Tips for filing LLC returns

San Diego Precision Tax Service Inc

Here are a few of the top questions we get and their answers for a refresher just as filing season gets underway.

The first question is, if a California resident sets up a single-member LLC in another state, does the LLC need to file in California? There will be no business transactions in California and all the investment income will be coming from other states.

The answer is yes. If the member is a resident, they’re required to file Form 568 and pay the $800 annual tax. An out-of-state LLC whose assets are real property located in another state is generally subject to California’s annual LLC tax if one or more managing members are California residents. If an LLC has a California member, the FTB presumes that the entity is doing business in California and the taxpayer has to present facts to show otherwise. Because the single-member LLC’s income is from non-California sources, the entity will not be subject to the LLC gross receipts fee.

The next common question is, a California single-member LLC is solely owned by an out-of-state corporation. We filed Form 568 for the LLC and Form 1120 for the corporation, but does the out-of-state corporation also have to file a California return?

Yes, the corporation will also have to file a California return because the out-of-state corporation is considered to be doing business in California as a result of its ownership of the California LLC.

Another question is, an LLC was formed in early 2025, and because it did no business, it was canceled with the Secretary of State using the short form by the end of the year. The $800 tax was never paid. Is a tax return still required in this case, given that no business was done?

One of the conditions of a short form cancellation is that the final tax return was or will be filed. If that’s the case, it sounds like we need to file a zero return for the LLC and show zero LLC tax on that return. This is correct. As long as the LLC was canceled or dissolved within 12 months of filing its articles of organization, it’s exempt from the $800 annual tax. To qualify for the exemption, however, the final return has to be timely filed by the extended due date. If the return is not timely filed, then you should consider applying to the FTB for a voluntary administrative dissolution to avoid having to pay the $800 annual tax.

Another question we hear quite frequently is, can a married couple have a single-member LLC if they’re both members? And if so, can only one of the spouses report all of the income and expenses on their return, or do they have to split all of the income and expenses?

The answer is yes. In California, a community property state, a married couple can be a single-member LLC. If the LLC is owned by both spouses, it is a community asset, and all income and expenses would be split between the two spouses.

And last, are the payment due dates for the annual tax and the gross receipts fee the same as for other entities?

The answer is no. The LLC fee due date is the 15th day of the sixth month of the current taxable year, which is June 15th, 2026, for calendar year taxpayers. The annual tax is due on the 15th day of the fourth month of the taxable year, April 15th, 2026, for calendar year taxpayers. The first year exemption from the annual tax is not available to entities formed after 2023.

Tips for filing LLC returns. To listen to this podcast, go to: https://traffic.libsyn.com/secure/spidellpublishing/SCM_01-18-26.mp3