When you do not pay your minimum LLC tax of $800 the FTB will charge you a penalty. Eventually, if you do not pay the tax your LLC will be suspended. The FTB will continue to charge you the $800 fee until the LLC is dissolved.

How does California Franchise Tax work?

For S corporations, the franchise tax is 1.5% of the corporation’s net income with a minimum tax of $800. For standard LLCs, the franchise tax is a flat fee rather than a percentage rate, and the fee varies depending on total income (essentially gross income) coming from California.

What happens when you close a LLC?

Unless dissolved, your California LLC will continue to be liable for state fees, it will continue to be open to incurring more debts, it will continue to own the assets under its name, and you won’t be able to sell those assets as your own.

What happens if I dont file franchise tax?

Penalty. 5% of the amount due: From the original due date of your tax return. After applying any payments and credits made, on or before the original due date of your tax return, for each month or part of a month unpaid.

Can a business close down and reopen with another LLC?

If you have known creditors in your business, you cannot close down an LLC for the sole purpose of evading those creditors and then re-open your business with another LLC if it’s essentially the same business.

What happens to your business when you close it down?

However, closing your business doesn’t just mean shutting down your website or storefront and calling it a day. You’ll need to formally close your LLC or Corporation. Otherwise, you can still be on the hook for filing your dead company’s annual reports, filing state/federal tax returns, and keeping up any business licenses.

Can a LLC be shut down by the FTB?

Simple answer: you certainly can shut it down, any time you want. If the LLC exists for one millisecond in the current year, $ 800 is due to the thugs at the FTB. Now, are YOU, personally, liable for the debts of your wholly owned LLC?

How to close a business entity in California?

Dissolving, surrendering, or canceling a California business entity is a multi-step, multi-state agency process that has requirements with us and SOS. The business entity must: File all delinquent tax returns and pay all tax balances, including any penalties, fees, and interest. File the final/current year tax return.