Community Property States:
A community property system is presently in effect in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, with Alaska having an "elect-in" system.

Under a community property system, property acquired by a husband or wife during their marriage (except property acquired by gift, devise, or descent) is usually considered to be community property.  The community relationship is considered to be a form of a partnership (usually with one spouse acting as managing partner or agent for the community), both partners having vested, equal, and undivided interests in the community property.

Under IRS Revenue Procedure 2002-69 taxpayers residing in community property States have the option to elect to treat a newly formed, husband/wife owned, LLC as a multi-member LLC or as a SMLLC.

California July 26, 2005 - Personal Income Tax: Governor Vetoes Bill That Would Have Clarified Reporting Requirement

California Governor Arnold Schwarzenegger has vetoed a bill that would have clarified that individuals who are subject to California's personal income tax must report all federal income tax adjustments to the California Franchise Tax Board (FTB) that increase the amount of tax due, without regard to whether the statute of limitations for mailing proposed deficiency assessments has expired. The bill was intended to be declaratory of existing law.

In his veto message, the Governor stated that he was unable to support the bill because it would change tax policy retroactively and would address an issue pending before the California Supreme Court (see Ordlock v. Franchise Tax Board, California Court of Appeal, Second Appellate District, No. B169465, July 28, 2004, modified August 24, 2004; petition for review granted, California Supreme Court, No. S127649, December 1, 2004; TAXDAY, 2004/07/30, S.2). However, the Governor indicated that he was not opposed to the policy outlined in the bill and would be willing to consider a bill that applies the policy prospectively.

In Ordlock v. Franchise Tax Board, a California court of appeal held that a taxpayer was not required to notify the FTB of a federal change in a case where the general four-year statute of limitations had expired at the time of the final federal determination and, therefore, the taxpayer was not subject to a California deficiency assessment. According to the FTB, which sponsored the vetoed bill, the failure to enact the bill and a decision by the California Supreme Court to uphold Ordlock would encourage taxpayers who are audited by the Internal Revenue Service (IRS) to refrain from reporting the results to the FTB with the hope that the FTB will not be notified of the results by the IRS before the normal statute of limitations expires.

A.B. 1630, vetoed July 26, 2005; Veto Message, Governor Arnold Schwarzenegger, July 26, 2005; Bill Analysis, Senate Floor, June 13, 2005

Search for information by State:
http://www.sba.gov/hotlist/businessnames.html

Search to see if the entity name you wish to use is available in the USA: http://www.knowx.com/infoam.exe?form=corp/search.htm&userid=guest&password=welcome

State Secretary of the State Web Sites:
http://www.coordinatedlegal.com/SecretaryOfState.html   backup page

State Tax Department Web Sites:
http://www.ct.gov/drs/cwp/view.asp?a=1456&q=266120

State Tax Department Web Sites:
http://www.statelocalgov.net/state-ct.htm

State Tax Form Web Sites:
http://www.taxadmin.org/fta/link/forms.html

State Sales Tax Department Web Sites:
http://www.olivierandassociates.com/homepage/allstateslinks.html

State Tax-Free Sales Tax Holidays:
StateTaxFreeOffers.pdf

State Motor Vehicle Department Web Sites:
http://www.drivershandbook.com/handbooks/usa/

All 50 States' and D.C.'s Home Pages and Workers' Compensation Agencies:
http://www.comp.state.nc.us/ncic/pages/all50.htm

How To File For Homestead Exemption:
http://www.assetprotectionbook.com/homestead_exemptions.htm

California Sales tax information:
http://www.olivierandassociates.com/homepage/casalestax.html
http://www.boe.ca.gov/sutax/staxregs.htm
http://www.boe.ca.gov/sutax/sutprograms.htm


California Corporation Taxes FAQ:
http://www.ftb.ca.gov/forms/misc/1083.pdf


California Business Forms:
http://www.sos.ca.gov/business/bpd_forms.htm
 

CA website for LLC's including taxes & fees
What is the limited liability company annual tax?  The limited liability company annual tax is $800. To be subject to the tax, the limited liability company must, for a least one day during the year, be:  Doing business in California, and/or Registered with the California Secretary of State.

