Do I Have to Pay Taxes on an LLC that Made No Money in California?

Do I have to pay taxes on an LLC that made no money California?
If your LLC is taxed as a sole proprietorship. You pay an $800 LLC tax annually, even if your LLC doesn’t earn any money. You pay an annual LLC fee, which depends on your LLC’s gross income. You pay California income tax on your net LLC income (rates range from 1% to 13.3%).
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If you own an LLC, you might be asking if you need to pay taxes on it even if it didn’t generate any revenue. The state in which your LLC is registered will determine the response. LLCs in California must pay an annual franchise tax of $800 regardless of whether they generated any revenue.

Therefore, in 2020, Do You Have to Pay the $800 California LLC Fee?

Yes, the first year of business is subject to the $800 California LLC cost. This means that even if your LLC had a loss the first year, you would still be required to pay the charge. This fee is regarded by the Franchise Tax Board as the minimal tax applicable to California-based LLCs.

Can LLC Fees Be Deducted?

Most of the time, LLC fees are not tax deductible. However, for the purposes of state taxes, you can deduct the $800 annual franchise tax amount from the gross revenue of your LLC. This means that your LLC’s obligation to pay state taxes may be reduced by the franchise tax cost.

If I Don’t Pay the California Franchise Tax, What Happens?

Your LLC will be charged fines and interest if you fail to pay the California franchise tax. The California Franchise Tax Board may even dissolve your LLC if you fail to pay the tax for a number of years. Penalties for failing to pay the franchise tax can be severe.

Therefore, Is It Legal for a California LLC to Have Just One Member?

LLCs in California are permitted to have just one member. But establishing a single-member LLC in California follows the same steps as establishing a multi-member LLC. Articles of Organization must be submitted to the California Secretary of State, together with the $70 filing fee. Additionally, you’ll need to register your LLC with the California Franchise Tax Board and get an EIN from the IRS.

The $800 yearly franchise tax is still applicable to LLCs that had no revenue in California, but you may be able to subtract the amount from your LLC’s gross income for the purpose of paying state taxes. Failure to pay the franchise tax may result in fines or possibly the termination of your LLC. Additionally, an LLC with only one member may be formed in California, and the procedure is the same as for an LLC with multiple members.

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