California 2020 Form 568: Filing Requirements & Instructions

The 2020 Form 568, known as the California Limited Liability Company Return of Income, is a tax document for the 2020 tax year. Limited Liability Companies (LLCs) use this form to report their financial activities to the California Franchise Tax Board (FTB), including detailing income, deductions, and credits. The form is also used to figure and pay the annual LLC tax and a separate LLC fee. The information provided on Form 568 allows the FTB to verify that the correct amount of tax and fees have been paid, ensuring compliance.

Who Must File Form 568

For the 2020 tax year, the requirement to file Form 568 extends to any Limited Liability Company that is organized in California, registered with the California Secretary of State (SOS), or actively doing business in the state. The mandate to file remains in effect even if the LLC is dormant, not generating income, or operating at a financial loss for the tax year.

Multi-member LLCs that are classified as partnerships for tax purposes are required to file Form 568. This form serves as their primary state income tax return, detailing the collective financial activities of the business. Single-member LLCs (SMLLCs) also have a filing requirement in California. While an SMLLC is typically considered a disregarded entity for federal income tax purposes, California law treats it as a distinct legal entity. Consequently, SMLLCs must file Form 568 and are responsible for paying both the annual tax and any applicable LLC fee.

An exception exists for LLCs with a very short taxable year. If an LLC’s taxable year is 15 days or less and it did not conduct any business in California during that brief period, it is not required to file Form 568 or pay the associated tax and fee.

Required Information and Financial Obligations

Before completing the 2020 Form 568, it is necessary to gather specific identifying information for the LLC. This includes:

• The LLC’s official legal name as registered with the state
• Its 12-digit California Secretary of State (SOS) file number
• Its federal employer identification number (EIN)
• The principal business activity (PBA) code that best describes your LLC’s primary business
• Detailed information for all members or managers, including their names, addresses, and ownership percentages

For the 2020 tax year, nearly every LLC was subject to a mandatory $800 annual tax. This tax is a flat amount due for the privilege of doing business in California and must be paid regardless of the LLC’s income or profitability. Separate from the annual tax, LLCs may also be required to pay an LLC fee, calculated based on the LLC’s total California income for the year. “Total California income” is defined as gross income plus the cost of goods sold, from California sources. The fee was structured on a tiered basis:

• $900 for income of $250,000 to $499,999
• $2,500 for income of $500,000 to $999,999
• $6,000 for income of $1,000,000 to $4,999,999
• $11,790 for income of $5,000,000 or more

You can obtain the official 2020 Form 568 and the accompanying instruction booklet from the California Franchise Tax Board’s website. These documents are typically found in the website’s section for prior year forms. The instructions provide detailed guidance on how to correctly report all required information.

Filing and Payment Instructions

For the 2020 tax year, the Franchise Tax Board encouraged electronic filing for business entities that used tax preparation software. If filing electronically, payment could also be submitted online through methods like FTB Web Pay for direct bank transfers or by credit card through third-party services.

If you chose to file a paper return, the completed Form 568 had to be mailed to the appropriate address. For returns with a payment enclosed, the mailing address is Franchise Tax Board, PO Box 942857, Sacramento, CA 94257-0501. For returns that requested a refund or had no balance due, a different post office box was used.

Payments for the annual tax and the LLC fee were to be made using specific vouchers if not paid electronically. The $800 annual tax payment for 2020 should have been submitted with the 2020 Form FTB 3522, LLC Tax Voucher. Any estimated LLC fee payments were made with Form FTB 3536, Estimated Fee for LLCs. When paying by check or money order, it was necessary to write the LLC’s California SOS file number and “2020 Form 568” on the payment.