It might be difficult to start a business since there are so many costs to take into account. The $800 annual franchise tax that S corporations are required to pay is one of the costs that Californian business owners may be curious about. Yes, S corporations are required to pay the $800 charge in their first year of operation, to give the quick response. Let’s examine this cost in more detail, as well as why S corporations are subject to it and how to submit the required papers.
All corporations are required to pay the state of California an annual fee of $800 known as the California franchise tax. You cannot claim this fee as a business expense on your tax return because it is independent from state and federal income taxes. The payment must be made no later than the fifteenth day of the fourth month following the beginning of the corporation’s fiscal year, which falls on April 15th for organizations that use the calendar year.
S companies are a kind of corporation that let business owners avoid paying corporate level federal income tax. Instead, the corporation’s earnings, credits, and deductions are transferred to the shareholders’ individual tax returns. S businesses must still pay the $800 California franchise tax, though. This is due to the fact that, despite the fact that S corporations are taxed differently at the federal level, California regards them the same as normal corporations for tax reasons.
How to Submit a SI-550 Online
You must first register for an account on the California Secretary of State’s website before you can submit the SI-550 form online. You can log in and go to the “File a Business Document” page once you have an account. Choose “Initial Statement of Information” from there, then follow the on-screen instructions to fill out the form and pay the filing cost. The SI-550 form has a $20 filing fee.
Another paperwork that California companies would need to submit is paperwork SI-100. This form is intended to notify the state of any changes to your company, including a change in registered agent or address. The paperwork needs to be submitted 90 days after any revisions. This form also carries a $20 filing fee.
You can file a “SI No Change” form in its place if your company has not changed since the previous time the SI-100 form was submitted. This document, which needs to be submitted yearly, only indicates that your business hasn’t changed. The SI No Change form has no filing cost.
Use the Business Search tool provided by the California Secretary of State to look up the status of your LLC in that state. To check the status of your LLC, just enter the name or business entity number. When your LLC is operating legally, its status will be indicated as “Active.” The status may be “Suspended” or “Forfeited” if there are any problems or paperwork that needs to be filed.
In conclusion, S corporations are subject to the $800 California franchise tax in the first year of existence. You must pay this fee on your own and cannot claim it as a company expense on your tax return. Use the online filing system provided by the California Secretary of State to submit the required documentation. You must submit Form SI-100 whenever your company undergoes any changes, such as a change in registered agent or address. You can alternatively submit the SI No Change form if there have been no modifications. Finally, you can use the Business Search feature on the Secretary of State’s website to determine the status of your LLC in California.