![]() Section 24(b)(1) of Assembly Bill 85 states: The overall goal of Assembly Bill 85 is to bring in additional tax revenue to the state. What’s the goal of Assembly Bill 85 for business owners? For more information and instructions, please see California LLC Annual Franchise Tax. ![]() The Estimated Fee begins at $900 and increases depending on your LLC’s estimated income. If your LLC will come close (or exceed) $250,000 in total revenue, then you should file Form 3536 and pay the Estimated Fee. It’s called an “Estimated” Fee because you will need to forecast your LLC’s total revenue. If your LLC will not earn that much in total revenue, then you don’t need to file Form 3536 (in the LLC’s 1st year or any year.) What is the Estimated Fee for California LLCs? Yes, your California LLC needs to file Form 3536 and pay an Estimated Fee if it will make more than $250,000 in total revenue. Does my California LLC need to file Form 3536 (Estimated Fee for LLCs) in the 1st year? No, since your California LLC doesn’t need to pay the $800 franchise tax for its 1st year, you don’t need to file Form 3522.įorm 3522 will need to be filed in the 2nd year.įor instructions on filing Form 3522, please see California LLC Annual Franchise Tax. Does my California LLC need to file Form 3522 (Limited Liability Company Tax Voucher) in the 1st year? Your California LLC needs to pay the $800 franchise tax payment in its 2nd year and for all years afterward. The California LLC franchise tax exemption from Assembly Bill 85 only covers the LLC’s 1st year. Your California LLC needs to pay the $800 franchise tax payment starting in its 2nd year, and continuing onward. Does my California LLC need to pay franchise tax in the 2nd year? Your first $800 payment is due the year following the year your LLC is approved. California LLC franchise tax due dates (after Assembly Bill 85): The first $800 payment is due in the LLC’s 2nd year. If your California LLC goes into existence on or after January 1st, 2021 (but before December 31st, 2023), there is no $800 payment due the 1st year. ![]() This completely eliminates the back-to-back $1,600 payment issue!Īnd it moves an LLC’s first $800 payment 12-16 months after the LLC is approved. California LLCs after Assembly Bill 85:Ĭalifornia LLCs don’t pay an $800 fee for their 1st year (if the LLC is formed after January 1st, 2021). LLCs formed later in the year (October – December) ended up with back-to-back payments, totaling $1,600. Then they paid that fee again April 15th every year. California LLCs before Assembly Bill 85:Ĭalifornia LLCs paid an $800 fee within 2-3 months of being approved. There is now some financial relief for the 1st year for people forming an LLC in California. While California Assembly Bill 85 affects multiple aspects of the state budget, we’re focusing on how it affects people forming an LLC in California.Ĭalifornia Assembly Bill 85 changed Section 17935, Section 17941, and Section 17948 of the California Revenue and Taxation Code. A California LLC can now legally “avoid” the $800 Annual Franchise Tax (1st year)Ĭalifornia Assembly Bill 85 was signed into law by the governor on June 29th, 2020. Deal alert! Our favorite company, Northwest, is forming LLCs for $39 (60% off!) See details.
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