement within 90 days after filing your articles of incorporation. To complete the statement, you’ll need to submit much of the same information as for the articles of incorporation, as well as the names and addresses of your LLC’s management or all LLC members, as well as a few additional details. The SOS website allows you to complete the statement online. You may also obtain a blank information statement form (Form LLC-12), which you can fill out on your computer, print off, sign, and send or hand deliver. The first statement costs $20 to submit.
Following that, further information statements are required every two years by the end of the anniversary month of the filing of your LLC’s articles of incorporation. More particular, there is a 6-month filing period before the ultimate due date. For example, if you filed your articles of organization on September 15 of an odd-numbered year, you must submit statements of information every other year between April 1 and September 30 of the following odd-numbered year. Following reports, like the original report, may be filled online, or you can download a blank form and submit by mail or hand delivery. Each biannual information statement now costs $20 to file.
State Corporation Tax
Most LLCs are pass-through tax corporations when it comes to income taxes. In other words, the burden for paying federal income taxes is passed via the LLC to the individual LLC members. LLCs do not pay federal income tax by default; only its members do.
Typical LLCs in California are subject to an annual minimum franchise tax of $800. (those not electing to be taxed as corporations). You must pay an extra yearly charge if your LLC’s annual gross earnings reach $250,000, in addition to the $800 minimum franchise tax. This charge is based on LLC revenue derived from California sources and presently varies from $900 to $11,790. The California Franchise Tax Board collects the tax and charge (FTB). More information regarding the tax and fee, including advise on which forms to use for your specific firm, may be found at
In certain situations, the owners of an LLC elect to have their firm taxed as if it were a corporation. This decision is made by submitting IRS Form 2553 to the IRS. (The form is available on the IRS website.) California, like almost every other state, taxes corporate revenue. This is known as a franchise tax in California. The franchise tax in California is now a flat 8.84% on net profits from California-based company transactions. The FTB receives the tax. If you have elected to have your LLC taxed as a corporation, you must pay this tax. To pay the tax, use the state’s company income tax return (Form 100).
Employer Taxes in the State
Do you have workers in your LLC? If this is the case, you must pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not addressed in this section. (However, it is important to understand that federal employer tax duties begin with getting a federal employer identification number (EIN).) Employers in California, on the other hand, must pay state taxes.
To begin, you must withhold and remit employee income taxes to the California Employment Development Department (EDD). Begin by registering your company with the EDD, either online or by completing Form DE-1. After you’ve enrolled, you must submit withholding taxes quarterly using Forms DE-88ALL and DE-9.
You’ll also need to register to pay state unemployment insurance (UI) taxes. These taxes, like income tax withholding, are handled by the EDD, and you may register for UI taxes online or by using the relevant form of Form DE-1. Then, each quarter, utilize Forms DE-9 and DE-9C to record your salary and pay your unemployment insurance taxes.
Taxes on Sales and Use
If your LLC sells items to clients in California, you must collect and remit sales tax. This implies you’ll need to register with the California State Board of Equalization (BOE) for this purpose and then make periodic sales tax payments for products sold. You may register either online or in person at a BOE field office. You will be issued a seller’s permit after you have registered. Then, on a monthly, quarterly, or yearly basis, you must file sales tax reports to the DOR. Your sales tax returns must be submitted online.
Other States Registration
If you want to do business in states other than California, your LLC may need to be registered in any or all of those states. The exact states concerned will determine if you are needed to register: each state has its own regulations for what defines conducting business and whether registration is required. For registration reasons, having a physical presence (a business location) in a state, recruiting personnel in a state, or soliciting business in a state (through telephone, print advertisements, mail, or the Internet) are sometimes considered conducting business. Obtaining a certificate of authority or comparable document is normally required for registration.