Incorporating a business in California is sometimes more challenging (and more expensive) than people realize.
It’s not just that the actual process for filing to start an LLC or corporation is unique , but it’s also that there are quite a few California LLC corporate taxes and fees that new business owners may be unaware of.
This article has been written to highlight the importance of correctly structuring your California LLCs as well as touch on some of the more common taxes and fees that California business owners must pay. Let’s begin!
The Importance of Incorporating California LLCs Right Straight Away
Structuring a corporation or LLC in California is extremely important.
California has several rules and regulations about how these businesses should be structured, and if these rules are followed, business owners can enjoy the full benefits and protection a correctly incorporated California LLC can offer.
Even just a single mistake during the creation of an LLC or corporation, may open business owners to liability and trigger financial penalties, fines, and other issues.
Highlighting Common California LLC and Corporate Taxes and Fees
All corporations in California are responsible for a flat tax rate of 8.84%, though there are obviously deductions, exemptions, and specific tax strategies that can legally lower this tax burden – sometimes dramatically.
As far as fees for establishing an LLC or corporation in California is concerned, the initial filing fee is going to cost $100 plus a $15 handling fee (as of 2021).
New businesses may also have to file documentation including important information about their company, with that filing fee coming in at $25 plus a $75 service fee.
Reserving a business name in California also carries a fee and is a necessary part of the incorporation process. This fee is made payable to the county or city that handles the incorporation process, though, and varies.
Every year California LLCs and corporations must file their annual report, and that’s another $25 fee that they are responsible for.
Most importantly each California LLC or corporation must pay an annual franchise tax of $800 made payable to the California Franchise Tax Board, either.
A business license fee may also need to be purchased (depending on the type of business being established), with these fees sitting at anywhere between $50 and $100 a year – and sometimes more.
There are significant financial penalties (and possible dissolution of businesses) for those that skip out on these payments.
Finding the Right professionals to Streamline Incorporation in California
With so many different fees and taxes to manage in California it’s important to be sure that a business is set up and incorporated correctly and a business pays all these fees.
And that’s why finding the right tax professionals to streamline incorporation is so important.
Customized California LLC Incorporation Services
We’d love to sit down and talk about your tax situation and how you can protect as much of your income as possible – legally, ethically, and responsibly.
If you’d like personalized help for navigating the often confusing tax situation post-coronavirus, please don’t hesitate to contact Robert Hall & Associates at your earliest convenience via the webform here, by phone at 818-452-2641 or reach me directly via email at [email protected].
References
https://www.upcounsel.com/california-llc-tax-rate
https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html
https://www.ftb.ca.gov/forms/misc/3556.html
https://www.nolo.com/legal-encyclopedia/annual-report-tax-filing-requirements-california-llcs.html
https://www.nolo.com/legal-encyclopedia/california-state-business-income-tax.html
http://www.incorporatecalifornia.com/callctax.html
https://www.investopedia.com/articles/personal-finance/102115/taxes-california-small-business-basics.asp