What is the limited liability company fee? Limited liability companies are subject to a fee under the same circumstances that they become subject to the annual tax.  The fee is based on the limited liability company’s annual "total income" from worldwide sources. Total income is not apportioned or allocated based on the operations in California.  Total Income: Total income is defined as gross income plus cost of goods. The fee schedule for the taxable years:

CA website for S-Corps including taxes & fees
What is the tax rate for S corporations? The annual tax for S corporations is the greater of 1.5 percent of the corporation's net income or $800. Newly incorporated or qualified corporations are exempt from the annual minimum franchise tax for their first year of business.

Limited Liability Companies Treated as S Corporations.  A limited liability company that is classified as an association and taxable as a corporation for federal purposes may elect S corporation status. The LLC will also be treated as an S corporation for the state and must file Form 100S (California S Corporation Franchise or Income Tax Return). California and federal laws treat these companies as corporations subject to California corporation tax law.

CA website for C-Corps including taxes & fees
What is the tax rate for C corporations?  The annual tax for C corporations is the greater of 8.84% of the corporation's net income or $800. Newly incorporated or qualified corporations are exempt from the annual minimum franchise tax for their first year of business.

Limited Liability Companies Treated as C Corporations.  A limited liability company that is classified as an association and taxable as a corporation for federal purposes must file Form 100 (California Corporation Franchise or Income Tax Return). California and federal laws treat these LLC's as corporations subject to California corporation tax law.

What is an investment club?

Certain partnerships are allowed to make an election to be excluded from the partnership provisions. These partnerships are often referred to as "investment clubs" because, in order to qualify, they generally have investment activities. They cannot be operating a trade or business.

Caution: Do not confuse investment clubs with investment partnerships. For more information about investment partnerships, please see the instructions for form 565.

Limited liability company annual tax: Limited liability companies may qualify and make an election under the investment club provisions. However, such an election does not exempt them from the limited liability company annual tax.

Limited liability companies must still file California returns for tax years after making the election. However, they only need to complete the entity information and pay any amounts due.

http://www.taxes.ca.gov/Income_Tax/limliacobus.shtml

What Is an Investment Club?

Certain partnerships are allowed to make an election to be excluded from the partnership provisions. These partnerships are often referred to as "investment clubs" because, in order to qualify, they generally have investment activities. They cannot operate a trade or business.

Caution: Investment clubs and investment partnerships are not the same. For more information about investment partnerships, please see the instructions for form 565.

Limited partnership annual tax: Limited partnerships may qualify and make an election under the investment club provisions. However, such an election does not exempt them from the limited partnership annual tax.

Limited partnerships must still file California returns for tax years after making the election. However, they only need to complete the entity information and pay any amounts due.

http://www.taxes.ca.gov/Income_Tax/limitedpartbus.shtml

Information about taxes for individuals in CA: http://www.taxes.ca.gov/Income_Tax/index.shtml

"My account" balance due and payments information in CA: http://www.taxes.ca.gov/Income_Tax/index.shtml

Information about taxes for trades or businesses in CA: http://www.ss.ca.gov/business/business.htm
Up-to-date Entity Mail Processing Times in CA: http://www.ss.ca.gov/business/bpd_processing_times.htm


Information about taxes for business entities in CA: http://www.taxes.ca.gov/index2.html
Information about taxes for business entities in CA: http://www.taxes.ca.gov/incbus.html
Information about LLCs in CA: http://www.ss.ca.gov/business/llc/llc_faq.htm
Information about Corporations in CA: http://www.ss.ca.gov/business/corp/corp_faq.htm
Information about Partnerships in CA: http://www.ss.ca.gov/business/gp/gp_faq.htm

Information about CA renter's credit: http://www.ftb.ca.gov/individuals/faq/ivr/203.html

California County, City & Town taxes: http://www.statelocalgov.net/state-ca.htm


Read about the advantages and disadvantages of six types of business organizations from proprietorship to incorporation:  http://www.ss.ca.gov/business/filings.htm


Payroll tax information, if you have a separate entity (corporation) that you trade through: http://www.edd.ca.gov/taxind.htm

Information about CA tax amnesty February 1, 2005 through March 31, 2005: http://www.ftb.ca.gov/amnesty/index.html


Search to see if the entity name you wish to use is available: http://kepler.ss.ca.gov/list.html
http://www.ss.ca.gov/business/llc/llc_naav.htm


Discover what's new in Business tax law, or scroll through general information on taxes and businesses. Download forms. http://www.ftb.ca.gov/forms/index.html


Download California tax forms for partnerships and limited liability companies. http://www.ftb.ca.gov/forms/misc/3556.html

Click here to see newspaper story about California non-filers.

