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Just formed a single member LLC in California, just want to…

Just formed a single...

Just formed a single member LLC in California, just want to verify if I have to pay the $800 Annual California Franchise Tax Due if my revenue was <$250k?

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3/19/2018
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Hello. Thank you for choosing this Q&A service for assistance. My name is***** will be assisting you. You formed the LLC when?

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Customer reply replied 4 months ago
December 2017

Ok. I am getting that info for you. i will be back to you shortly.

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In brief, if you have elected the LLC to be taxed as a corporation, the first year exemption applies. Otherwise, it does not. SEE BELOW:

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In the second year and beyond, corporations are subject to the annual $800 minimum franchise tax rule. The first-year exemption only applies to S corporations, C corporations, LPs, LLPs and LLCs that elect to be taxed as a corporate entity.

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The CA Franchise Tax Board waives the first-year minimum franchise tax for new corporations that qualify or incorporate with the California Secretary of State. But corporate owners are still responsible for paying the applicable franchise tax on any net income they earn during this initial year. In the second year and beyond, corporations are subject to the annual $800 minimum franchise tax rule.

The first-year exemption only applies to S corporations, C corporations, LPs, LLPs and LLCs that elect to be taxed as a corporate entity. LLCs that are treated as disregarded entities, such as those that do not elect a corporate structure, are not exempt.

REFERENCE SOURCE:

https://www.legalzoom.com/articles/what-is-the-annual-california-franchise-tax

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Customer reply replied 4 months ago
a disregarded entity doesn't have to pay the $800?

A disregarded entity DOES have to pay the $800. SEE BELOW:

LLCs that are treated as disregarded entities, such as those that do not elect a corporate structure, are not exempt.

Tax.appeal.168
Tax.appeal.168, Tax Accountant
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Customer reply replied 4 months ago
No I see, they do. I formed the LLC after Dec 15th, so I'm exempt though, if I'm reading this correctly.
Customer reply replied 4 months ago
Thank you.

If you have not elected for the LLC to be taxed as a corporation, you are NOT exempt, which means that you have to pay the $800. Disregarded entities are not exempt.

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