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Doing business in California is expensive. Many businesses, though, are ok with the high costs because of the Golden State’s strong economy and numerous opportunities to grow.
But there’s no question that California has more fees and red tape to cut through than many other states.
Limited Liability Companies (LLCs) operating in California are taxed in two different ways: income taxes and franchise taxes. The LLC owner(s) pay income taxes on their individual Form 1040 tax return, while franchise taxes are levied against the actual LLC itself.
Use this blog to learn about filing due dates for tax year 2024 and extensions for your California LLC.
California LLC Tax Due Date 2024
LLCs with only one owner are taxed as sole proprietorships by default, while LLCs with more than one owner are taxed as partnerships by default. In both situations, the LLC's net income (or loss) flows through to the owner’s individual tax return, known as pass-through taxation. The owner will then be taxed at a rate up to 13.3% in California. (The top individual federal tax rate is 37%.)
If your California LLC is taxed as a sole proprietorship, your taxes are due by April 15th. If your LLC operates as a partnership, file by March 15th.
California LLC Tax Extension
If you’re a full-year resident of California, you’ll file your share of your LLC’s revenue and expenses on California’s Form 540, which is California’s form for individual income tax returns.
Suppose you don’t reside in California or lived there only for part of the year. In that case, you’ll file your share of your LLC’s revenue and expenses on California’s Form 540NR for nonresident individual income tax returns.
If you need to file an extension, California allows an automatic six-month extension as long as you pay any tax owed to California by the original due date. No forms need to be filed to extend your tax return due date.
The IRS granted individuals and businesses impacted by natural disasters in certain parts of California an extension from April 15th to June 17th, 2024.
California LLC Late Filing Penalty
Three types of penalties and interest can be assessed against your LLC for missing a filing date. These penalties include:
- Failure to Comply with Filing Requirements. Unless there’s a reasonable cause, a penalty will be assessed if your LLC is required to file Form 568 and fails to file the return on time (including extensions) or the LLC files Form 568 that fails to show all required information.
The penalty for each month or part of a month (up to a maximum of 12 months) is $18 multiplied by the total number of LLC owners during any part of the taxable year for which the return is due. Interest will also be charged on the penalty from the date the notice of tax due is mailed until the tax return is filed.
- Failure to File a Timely Return. If your LLC fails to file Form 568 on or before the extended due date, you will be assessed a penalty. The penalty is 5% of the unpaid tax for each month or part of the month, and the return remains unfiled from the due date until it is filed. The maximum penalty is 25% of the unpaid tax.
- Failure to Pay by the Due Date. This penalty begins at 5%. Every month (or partial month) the amount is not paid, the penalty increases by 0.5%. The penalty continues to increase for 40 months, up to a maximum of 25%.
Interest is assessed on any tax due if not paid by the original due date. Interest is also levied on certain penalties. Keep in mind that an automatic extension of time to file does not stop interest from accruing. So, if possible, pay the tax your business owes by the due date.
Quarterly Estimated Tax Filing in California
If you expect your LLC to owe $500 or more in state income tax annually, you must calculate and file quarterly estimated taxes.
These are the due dates for filing your LLC's quarterly estimated taxes:
If a deadline falls on a weekend or holiday, you must file by the following business day.
Small Business Tax Filing Exemptions in California
LLCs are pass-through entities, meaning profits are passed through to each owner to be addressed on their individual tax returns. If you feel your LLC should be tax-exempt, similar to a non-profit, you would file Form FTB 3500 with the state of California.
After reviewing your application and any supplemental documentation, the California Franchise Tax Board will determine if your LLC qualifies for this status.
How to File LLC Taxes in California
To determine how much your LLC's franchise tax fee will be, you’ll file a “Return of Income.” Since your LLC may be classified for tax purposes as a partnership, a corporation, or a disregarded entity, you must file the appropriate California tax return for its classification:
For LLCs classified as partnerships, the due date for filing Form 568 is the 15th day of the third month following the close of the taxable year. If your LLC follows the calendar year, March 15th is the filing deadline.
If you cannot file Form 568 by the due date, you are granted an automatic seven-month extension unless your LLC has been suspended or forfeited.
How 1-800Accountant Can Support Your California Small Business
Calculating and filing your California LLC taxes accurately and on time while building your business is a difficult balancing act. If an error is made or a deadline is missed, it can have detrimental consequences for your business activities. No one needs those headaches, which is why many LLCs trust 1-800Accountant, America’s leading virtual accounting firm for small businesses, for their financial needs.
Whether it's business tax preparation, quarterly estimated taxes, or any of our professional accounting services, we have the affordable pricing solutions you need to ensure your California LLC remains tax-compliant. Schedule a quick consultation – usually 30 minutes or less – to learn more.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.