California LLC Fees

Michael Lodge

by Michael Lodge

California is a greedy state.  If you have a LLC in California, not only do you have to pay that yearly fee on your tax return of $800, but you also have to pay a fee on your gross income.  Everyone thinks they are done by paying the $800, and they think that if they have a Loss on the business they won’t owe anything.  Wrong – California has fooled you and you will pay a fee on the gross income of your business.

In California, limited partnerships, corporations, S corporations and LLCs must all pay the annual minimum franchise tax of $800; however, the LLC is also subject to an additional “fee” that was included in the original legislation that authorized the formation of LLCs in California.  This fee is found in Revenue and Taxation Code Section 17942(a), which imposes a fee, in addition to the minimum franchise tax, which is determined by an entity’s “total income,” basically its gross revenues.  Under this Section, the amount of the fee is determined as follows:

$0 for LLCs with annual gross revenues of less then $250,000;

$900 for LLCs with annual gross revenues of at least $250,000 but less than $500,000;

$2,500 for LLCs with annual gross revenues of at least $500,000 but less than $1,000,000;

$6,000 for LLCs with annual gross revenues of at least $1,000,000 but less than $5,000,000;

$11,790 for LLCs with annual gross revenues of $5,000,000 or more.

So don’t yell at your tax accountant when he/she tell you that on the State of California LLC return you will owe money.  Point your finger at the State of California.

If you need further help on filing your LLC’s call us at:  877.778.1770  and visit our web site at:  www.icontaxgroup.com