Business Tax Preparation & Strategy

S-Corporations (S-Corp)

California S-Corporations must file a Federal Annual Return (Form 1120-S) and a California State Return (Form 100S) by March 15th each year. While you can request an automatic six-month extension to file by the March deadline, this does not extend the time required to pay any taxes due. 

S-Corp Franchise Tax

The Franchise Tax Board imposes a 1.5% franchise tax on net income, with a minimum tax of $800 required annually for California S-Corporations. For existing entities, this $800 tax is generally due by April 15 (the 15th day of the 4th month) of the current year. Note that newly incorporated S-Corporations are typically exempt from the $800 minimum tax during their first taxable year but still subject to the 1.5% franchise tax on net income.

 

Due Dates for Estimated Tax Payments

Estimated Tax Payments for a calendar year California S-Corporations are generally due in four installments using the following schedule: 

    • April 15th: 30% of total tax liability (minimum $800 due for most existing entities)
    • June 15th: 40% of total tax liability
    • September 15th: 0% (No payment required for this installment)
    • December 15th: 30% of total tax liability

Weekend/Holiday Rule: If a deadline falls on a weekend or legal holiday, the payment is due on the next business day.

 

Important Compliance Notes

    • Minimum Franchise Tax: Most S-corps must pay at least $800 This is typically paid with the first estimated installment.
    • Tax Rate: S-corps are taxed at 5% on their net income (3.5% for financial S-corps).
    • Weekend/Holiday Rule: If a deadline falls on a weekend or legal holiday, the payment is due on the next business day.
    • Mandatory e-Pay: You must pay electronically if your estimated tax payment exceeds $20,000 or your total tax liability exceeds $80,000. Payments can be made via FTB Web Pay.
    • Shareholder Estimates: Because S-corps are pass-through entities, shareholders may also need to make personal estimated payments on their share of the income (Form 540-ES). 

Special Situations

    • New Corporations: Corporations formed on or after January 1, 2000, are generally exempt from the minimum $800 tax for their first taxable year, though they still pay tax on net income.
    • QSub Tax: If your S-corp has a Qualified Subchapter S Subsidiary (QSub), you must pay an annual $800 tax for each subsidiary with your first estimate. 

 

If BAT Services prepared your prior year S-Corp tax returns, please see the “Results Letter and Vouchers” we provided with your last tax returns for the specific amounts you need to pay or if you need help calculating your specific liability, feel free to reach out!

 

The California’s Franchise Tax Board (FTB) offers Web Pay for Business as a free and secure way to pay business taxes directly from your bank account.

 

These instructions apply to California corporations and LLCs taxed as S‑corporations that need to make estimated tax, extension, or return payments through the Franchise Tax Board’s Web Pay for Business system.

 

FTB Web Pay for Business: Step by Step Instructions

  1. Access Web Pay

    Go to the FTB Web Pay for Business portal and select Bank Account as your payment method.

  2. Choose the Business Payment Option

    • Select the Business tab
    • Choose Web Pay Business
    • Select Corporation as the entity type

  3. Enter the California Entity ID

    Provide the 7–12 digit California Entity ID (not the Federal EIN).

    • Corporations typically have a 7‑digit California Corporation Number
    • LLCs electing S-corporation status usually have a 9–12 digit Secretary of State (SOS) number

  4. Enter Contact Information

    Provide your name, phone number, and email address.

  5. Select the Correct Form

    Choose Form 100, 100S, 100W, or 100X.

    Then select the payment type:

    • Estimated Tax Payment (Form 100‑ES)
    • Extension Payment (Form 3539)
    • Original Return Payment (Form 100 or 100S)

  6. Enter the Tax Year:

    Input the beginning and ending dates of the tax year.

    Example: For the 2026 tax year, enter: January 1, 2026 → December 31, 2026.

  7. Enter Payment Details

    Provide:

    • Payment amount
    • Payment date (you may schedule payments up to one year in advance)

    Note: California generally requires the $800 minimum franchise tax, by April 15.

  8. Enter Bank Information

    Provide your:

    • Routing number
    • Account number
    • Account type (checking or savings)

  9. Review and Submit

    Confirm all information, enter your email and phone number, authorize the payment, and submit.

  10. Save Your Confirmation

    Print or save the confirmation number for your records.

Common Mistakes to Avoid

These are the issues we see most often as Enrolled Agents:

  • Using the Federal EIN instead of the California Entity ID
  • Selecting the wrong form or payment type
  • Scheduling payments for the wrong year by entering incorrect tax year dates
  • Mailing Form 100‑ES after paying online (this can cause duplicate payments)
  • Not saving the confirmation number

 

This guide is for general educational purposes only and may not reflect the most current California FTB procedures. For advice specific to your situation, consult a qualified tax professional.

Limited Liability Company (LLC )

California Limited Liability Companies (LLCs) are subject to unique taxes, varying tax forms, and filing deadlines based on how the LLC is classified. Due dates are based on federal rules.

 

The most common California LLC classifications include: 

    • Single-Member LLCs (Individual): CA Form 568 | Fed Form 1040/Sch C. Due April 15.
    • Single-Member (Pass-Through): CA Form 568 | Fed Form 1065/1120-S. Due March 15.
    • Multi-Member LLCs (Partnerships): CA Form 568 | Fed Form 1065. Due March 15.
    • S-Corp Election: CA Form 100S | Fed Form 1120-S. Due March 15.
    • C-Corp Election: CA Form 100 | Fed Form 1120. Due April 15.

