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hi patrick russell e8 with today's caliente topic great news for small startup business owners looking to start their llcs or llps in the state of california governor gavin newsom signed into law the 2020 budget a b act 85 which within one of the provisions is now exempting first year franchise fee that 800 franchise fee for the privilege of doing business in california will now be waived for any llc's or llps that organized after january 1st 2021 and this exemption will now be carried to through to january [ __ ] let's see january 1st 2024 all right and so there's no income limit to that so depending on whether or not you have a loss or making money in that first year is inconsequential to this exemption that first franchise fee is excluded for your first year now come year two then the annual 800 minimum franchise fee will be required to be paid every year until that llc formally dissolved now remember that 800 franchise fee is a minimum fee it can go higher the rate is based off of the gross sales gross revenue that the llc reports to the state of california that 800 minimum is covered for the first 250 000 of gross revenue once you receive gross once you get past the 250 000 mark from 250 000 to 499 000 the franchise fee becomes seventeen hundred dollars that's eight hundred dollars plus an additional nine hundred dollars for a full seventeen hundred dollar annual fee and then that'll cover you until five hundred thousand and then after five hundred thousand to a million nine hundred ninety nine thousand nine hundred ninety nine the franchise fees goes up to thirty three hundred dollars a year guys this has been a real quick calliente topic a real quick way to get a quick answers by using the comment box below don't just subscribe to this channel even though i will be doing this pro bono tax workshop on a daily basis but lend your voice to the show it'll make it a whole lot more fun viagrandios compadres
Thanks for your comment Elinore Silos, have a nice day.
- Edwin Gramajo, Staff Member
do I have to pay California's $800 franchise fee for my LLC Amanda here from the business finance coach where I'm simplifying accounting taxes and business planning if this sounds like something you're interested in you can subscribe to my youtube channel while still watching this video by clicking the watermark in the bottom right corner of your screen back to the California Franchise Tax fee of $800 so do you really have to pay this fee you can see the state web site behind me you just search ftb.ca.gov and you can just search FTB $800 LLC California and up will come the links for this site it does sound a little confusing as you'll see in this graph here where they talk about the annual California fee and then they talk about incomes greater than two hundred and fifty thousand dollars now just to verify I actually called and spoke to the state and part of why this is confusing is because there's two fees or taxes that apply to your LLC if you have an LLC in the state you have to pay the $800 franchise tax fee every year everyone really pays the $800 fee for any LLC formed in the state the second aspect is if you have an annual LLC fee which is in addition to that $800 fee which you pay every year as long as the income is less than 250,000 in your business you don't have to worry about an additional tax but once your gross income sales goes above 250,000 then you will have an additional tax to pay to the state of California the next thing I want to show you is the amount of that additional tax here we are in the instructions and this is where you'll see the amounts of the second feed two hundred fifty thousand to four hundred and ninety nine nine nine nine a dollar short of five hundred thousand pay $900 five hundred to a million right before million pay twenty five hundred dollars a million to almost five million pay six thousand dollars and then the next bracket over five million pay eleven thousand seven ninety like many things taxes you know it's like the person making 1 million is paying the same as the person making four point five million so you know is it fair I don't know but regardless this is the tax for California and then you can see that they give a an example down here and they go through for each business the annual tax which is that eight hundred dollar fee plus the LLC fee so the annual tax is eight hundred and the LLC fee is based on if you earn more than two hundred fifty thousand and your income and so I know that that's a little confusing I'd love to hear any questions you have in the comments below if you enjoyed this video let me know otherwise subscribe I'll see you next time have a beautiful day bye
Thanks dirljivih4 your participation is very much appreciated
- Edwin Gramajo
About the author
I've studied space warfare at West Texas A&M University in Canyon and I am an expert in systems biology. I usually feel disappointed. My previous job was employment and placement specialist I held this position for 18 years, I love talking about surfing and canyoneering. Huge fan of Jason Sudeikis I practice hurling and collect basketball cards.
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