LLC Biennial Report and Tax Filing Requirements in California

If you want to start and run a California limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for California LLCs.

California LLC Initial and Biennial Statements of Information

Unlike other states, California requires you to file an initial statement of information within 90 days of filing your articles of organization. You'll file this form with the California Secretary of State (SOS).

To complete the statement, you'll need to provide much of the same information needed for the articles of organization, including:

• your LLC's name
• your LLC's SOS entity number
• your LLC's business address
• the name and addresses of your LLC's members and managers
• the name and address of your LLC's registered agent
• the type of business your LLC will be engaged in
• your LLC's chief executive officer (if elected or appointed)
• a statement about whether there's a labor judgment or proceeding against your LLC, and
• an email address, if you want to opt in to email notifications from the SOS.

The statement will need to be signed by an authorized person, like an LLC member or representative.

The statement can be completed online at the SOS website. You can also download a blank information statement form (Form LLC-12) to complete and mail to the SOS. As of 2023, there's a $20 fee to file the initial statement.

After you submit your initial statement, you must file the same statement of information every two years. If you registered your LLC in an even-numbered year, then your registration would be due every even-numbered year, and vice versa. You can file your statement within the six months preceding the anniversary month of your registration.

For example, suppose you registered your LLC on November 16, 2022. After filing your initial statement, your next statement of information will be due between June and November 2024.

As with the initial report, subsequent reports can be filed online or by mail. As of 2023, the filing fee for each biennial information statement is $20.

State Business Taxes in California

When it comes to income taxes, most LLCs are treated as pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves don't pay federal income tax, only their members do. As an LLC owner, you'll report and pay taxes on your share of the LLC's income.

Must pay a franchise tax. California imposes an $800 annual franchise tax on LLCs

Might pay an LLC fee. If your LLC will make more than $250,000, you'll need to pay an additional fee based on your business's income. As of 2023, the fee will range between $900 and $11,790.

The tax and fee are payable to the California Franchise Tax Board (FTB). For more information about the tax and fee, including guidance on which forms to use for your particular business, check the LLC section of the FTB website.

In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. The State of California, like almost every other state, taxes corporate income. California calls this type of tax a franchise tax.

As of 2023, California's franchise corporate tax rate is a flat 8.84% of net income from business transacted in California. The tax is payable to the FTB. If you've chosen to have your LLC taxed as a corporation you'll need to pay this tax. Use the state's corporation income tax return (Form 100) to pay the tax.

For more details, check out our article on California's business income income tax or the FTB website.

California Employer Taxes

Does your LLC have employees? If so, you'll need to pay employer taxes (also called "payroll taxes"). Some of these taxes are paid to the federal government (the IRS) and aren't covered here. California employers must also pay employer taxes to the state.

California has four payroll taxes:

• Unemployment insurance (UI): You pay a percentage of your employee's wages to fund a program that provides temporary payments to people who are unemployed.
• Employment training tax (ETT): The ETT funds training for employees.
• State disability insurance (SDI): You deduct SDI from employees' wages to provide benefits for employees who can't work because of an illness, injury, pregnancy, or other qualifying event.
• Personal income tax (PIT): You withhold PIT from the employee's pay based on the employee's W-4 to fund public services.

The employer (and not the employee) pays UI and the ETT are these taxes are due quarterly. SDI and PIT are withheld from employees' wages and are due periodically. To pay these taxes, you need to register your business with the California Employment Development Department (EDD). You can sign up for e-Services for Business to manage your employer tax account. Once you've registered, you'll need to file the following forms:

• Quarterly Contribution Return and Report of Wages (DE 9) to reconcile the wages and taxes you report every quarter
• Quarterly Contribution Return and Report of Wages (DE 9C) to report individual employee wages each quarter, and
• Payroll Tax Deposit (DE 88) to report and pay UI, ETT, SDI, and PIT.

You can find more information on the payroll taxes section and payroll overview section of the EDD website.

California Sales and Use Tax

If your LLC will sell taxable goods and services to customers in California, you'll need to collect and pay sales tax. You must register with the California Department of Tax and Fee Administration (CDTFA) to obtain a seller's permit. Then, periodically—monthly, quarterly, or annually—you must submit sales tax returns to the CDTFA. You can complete your sales tax returns online.

You might also be responsible for reporting and paying sales and use tax to your city or county. Make sure you check with your local taxing authorities for your reporting responsibilities.

For more information, check out the sales and use tax section of the CDTFA website.

LLC Registration in Other States

If you'll be doing business in states other than California, you might need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved. Each state has its own rules for what constitutes doing business and whether registration is necessary.

To find out whether you need to register in another state, see our state guide to qualifying to do business outside your state.

More Information About California LLCs

For more on how to operate your LLC, see our section on running an LLC. If you have any legal questions, reach out to a business lawyer in California. They can help you determine your filing requirements and tax responsibilities.

If you need more information about other states' requirements, read our article on LLC tax and filing requirements.