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.