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Determining the Limited Liability Company (LLC) Annual Tax and Fee

Original: August 1, 2011

Modified: August 17, 2011

California imposes on all LLCs classified as partnerships or disregarded entities both an annual tax of $800 and an annual fee based on the LLC’s total income.

The LLC annual tax is similar to the corporate minimum franchise tax as both taxes are imposed for the privilege and protections of doing business in California. The $800 LLC annual tax is due on April 15 of each year for calendar year LLCs, and on the 15th day of the 4th month of the taxable year for fiscal year LLCs.

The annual fee; however, is a graduated fee based on the LLC’s total income from all sources derived from or attributable to this state plus the cost of goods sold under R&TC Section 17942. Presently, we are reevaluating the computation of total income under R&TC Section 17942.

An LLC that elects to be treated as either a C or S corporation will determine its tax under California Bank and Corporation Tax Law, so they are subject to the $800 minimum franchise tax under R&TC Section 23153, or the franchise tax under R&TC Section 23151, or the corporation income tax under R&TC Section 23501.

Back to August 2011 Tax News