California LLC Taxes: The Complete Filing Guide (2025)

California LLC Tax Basics

Navigating your California LLC tax obligations doesn’t have to be complicated. We’ll walk you through the essentials of pass-through taxation, explain California’s specific requirements, and highlight strategies to stay compliant and organized. This guide covers everything from federal income taxes to city-specific requirements and filing deadlines.

Use the links below to jump directly to the section you need:

• California LLC Taxes at a Glance
• Understanding LLC Taxation Basics
• Federal Tax Obligations
• California State Taxes
• Local Tax Considerations
• Tax Calendar and Filing Tips
• Tax Strategies for California LLCs
• Forms and Resources

California LLC Taxes at a Glance

Tax Type	Rate	Filing Deadline	Forms Required
Federal Income Tax	10-37% (personal brackets)	April 15, 2025	Form 1040 + Schedule C or Schedule E/K-1
Self-Employment Tax	15.3%	April 15, 2025	Schedule SE
California Income Tax	1%-12.3%	April 15, 2025	Form 540
California Pass-Through Entity Tax	9.3%	March 15, 2025	Form 568 + Form 3804 (calculation)
California Corporate Income Tax	8.84%	April 15, 2025	Form 100
Federal Payroll Taxes (If Employees)	7.65% employer + 7.65% employee (FICA)	Quarterly (April 30, July 31, October 31, January 31)	Form 941
California Unemployment Tax (If Employees)	1.5%-6.2% (new employers: 3.4%)	Quarterly	Form DE-1
Federal Unemployment (FUTA)	6% on first $7,000 per employee (0.6% after credits)	January 31, 2026 (annual)	Form 940
Sales & Use Tax	7.25%	Monthly, quarterly, or annually based on sales volume	Form CDTFA-401-A
California Franchise Tax	$800 fee	April 15, 2025	Form FTB 3522
California LLC Fee (if income $250K+)	Varies ($900-$11,790)	June 15, 2025	Form FTB 3536

Understanding LLC Taxation Basics

How California LLCs Are Taxed By Default

Your California LLC doesn’t pay taxes itself. Instead, profits flow through to you and your members, who report them on personal tax returns. This is called pass-through taxation.

Here’s how it works:

1. Your LLC earns income from business activities
2. The LLC itself files no tax return (unless you elect otherwise)
3. Profits “pass through” to members based on ownership percentage
4. Each member reports their share on their personal tax return
5. Members pay tax at their individual income tax rates

What this means for you: Unlike corporations, your business profits are only taxed once, which typically saves money.

Tax Classification Options

While pass-through taxation is the default, your California LLC can choose alternative tax treatments:

Default LLC Tax Status:

• Single-member LLC: Taxed as a sole proprietorship
• Multi-member LLC: Taxed as a partnership

Optional Tax Classifications:

• S Corporation: Can reduce self-employment taxes by paying “reasonable salaries”
• C Corporation: LLC pays corporate tax on profits, members pay personal tax on distributions (creates double taxation)

Not sure which tax classification is right for your business? Schedule a free consultation with 1-800Accountant.

Federal Tax Obligations

Income Tax

As a California LLC owner, you’ll report your share of business profits on your personal tax return using:

• Form 1040 + Schedule C (single-member LLCs)
• Form 1040 + Schedule E + Schedule K-1 (multi-member LLCs)

Federal income tax rates range from 10% to 37% based on your tax bracket (actual brackets will depend on inflation adjustments and any tax law changes).

Simply Put: Whatever money your business makes (after expenses) gets added to your personal tax return, just like income from a job.

Self-Employment Tax

LLC members actively involved in the business must pay self-employment tax of 15.3% (covering Social Security and Medicare) on their share of LLC profits.

Key points:

• Applies to net earnings of $400 or more
• Calculated on Schedule SE
• You can deduct 50% of the self-employment tax as an “above-the-line” deduction, which lowers your adjusted gross income

What happens if I miss this payment? The IRS charges penalties of 0.5% per month plus interest. However, first-time mistakes can often qualify for penalty abatement if you have a clean compliance history.

