California Form 568: LLC Return of Income

California Form 568, the Limited Liability Company Return of Income, is an annual information return filed with the state’s Franchise Tax Board (FTB). It is used to report an LLC’s financial data, such as its income, deductions, and credits. This information allows the FTB to assess the state-level taxes and fees owed by the LLC for the taxable year.

Who Must File Form 568

Any Limited Liability Company organized in California must file Form 568, regardless of its income or where it conducts business. The requirement also applies to any out-of-state (foreign) LLC that is either registered with the California Secretary of State (SOS) or is actively doing business in California. An LLC must file even if it has not formally registered with the SOS but meets the criteria for doing business in the state.

A Single-Member LLC (SMLLC) that is a “disregarded entity” for federal purposes must still file a separate Form 568 in California. This state-specific rule applies to all LLCs, regardless of their federal classification. The filing requirement also extends to LLCs that have elected to be taxed as S Corporations or C Corporations for federal purposes.

An LLC is considered to be “doing business” in California if it meets specific economic thresholds, which are indexed for inflation annually. An LLC meets this definition if its sales in California exceed $735,019, the value of its real and tangible personal property in the state is greater than $73,502, or the amount of compensation it pays in California is more than $73,502. These thresholds can require an LLC to file even if it has no physical office in the state.

Required Payments with Form 568

Filing Form 568 involves two potential financial obligations. The first is the annual LLC tax, a fixed payment of $800. This tax is required for nearly every LLC that must file Form 568 and is due even if the LLC had no income or was inactive for the year.

Separate from the annual tax is the LLC fee, a variable amount based on the LLC’s total California income. This fee applies only to LLCs with total California income over $250,000 and is structured in tiers:

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

The $800 annual tax is due by the 15th day of the fourth month of the LLC’s taxable year and is often paid with Form FTB 3522, the LLC Tax Voucher. The LLC fee is calculated on Form 568 and paid with the return. Failure to pay either the tax or the fee on time can result in penalties and interest.

Information and Forms Needed for Preparation

To prepare Form 568, you will need the LLC’s legal name, federal Employer Identification Number (EIN), and the 12-digit file number from the California Secretary of State. The LLC’s principal business activity code, which classifies its operations, is also required.

Financial information must be compiled from the LLC’s federal income tax return. For a multi-member LLC, this is Form 1065. For an SMLLC treated as a disregarded entity, the data comes from the owner’s Form 1040, Schedule C. If the LLC has elected corporate taxation, information from Form 1120 or 1120-S is needed.

You will also need information for each member of the LLC, including their name, address, and Taxpayer Identification Number. Their profit, loss, and capital ownership percentages are necessary to complete Schedule K-1 (568) for each member. Current-year forms and schedules can be downloaded from the California Franchise Tax Board’s website.

Filing and Payment Procedures

The filing deadline for Form 568 depends on the LLC’s tax classification. For LLCs taxed as partnerships, the deadline is the 15th day of the third month after the taxable year closes. For single-member LLCs treated as disregarded entities, the deadline is the 15th day of the fourth month after the year’s close.

An automatic extension to file is available, but it does not extend the time to pay. The LLC’s annual tax and any estimated fee are still due by the original deadline. LLCs taxed as partnerships receive a seven-month extension, while single-member LLCs receive a six-month extension, making the extended deadline October 15 for calendar-year filers.

California mandates electronic filing for most LLCs, especially those using tax preparation software. If permitted to file by mail, the address depends on whether a payment is included. Returns with a payment are sent to FRANCHISE TAX BOARD, PO BOX 942857, SACRAMENTO CA 94257-0501, while returns without a payment are sent to FRANCHISE TAX BOARD, PO BOX 942857, SACRAMENTO CA 94257-0500.

Payments can be made through the FTB’s Web Pay platform for direct bank debits or by credit card, which may include a convenience fee. If paying by mail, make the check or money order payable to the “Franchise Tax Board.” Include the LLC’s EIN or SOS file number on the payment to ensure it is properly credited.