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Zachary
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I opened my LLC on February 2011 as one owner (no managers).

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I opened my LLC on February 2011 as one owner (no managers). I did not conduct any business, never used this entity. What should I do to cancel this LLC asap? What kind of taxes should I pay?
Submitted: 1 year ago.
Category: Business Law
Expert:  Zachary replied 1 year ago.

Hi,

Thank you for your question. In California, there is a minimum franchise tax in the amount of $800.00 per year. You also need to file a Calfornia 568 Limited Liability Company Return of Income for 2011 and 2012.

To cancel the Articles of Organization of a domestic limited liability company (LLC), the

domestic LLC must file a Certificate of Dissolution (Form LLC-3) and Certificate of Cancellation(Form LLC-4/7). These forms may be found at: http://www.sos.ca.gov/business/llc/forms/llc-3_4-7_4-8.pdf

Please let me know if you have further questions regarding this matter. Please also remember to rate my answer positively so that I am compensated for my work on your question.

Thanks and Best Regards,

ZDN

Customer: replied 1 year ago.

Am I right stating that:If the LLC has a single memeber(just myself), it is treated as a sole proprietorship or a division of its owner, unless it elects to be taxable as a corporation? If this is true, am I required to pay $800?


 


 

Expert:  Zachary replied 1 year ago.

No, you are right, but you still have to pay the $800 franchise tax. When you are a sole proprietor LLC, you get excused form the California Corporate Income Tax. Here, since you did not run anything through your LLC, you don't really get any benefit from this exemption.

The minimum franchise tax issue is why I never recommend incorporating in CA unless you are going to make a lot of money. The best thing you can do is immediately dissolve the LLC.

The CA Franchise Tax Board has been very vigilent as of late of making sure that franchise taxes are paid. While you might slip under the radar, it's best to pay this now so that just in case you are caught later on, there will not be a large amount of penalties added on top of the minimum amount you owe now. The FTB will also allow you to enter into a payment plan once you file the return and contact them to request leniency.

-ZDN

Zachary, Attorney
Category: Business Law
Satisfied Customers: 3821
Experience: Internationational Commercial Attorney
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