Click here for additional CA information, LLC formation and the 25102(f) notice.

Click here for the CA form 568 LLC tax return booklet.

CA Net Operating Losses (NOL) differ from the IRS's NOL rules:
http://www.taxalmanac.org/index.php/CA_-_NOL_Deductions_Suspended_then_Reinstated

http://www.calchamber.com/GovernmentRelations/IssueReports/Documents/IssuesSummaries/09-IssueSummariesNetOperatingLoss.pdf

http://www.ftb.ca.gov/law/legis/07_08bills/ab135_011607.pdf

Starting with 2008 and through 2010 CA has a two-year suspension of the corporation franchise and income tax net operating loss (NOL) deduction, which would then be followed by a phased-in conformity to the federal NOL carryback and carryover periods; and enactment of a modified tax amnesty.

http://www.ftb.ca.gov/forms/misc/3556.html
http://www.ftb.ca.gov/forms/misc/3556.pdf
LLCs classified as partnerships or disregarded entities are subject to an $800 annual tax if they are doing business in California, or the California Secretary of State accepts their articles of organization or certificate of registration. The annual tax is pre-paid for the privilege of doing business in California and is due on the 15th day of the fourth month after the beginning of the taxable year. LLCs must file a Limited Liability Company Tax Voucher (FTB 3522) to pay the annual tax.

First Year Annual Tax Due Date:

• A domestic LLC has until the 15th day of the fourth* month after filing its articles of organization with the Secretary of State to pay the first year annual tax.   *we believe CA writers do not understand English and math.   and we suggest taxpayers consider paying by the 15th day of the third month after (or the fourth month of).
• A domestic LLC has until the 90th day after filing its articles of organization with the Secretary of State to pay a $20 Secretary of the State fee.

LLCs are also subject to an annual fee based on their total income. (tentatively declared unconstitutional March 3, 2006).  Total income is defined as the sum of worldwide gross income plus cost of goods sold (California Revenue and Taxation Code Section 24271). The LLC fee is due on the original due date of the return, which is the 15th day of the fourth month following the close of its taxable year. Use Form 568 (Limited Liability Company Return of Income) to report income and the fee.

Pay the annual $800 LLC tax on CA form 3522 subject to a late payment penalty plus interest.  Due by 15th day of 4th month of the taxable year.  i.e. it is due before the end of the year.

Pay the biennial $20 LLC tax on CA SOS form LLC-12 subject to a $250 late filing penalty.


Pay the annual $800 Limited Partnership tax with form CA form 565 or with extension CA form 3538.  Due by 15th day of 4th month following the taxable year.  i.e. it is due after the end of the year.


General Partnerships are exempt for the $800 annual tax and the annual fee on income.



http://www.taxes.ca.gov/CorpS.html
The annual tax for S corporations is the greater of 1.5 percent of the corporation’s net income or $800.Note: As of January 1, 2000, newly incorporated or qualified corporations are exempt from the annual minimum franchise tax for their first year of business.



On March 3, 2006, a San Francisco Superior Court ruled that the "fee" imposed by California on LLC gross income is a "tax" that is unconstitutional because it is not fairly apportioned. Northwest Energetic Services, LLC v. California Franchise Tax Board (Cal. Super. Ct. No. CGC-05-437721).

Four year Statute of Limitations explained here:
http://www.ftb.ca.gov/professionals/taxnews/article/llcfee.html

Protective Refund Claim form: http://www.gtlaw.com/pub/alerts/2006/0401.pdf to be faxed to CA @ 916-845-9796  or click  http://www.venulex.com/viewdoc.asp?documentID=5381 for another site.


update:
AB 198 was signed by the Governor on October 9, 2007

The California Legislature has enacted a new law that addresses the constitutionality of the state's limited liability corporation (LLC) fee scheme. Specifically, the new legislation bases the LLC fee on LLCs' income derived from income in-state, rather than on worldwide gross receipts without apportionment. It also codifies a state court decision to ensure that only refunds of the fee collected in violation of the U.S. Constitution will be refunded. ( L. 2007, A198, eff. 10/10/2007 .)