Employment Taxes

If your LLC has employees, you must:

• Withhold federal income tax
• Pay and withhold FICA taxes (7.65% each for employer and employee)
• Pay federal unemployment tax (FUTA)
• File quarterly employment tax returns (Form 941)
• Provide W-2 forms annually

Estimated completion time: 2-3 hours per quarter (significantly less with payroll software or professional help)

Estimated Tax Payments

Because no tax is withheld from your LLC profits, you’ll likely need to make quarterly estimated tax payments using Form 1040-ES. These payments cover both income and self-employment taxes on your share of the business income. Missing deadlines or underpaying can lead to IRS penalties, even if you pay in full later.

Working with an accountant can help ensure accurate calculations, on-time payments, and a smarter overall tax strategy.

Key deadlines:

• April 15
• June 16
• September 15
• January 15

Pro Tip: Set calendar reminders 15 days before each deadline. This gives you time to prepare without the last-minute rush that leads to mistakes.

California State Taxes

California Income Tax

California has a personal income tax rate of 1%-12.3% that applies to your LLC’s profits on your personal return, if your LLC has elected default taxation. 

Filing requirements:

• Use California Form 540
• Due April 15, 2025
• All LLC members must complete this return 

California Corporate Income Tax 

If you’ve elected to have your LLC taxed as a c corp, your business will be required to pay California’s flat 8.84% corporate income tax. 

Filing Requirements: 

• Use Form 100
• Due April 15, 2025

California Pass-Through Entity Tax

California’s elective PTET allows certain LLCs taxed as partnerships or S corps to pay state income tax at the entity level, reducing federal taxable income for members.

• Flat rate of 9.3% 
• Use Form FTB 3804 for tax calculation.
• Use Form FTB 3893 for payments.

Note: The PTET is designed to help owners bypass the federal $10,000 SALT deduction cap by shifting the tax burden to the business entity.

Sales and Use Tax

If your California LLC sells physical products or certain services:

• Collect 7.25% sales tax on taxable sales
• Register for a seller’s permit through California Department of Tax and Fee Administration
• File and pay collected taxes monthly, quarterly, or annually based on sales volume
• Due dates vary based on filing frequency

60-Second Check: Do I Need to Collect Sales Tax?

• Do you sell physical products in California? → Yes, collect tax
• Do you sell unprepared food products? → Generally not taxable
• Do you provide services? → Most services are exempt 
• Do you sell online to California customers? → Yes, collect tax

Products and services typically subject to sales tax include:

• Tangible personal property
• Prepared, hot, or served food
• Services associated with creation of new tangible personal property

Payroll Taxes 

If you have employees in California, you will be responsible for multiple types of payroll taxes. 

To pay the following three payroll taxes, you must register through the California Employment Development Department using Form DE-1 and submit a Payroll Tax Deposit (Form DE 88). 

• Unemployment Insurance (UI) Tax: 3.4% for new employers, 1.5%-6.2% afterwards) 
• Employee Training Tax (ETT): Flat rate of 0.1%
• State Disability Insurance (SDI) Tax: Flat rate of 1.2%

State Withholding Tax 

• Register through the California Employment Development Department
• Rate varies by employee 
• All employees must first file Form DE-4
• Employers use Form DE-9
• Due monthly, quarterly, or annually 

Annual Franchise Tax

Your California LLC must pay an annual franchise tax to the California Department of Franchise Tax Board: 

• Your first franchise tax payment is due before the 15th day of the 4th month after forming your LLC 
• Due May 15 each year following 
• $800 flat tax
• Can be filed online or by mail using Form FTB 3522

Calendar Alert: Set a reminder for April 1 to ensure you don’t miss this easy but required filing.

LLC Fee 

If your LLC earns $250,000 or more in total income, you will be required to pay an annual LLC fee. Your business’s required filing fee will depend on total income: 

• $250,000-$499,999 → $900 
• $500,000-$999,999 → $2,500 
• $1,000,000-$4,999,999 → $6,000
• $5,000,000 or more → $11,790

Filing Requirements: 

• Use Form 568
• Due June 15, 2025

California Statement of Information 

While not a tax, California LLCs are required to file the State of Information (also known as a biennial report) every two years. 

