Single Member LLC California Form 568: Filing Requirements and Deadlines

California requires Single Member LLCs (SMLLCs) to file Form 568 annually, even if they have no income or activity. This ensures the state collects necessary taxes and fees from businesses operating within its jurisdiction. Failing to comply can result in penalties and additional costs.

Who Must File

All SMLLCs operating in California must file Form 568, regardless of income or business activity. The state classifies SMLLCs as disregarded entities for tax purposes, meaning they do not file a separate federal tax return but must still report income and pay state fees.

Foreign SMLLCs—those formed outside California but conducting business in the state—must also file. California defines “doing business” broadly, including having employees, owning property, or surpassing the state’s economic nexus threshold. As of 2024, this threshold is $690,144 in annual sales or 25% of total sales, payroll, or property in California. If an out-of-state LLC meets any of these criteria, it must register with the California Secretary of State and comply with tax obligations.

SMLLCs that have elected corporate taxation are exempt from Form 568, as they follow corporate tax rules. Additionally, SMLLCs owned by tax-exempt organizations and operating exclusively for charitable purposes may qualify for an exemption from the $800 annual LLC tax but must still file Form 568 to report their status.

Filing Deadlines

Form 568 is due on the 15th day of the fourth month after the LLC’s taxable year ends. For businesses using a calendar year, this means an April 15 deadline. If the due date falls on a weekend or holiday, it moves to the next business day.

Missing the deadline results in an $18 per member per month penalty, up to 12 months. Failing to pay the required annual LLC tax on time incurs a separate penalty, with interest accruing at the underpayment rate set by the Franchise Tax Board (FTB).

California offers a seven-month extension for filing Form 568, pushing the deadline to November 15 for calendar-year businesses. However, this extension only applies to filing the form—any taxes owed must still be paid by the original due date to avoid penalties and interest.

Required Attachments

Filing Form 568 requires supporting documentation to ensure compliance. One key attachment is Schedule IW, which reports income, deductions, and credits allocated from the LLC to its owner. This helps the FTB verify that the LLC’s financial activity aligns with the owner’s individual tax return.

If the LLC has paid nonresident members for services performed in California, a Schedule K-1 may also be required. While typically used by multi-member LLCs, some SMLLCs that pay out-of-state contractors or partners must report these transactions.

Businesses claiming deductions or credits must provide supporting documentation. For example, if an LLC deducts expenses such as rent, wages, or equipment purchases, it should include a detailed breakdown. Similarly, businesses claiming state tax credits, such as the California Research & Development Credit, must submit the necessary forms and calculations.

State Fees and Taxes

California imposes multiple financial obligations on SMLLCs beyond the annual filing requirement. The most significant is the $800 annual LLC tax, which applies regardless of income or activity.

LLCs with California-source income exceeding $250,000 must also pay a gross receipts-based LLC fee:

– $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 million and $4,999,999
– $11,790 for income of $5 million or more

This fee is due by the 15th day of the sixth month of the taxable year, meaning calendar-year businesses must pay by June 15.

Unlike most states, which tax LLCs based on net income, California calculates fees based on gross receipts. This means even businesses operating at a loss can owe substantial fees if their revenue exceeds the threshold. For example, an e-commerce business with $600,000 in gross receipts but $50,000 in expenses would still owe $2,500. This structure disproportionately impacts high-revenue, low-margin businesses, such as wholesalers and online retailers.

Payment Methods

California offers multiple payment options, but businesses meeting certain thresholds must use electronic payments to avoid penalties.

The FTB’s Web Pay system allows direct bank transfers at no cost. Businesses can also pay by credit card through an official third-party processor, though this incurs a processing fee.

LLCs owing more than $80,000 in taxes or making estimated payments over $20,000 must use electronic payments under California law. Failure to comply results in a 1% penalty on the amount due.

For those preferring traditional methods, checks or money orders can be mailed with Form 3522 (LLC Tax Voucher) or Form 3536 (LLC Fee Payment Voucher). The FTB also accepts in-person payments at its field offices, though appointments may be required. Payments should be submitted well in advance of deadlines to account for processing times and avoid late fees.

Penalties for Non-Compliance

Failing to meet California’s filing and payment requirements can lead to significant financial consequences.

Missing the Form 568 deadline results in an $18 per month penalty, up to 12 months. More severe is the penalty for failing to pay the $800 annual LLC tax, which accrues at 5% of the unpaid amount plus 0.5% for each additional month, capped at 25%. If an LLC also owes the gross receipts-based LLC fee and does not pay on time, an additional 10% penalty applies.

Beyond monetary penalties, prolonged non-compliance can lead to suspension or forfeiture of the LLC’s legal status. The FTB can revoke an LLC’s ability to conduct business in the state, preventing it from entering contracts, filing lawsuits, or securing financing. Reinstating a suspended LLC requires filing past-due returns, paying outstanding balances, and submitting a formal request for revival, which can be costly and time-consuming.