LLC Tax Filing California

How LLCs Are Taxed

An LLC is a state-law entity — the IRS does not recognize it as a separate tax classification. Instead, the IRS taxes LLCs based on how many members they have and whether they have made any tax elections. By default, a single-member LLC is taxed as a sole proprietorship (Schedule C on the owner's personal return), and a multi-member LLC is taxed as a partnership (Form 1065). An LLC can also elect to be taxed as an S corporation or C corporation by filing the appropriate election form.

Single-Member LLC Filing

A single-member LLC that has not made a tax election is a "disregarded entity" for federal tax purposes. All income and expenses are reported on Schedule C of the owner's Form 1040. The owner pays self-employment tax (15.3% on net earnings up to the Social Security wage base, 2.9% above) on all net profit. There is no separate federal return for the LLC itself. However, California requires a separate California LLC return (Form 568) even for single-member LLCs.

Multi-Member LLC Filing

A multi-member LLC files Form 1065 (Partnership Return) at the federal level. The LLC itself does not pay federal income tax — instead, it issues Schedule K-1 to each member showing their share of income, deductions, and credits. Each member reports their K-1 income on their personal return and pays self-employment tax on their distributive share of business income. California requires Form 568 for multi-member LLCs as well.

California LLC Tax Requirements

Every California LLC must file Form 568 and pay: (1) the $800 minimum franchise tax, and (2) the LLC annual fee based on gross receipts from California sources (ranging from $0 for receipts under $250,000 to $11,790 for receipts over $5 million). These fees are due even if the LLC had no profit. California also requires LLCs to pay estimated franchise tax — the $800 minimum is due by April 15 of the current tax year.

Filing Deadlines & Due Dates

Federal LLC returns (Form 1065) are due March 15 for calendar-year LLCs — one month before the individual return deadline. California Form 568 is due April 15. Extensions are available: 6-month extension for federal (to September 15), 7-month extension for California (to November 15). The $800 California franchise tax is due April 15 regardless of whether an extension is filed.

S Corp & C Corp Elections

An LLC can elect to be taxed as an S corporation by filing Form 2553. This election can significantly reduce self-employment taxes for profitable LLCs — the owner pays payroll taxes only on their salary, not on distributions. KDA evaluates the S corp election for every LLC client with net profit over approximately $50,000. The election must be filed by March 15 of the year it is to take effect (or within 75 days of formation for a new LLC).