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Adam Savett
Adam Savett, Attorney
Category: Business Law
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Experience:  I am a nationally recognized expert on complex litigation and class actions.
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I just formed a LLC and I do have a Federal EIN. Do I need

Customer Question

I just formed a LLC and I do have a Federal EIN. Do I need to also get a State of California Franchise Tax Board Number? If so, how do I get one? I have no employees and do not plan to hire any.
Submitted: 1 year ago.
Category: Business Law
Expert:  Adam Savett replied 1 year ago.

Adam Savett :

Hi, I'm happy to try and help you today.

Adam Savett :

The first question would be whether your LLC is a single member or multiple member LLC?

Expert:  Adam Savett replied 1 year ago.

The short answer is yes, you will need to register with the Franchise Tax Board (FTB) and obtain an FTB number.

 

Classification of LLCs

 

For California income and franchise tax purposes, generally the FTB classifies:

 

• A single-member LLC as disregarded from its owner, and treat it as a sole proprietorship, or a branch or division of its owner.

• An LLC with more than one member as a partnership.

 

• An LLC that files an election to classify as an "association," for federal tax purposes, as a corporation.


Importantly - an LLC must have the SAME classification for both California and federal tax purposes.

 

LLCs classified as disregarded generally do not report their own income separately from their owners. However, the FTB treats them as separate entities for purposes of the annual tax, LLC fee, tax return requirements, and credit limitations. If certain items of income/loss or payments attributable to a disregarded LLC's activity exceed certain levels, the disregarded LLC must separately report its
income on its tax return.

 

LLCs classified as partnerships generally determine and report their California income, deductions, and credits separately under the personal income tax law. These items pass through to their owners for purposes of taxation. LLCs classified as corporations generally determine their California income under the corporation tax law.

 

Refer to FTB Publication 1060, Guide for Corporations Starting Business in California, for these types of LLCs.

 

Attachment: 1060.pdf

 

 

Annual Tax

 

LLCs classified as disregarded or as partnerships are subject to an $800 annual tax. This applies if they do business in California or the SOS accepts their Articles of Organization (LLC-1) or Application for Registration as a Foreign Limited Liability Company (LLC-5). LLCs organized or registered in California are subject to the annual tax even if they conduct no business in California.

 

Attachment: 3556.pdf

 

 

Best of luck.

 

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Customer: replied 1 year ago.

My LLC's are Single Member LLC's

Expert:  Adam Savett replied 1 year ago.
Since it is a single member LLC, then the FTB treats the LLC as "disregarded from its owner."

LLCs classified as disregarded generally do not report their own income separately from their owners.

But, the FTB treats them as separate entities for purposes of the annual tax, LLC fee, tax return requirements, and credit limitations.

LLCs classified as disregarded are subject to an $800 annual tax. This applies if they do business in California or the SOS accepts their Articles of Organization (LLC-1) or Application for Registration as a Foreign Limited Liability Company (LLC-5).

LLCs organized or registered in California are subject to the annual tax even if they conduct no business in California.

Please let me know if you have any further questions.
Adam Savett, Attorney
Category: Business Law
Satisfied Customers: 12
Experience: I am a nationally recognized expert on complex litigation and class actions.
Adam Savett and 2 other Business Law Specialists are ready to help you
Expert:  Adam Savett replied 1 year ago.
Thanks for your positive rating.

Please let me know if you have any further questions.

Best of luck,

Adam
Customer: replied 1 year ago.

Thank you.

Expert:  Adam Savett replied 1 year ago.
My pleasure.
Expert:  Adam Savett replied 1 year ago.
Please let me know if you have any further questions about the Franchise Tax Board.

Regards,

Adam

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Adam Savett
Adam Savett
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I am a nationally recognized expert on complex litigation and class actions.