California Corporation Franchise Tax Fees Are Changing: Are You Ready?

In California, to do a takeoff of the title of an old Bob Dylan song, “The (Filing) Times, They Are a Changing.” The State of California Franchise Tax Board recently changed the due dates, deadlines, and tax/fee amounts for annual tax payments and fees to be paid by LLCs and Corporations doing business in California.

If you have a Corporation or LLC registered in California, is your company ready to adjust to these changes? CorpNet can help you meet these new deadlines and avoid paying extra fees or penalties.

Most business owners are familiar with filing their initial reports (also known as an initial statement of information) in the states where this is required. But in addition to these initial reports, companies also need to file annual reports with the state to remain in good standing and avoid late fees.

These annual reports determine whether your company owes certain taxes and fees. If your company needs to be closed and you no longer want to do business as a corporate entity in California, there are other filings that need to be made to dissolve the corporation or LLC. 

What Are the New California Franchise Tax Fees and Deadlines?

The fees and deadlines depend on whether your company is doing business as an LLC or Corporation.

California LLC tax due dates:

  • First Annual Tax Payment: Newly incorporated California domestic LLCs are required to file Articles of Incorporation with the California Secretary of State. The first-year annual tax is due by the 15th day of the 4th month after filing these articles.
  • Annual Tax: California LLCs have to pay an annual state tax based on the company’s total income earned from sources “derived or attributable” to California. This annual tax must be paid by the 15th day of the 6th month of the current tax year.

California Corporation tax due dates:

  • First Annual Tax Payment If your corporation incorporates or qualifies to do business in California, the minimum franchise tax for the 1st year is waived. However, your corporation is still liable for a franchise tax on its net income.
  • Annual Tax: Your corporation is subject to an annual $800 minimum franchise tax if it is doing business in the state, whether your corporation is active, inactive, operating at a loss, or filing a short period return for less than a 12 month period.

What Does this Mean to You and Your Business?

If you’re late in paying California corporation franchise taxes, your corporation or LLC will go into bad standing. This is not a good thing. Even if you are no longer doing business within that business structure, you still need to decide whether or not to dissolve the corporation.

If you want to reinstate the company, CorpNet can file paperwork to reinstate the Corp or LLC. If you do NOT want to reinstate the company, you can’t let your Corporation or LLC go on. Even if you’re no longer doing business, if you have a Corporation or LLC on the books, you’re going to continue to accrue Franchise Tax fees. This means that if your business is no longer viable and you want to shut it down, your other option is to dissolve the Corporation or LLC.

This is where CorpNet can help you. We make it easy for you to file papers to bring your taxes and fees up to date (if needed). Then when you’re ready to close your company by filing Articles of Dissolution, we can help you file papers to dissolve the Corporation or LLC.

Whatever you need to do to bring your California corporation or LLC up to date with the latest deadlines and franchise tax requirements, talk to CorpNet by the end of 2011. Whether you need to file new paperwork or dissolve your corporation, it might be to your advantage to get the business filings done by the end of the year.

 

2017-09-25T11:57:59+00:00 November 4th, 2011|Categories: Ongoing Management and Protection|Tags: , , |

About the Author:

Nellie Akalp
Nellie Akalp is an entrepreneur, small business expert, speaker, and mother of four amazing kids. As CEO of CorpNet.com, she has helped more than half a million entrepreneurs launch their businesses. Akalp is nationally recognized as one of the most prominent experts on small business legal matters, contributing frequently to outlets like Entrepreneur, Forbes, Huffington Post, Mashable, and Fox Small Business. A passionate entrepreneur herself, Akalp is committed to helping others take the reigns and dive into small business ownership. Through her public speaking, media appearances, and frequent blogging, she has developed a strong following within the small business community and has been honored as a Small Business Influencer Champion three years in a row.

3 Comments

  1. Bill April 23, 2013 at 6:11 am - Reply

    I have a company (LLC) in California that wasn’t properly shut down and has, apparently, been limping along, collecting fees and penalties, for the last 4-5 years or so. Amazingly enough, I have never received a notice from the CA FTB, so it was only recently after a conversation with my former partners that I went to check the status of the company online and found it to be “suspended” and not “dissolved.” The bad news is that, obviously, there must be about 3-5k worth of penalties and back taxes (franchise fees) owed at this point. The company made no money during that time (obviously), so there is no untaxed income. The good news is that the company actually has the money to pay that left over in an old account. How would I go about getting this all resolved so I can properly dissolve the company (myself this time…yeah)?

    Thanks.

  2. cat west July 16, 2016 at 6:29 pm - Reply

    My husbands mother had a loan out corp created for entertainment contracts in 1972. The corp was suspended by the ftb in 1988 for failing to file taxes. She died in 1990 and all assets poured into a family trust.
    This corp has lingered without any activity and all existing assets distributed to the heirs. Now the ca ftb wants the remaing heir to file 43 years of tax returns and pay all minimum taxes with penalties and interest on the tax debt to dissolve the entity. This is an impossible request. No records, no activity, how can this be resolved? Advocates are all ftb employees who are not helpful.

    • Allison Sinclair August 4, 2016 at 8:45 am - Reply

      Thank you for reading and commenting. Unfortunately, CorpNet does not offer tax advice and therefore cannot assist you with this matter. I recommend you seek tax advice from a CPA or have them handle this issue on your behalf. Should you not have a CPA that you deal with, I suggest Dawson & Associates, a firm CorpNet works with often. Here is a good phone number for them: (818) 379-9800. Let them know that CorpNet sent you.

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