• Due within a six-month filing window
• $20 filing fee 
• Filed with California Secretary of State

Local Tax Considerations

City Sales and Use Taxes

California allows cities, counties, and other special districts to impose local sales and use taxes. These typically range from 0.10% to 2% in addition to the statewide sales tax rate. 

Cities with sales and use taxes (total tax rate state, county, and local):

• Alameda (10.75%)
• Malibu (10.25%)
• San Luis Obispo (8.75%)
• Santa Barbara (9.25%) 
• Other California cities

Filing requirements:

• Use the Find a Sales and Use Tax Rate tool to determine applicable tax rates
• File returns with California Department of Tax and Fee Administration 

Property Taxes

If your LLC owns real property in California:

• Rates vary by locality
• General property tax rate is 1%
• May qualify for various exemptions based on business type
• Contact your county assessor for more information 

Tax Calendar and Filing Tips

Key Deadlines for California LLCs

January:

• January 1: Fourth quarter payroll tax payment due (state) 
• January 15: Final estimated tax payment for previous year
• January 31: Issue W-2s/1099s to employees/contractors
• January 31: Fourth quarter payroll tax payment due (federal) 

March:

• March 15: Partnership/S-Corp tax returns due

April:

• April 1: First quarter payroll tax payment due (state) 
• April 15: Personal or corporate income tax returns due
• April 15: Federal income and self-employment tax returns due
• April 15: First quarter estimated tax payment due 
• April 15: Annual franchise tax due 
• April 30: First quarter payroll tax payment due (federal) 

June: 

• June 15: Annual LLC fee due (if applicable) 
• June 16: Second quarter estimated tax due 

July: 

• July 1: Second quarter payroll tax payment due (state) 
• July 31: Second quarter payroll tax payment due (federal) 

September:

• September 15: Third quarter estimated tax payment due

October:

• October 1: Third quarter payroll tax payment due (state) 
• October 31: Third quarter payroll tax payment due (federal) 

Record-Keeping Checklist

Keep these records for at least 7 years:

• Business income records (invoices, receipts)
• Expense receipts and documentation
• Bank and credit card statements
• Asset purchase and improvement records
• Vehicle mileage logs
• Home office documentation
• Payroll records
• Previous tax returns

Tax Strategies for California LLCs

S Corporation Election Benefits

Converting your LLC to an S Corporation for tax purposes can save on self-employment taxes:

1. File Form 2553 with the IRS
2. Pay yourself a “reasonable salary” subject to employment taxes
3. Take remaining profits as distributions exempt from self-employment tax

Example: An LLC making $100,000 in profit pays 15.3% self-employment tax on the entire amount. As an S Corp, if $60,000 is a reasonable salary and $40,000 is taken as distributions, only the $60,000 is subject to employment taxes.

Potential Savings: In this example, you’d save about $6,120 in self-employment taxes.

Business Expense Deductions

Common deductions California LLC owners often overlook:

• Home office deduction
• Business mileage (70¢ per mile for 2025)
• Health insurance premiums
• Retirement plan contributions
• Professional development expenses
• Business meals (50% deductible)

Forms and Resources

Federal Tax Forms

• Schedule C: Profit or Loss From Business (sole proprietors)
• Form 1065: U.S. Return of Partnership Income
• Schedule K-1: Partner’s Share of Income, Deductions, Credits
• Form 1120-S: U.S. Income Tax Return for an S Corporation
• Form 2553: Election by a Small Business Corporation (S Corp)
• Form 8832: Entity Classification Election

California Tax Forms

• Form 540: California Individual Income Tax Return
• Form 100:California Corporate Income Tax Return 
• Form CDTFA-401-A: California State, Local, and District Sales Tax Return
• Form FTB 3522: California Annual Franchise Tax Form

Helpful Resources

• California Department of Tax and Fee Administration 
• California Franchise Tax Board
• Internal Revenue Service
• California Employee Development Department

California LLC Taxes FAQs