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If I work as an independent contractor under a foreign LLC…

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If I work as an...
If I work as an independent contractor under a foreign LLC partnership in California, do I need to register as a foreign LLC in CA? The gross income from CA this year would be less than 50K. CA is NOT my main domicile. I travel for work. The net income payable to me would be less than 25K.
Submitted: 11 months ago.Category: Tax
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Answered in 29 minutes by:
9/5/2017
Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,220
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago

A sole-member LLC is a disregarded entity (unless it makes an election to be treated as a corporation. The LLC must file Form 568, Side 1, Side 2, Side 6 (Schedule IW), and pay the annual tax and LLC fee. If its only member is a nonresident and has not signed the Single Member LLC Information and Consent on bottom of Form 568 Side 1, consenting to California’s jurisdiction, then the LLC is required to complete Schedule T and pay the tax on behalf of its single owner. This means that the LLC will pay a tax on the nonresident's estimated net income from the LLC at the highest marginal individual tax rates. So on your case, $25k of income would result in a fee of $3,325, which is calculated at the 13.3% highest marginal rate. If you sign the concent, you just file the Form 3522 and pay the $800 annual fee.

As a nonresident working in CA, you will be required to file a Form 540NR, non-resident CA income tax return.

I hope this answers your question. If you have any more, please feel free to ask and I will be happy to answer.

Thanks! Have a great week!

Roger

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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago

I have not heard back from you. Do you have any further questions?

If you don't, can you please rate me? That is how the question is closed.

Thanks!

Roger

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Customer reply replied 11 months ago
Did you even read the question? The LLC is a partnership. It is not a sole-member LLC.
Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago

I did read the question. You said that you were working under a foreign LLC partnership, and you asked if YOU needed to register as an LLC in CA. I read it that the foreign LLC partnership was a client that you, as an LLC, was working for.

It makes no difference for my answer. If you are working in CA as a member of the LLC, and you are earning money on behalf of that LLC, then the LLC is considered to be doing business in CA and it still needs to register. CA wants to make sure that they get their cut of the LLC's profit. Since you are working in CA and you are a member of the LLC, then you are giving the LLC a taxable presence in CA.

So the answer remains unchanged. The LLC still needs to file using the forms I listed above.

Thanks!

Roger

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