 

This is a general summary from a CA based tax pro:
Not only does California charge a $800 annual tax for S Corps, Limited Partnerships and LLC's for the privilege of doing business here and filing a tax return, but the businesses that do form an LLC also have a gross receipts tax such as $250,000 to $500,000 = $900 fee, $500,000 to $1,000,000 = $2,500 fee, $1,000,000 to $5,000,000 = $6,000 fee and $5,000,000 + = $11,790 fee. (2004 Fees) This is all in addition to the $800 minimum fee, then income tax on the pass through to the members from there.

California is not a very business friendly State. Consequently LLC's are not the choice here unless you can stay under the $250,000 to avoid the gross receipts tax. But the $800 annual tax fee is still due. They also have a totally separate LLC form to complete.

We just heard that Nissan is moving its operations out of California and going to Tennessee.  So California lost another large employer. For years now, large employers like TRW Information Services (now Experion) some of SBC Pacific Bell and other well know large corporations having been moving all or part of their operations out of California due to the high cost of doing business. They can go to Texas, Tennessee, Arkansas, Kentucky and of the other States and "cut" deals and reduce their operation costs, purchase property at less cost, less property tax, etc.

Do not forget the City Permit issue.  They average probably about $125 annually depending on the city, but then some of the City's also have a sliding scale on Gross Receipts. I have a Retail Client that has over $6 Mil in Gross Receipts and his annual City License is around $1,600 per year and keeps going up. Another client that is a Service Business owner and spouse pays $137.50 for their permit, additional taxes due if they add an employee.

Download City of Los Angeles business tax forms.  http://www.lacity.org/finance/Business_Tax_Forms.htm
http://lacity.org/finance/finA3.htm

http://lacodes.lacity.org/NXT/gateway.dll/lamc/code00000.htm/chapter00002.htm#JD_21.00


Form AB63 program:
http://lacity.org/finance/finA1ai.htm
Contact LA City Finance:
http://lacity.org/finance/finH.cfm
New Business Exemption for First Two Years of Operation:
http://lacity.org/finance/finA5c.htm
Small Business Exemption:
http://lacity.org/finance/finA5e.htm
Other Exemptions:
http://lacity.org/finance/finA5g.htm
Tax Discovery Program (form letter):
http://www.ci.la.ca.us/finance/pdf/AB63/Notification%20(3-4-04)%20A.pdf



Links to LC Municipal Code Chapter II - to fight LA demands for business taxes/fees:
SEC. 21.49(c)(3)(vi)  GROSS RECEIPTS FUND CLASS 9.
SEC. 21.00 (a)
"Provided, further, that any agent or broker dealing in stocks or other similar written instruments evidencing the right to participate in the assets of any business, or dealing in bonds or other evidences of indebtedness, who also deals in that property as a principal, shall include the gross receipts by which the tax is measured the amount of his trading profits resulting from these dealings. No deduction from receipts attributable to trading as a principal shall be made unless the deduction is provided for under Subsection (a) of Section 21.00 of this article."

buzz words:
I do passive investing; I invest for myself; I'm not a stock broker; I do not invest other people's money/




City of Newport Beach business license.  http://www.city.newport-beach.ca.us/revenue/revenue.htm



City of Redondo Beach business license.  http://www.redondo.org/faqs/qanda.asp?id=19#150



City of San Francisco business registration. http://www.sfgov.org/site/treasurer_page.asp?id=14973



California Counties' Websites
http://www.csac.counties.org/counties_close_up/county_web/index.html


 

Taxpayers requiring more assistance in their PLANNING, design and set-up of their trading business and with the PREPARATION or the REVIEW of their tax filings are encouraged to contact us for personally tailored tax advice at our normal rates.

How can a CPA help you? 

Why work with a CPA? 

Tax Mama's I  can do it myself, thank you! 

Smart Money's Finding a Tax Pro 

The Blade's Complicated Returns send filers to the Pros 

What's needed to get started right away?


Write to us first with an outline your situation and what you are looking to accomplish (besides the obvious: lowering tax bill):  GetMyCaliforniaTaxesDone

California Board of Accountancy
https://www.cba.ca.gov/ppns_search  (leave off the zip code & firm name when searching)

Colin M. Cody, CPA, CMA
6004 Main Street
Trumbull, Connecticut 06611-2400

(203) 268-7000



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http://www.sots.state.ct.us/SBOA/DownloadData.html
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