Important Notes:

    • Weekend/Holiday Rule: If a deadline falls on a weekend or holiday, the due date moves to the next business day.
    • Extensions: To stay safe and aligned with federal rules, plan for a 6-month extension period.
      • Federal: You must specifically request an extension with the IRS (e.g., Form 7004 or 4868).
      • California: Extensions are granted automatically—no form is required to get the extra time to file. 
    • Filing vs. Paying: An extension provides more time to file, not more time to pay. All estimated taxes, annual taxes, and fees must be paid by the original due date to avoid interest and penalties. 
    • Payment Deadlines: The $800 annual tax, LLC gross income fees, and estimated corporate taxes must be paid by the original due date.
      • Note: The first-year $800 tax exemption (AB 85) for LLCs, LPs, and LLPs has expired for entities formed on or after January 1, 2024. 

Other Entity Types:

    • Limited Liability Partnerships (LLP) and Limited Liability Limited Partnerships (LLLP): LLP and LLLP are distinct legal structures from LLCs and are governed by separate statutes. LLPs and LLLPs generally file Form 565 (Partnership Return) in California.
    • Series LLCs: California does not allow domestic Series LLCs but recognizes foreign ones; each series is treated as a separate LLC and incurs its own $800 annual tax.

Every LLC doing business or registered in California is subject to four potential state and federal taxes.

 

Entity Level Taxation:
  1. The $800 Annual Franchise Tax: This is a mandatory flat tax for simply doing business in California.
    • Amount: $800 (Flat fee).
    • Current Year Due Date: April 15, 2026 (for calendar year filers). Use Form 3522.
    • Prior Year Balance Due: If you owe a balance from your previous tax year return (Form 568), it must be paid by the Return Due Date:
      • Multi-Member LLCs (Partnerships): March 16, 2026. Use Form 3588 to pay the balance due if e-filing.
      • Single-Member LLCs (Disregarded): April 15, 2026. Use Form 3588 to pay the balance due if e-filing. 

2. The LLC Annual Fee (Gross Receipts Fee): If your LLC’s total income from California sources is $250,000 or more, you must pay a graduated fee based on your gross receipts (total revenue before expenses).

        • Fee Schedule:
          • $0 – $249,999: $0
          • $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
        • Due Date: You must estimate and pay this fee by the 15th day of the 6th month (June 15th) using Form 3536.
Member Level Taxation:

3. Self-Employment Tax (Federal): This is a federal tax covering Social Security and Medicare, typically paid by LLC members on their share of profits.

    • Rate: 15.3% on net business earnings.
    • Breakdown: 12.4% for Social Security (on the first $184,500 of earnings in 2026) and 2.9% for Medicare (on all earnings).

4. Personal Income Tax (State & Federal): LLCs are “pass-through” entities. Profits are not taxed at the entity level; instead, they “pass through” to the owners.

    • California Rate: Graduated rates from 1% to 13.3%. Paid via Form 540.
    • Federal Rate: Graduated rates from 10% to 37%. Paid via Form 1040.
    • Estimated Quarterly Payments: If you expect to owe more than $1,000, you generally must make quarterly estimated payments (April, June, Sept, Jan).

Managing your tax obligations is easier when you know what’s coming. If BAT Services prepared your prior-year returns, please refer to the “Results Letter and Vouchers” we provided for your specific payment amounts.

 

California LLC Requirements

    • Annual Franchise Tax: $800 (Due for all LLCs regardless of income).
    • LLC Annual Fee: Required if your gross income is $250,000 or more.
    • Individual Taxes: Members are responsible for Federal and State estimated income taxes and Self-Employment tax.

Need help calculating your liability? Reach out to us today!

 

Single-Member LLC and Individual Schedule

For calendar-year taxpayers.

 

April 15th

    • $800 Annual LLC Tax for the current year (Form 3522).
    • Prior Year SMLLC Return & Balance Due (Form 568/3588).
    • Federal Q1 Estimate: 25% of total estimated tax (Form 1040-ES).
    • California Q1 Estimate: 30% of total estimated tax (Form 540-ES).

June 15th

    • Estimated LLC Annual Fee if income is $250k+ (Form 3536).
    • Federal Q2 Estimate: 25% of total estimated tax (Form 1040-ES).
    • California Q2 Estimate: 40% of total estimated tax (Form 540-ES).

September 15th

    • Federal Q3 Estimate: 25% of total estimated tax (Form 1040-ES).
    • California Q3 Estimate: $0 (No payment due).

January 15th

    • Federal Q4 Estimate: 25% of total estimated tax (Form 1040-ES).
    • California Q4 Estimate: 30% of total estimated tax (Form 540-ES).
Weekend/Holiday Rule
If a deadline falls on a weekend or legal holiday, the payment is due on the next business day.
 

For calendar-year taxpayers.

March 15th

    • MMLLC Return & Balance Due (Form 568/3588).

April 15th

    • $800 Annual LLC Tax for the current year (Form 3522).
    • Federal Q1 Estimate: 25% of total estimated tax (Form 1040-ES).
    • California Q1 Estimate: 30% of total estimated tax (Form 540-ES).

June 15th

    • Estimated LLC Annual Fee if income is $250k+ (Form 3536).
    • Federal Q2 Estimate: 25% of total estimated tax (Form 1040-ES).
    • California Q2 Estimate: 40% of total estimated tax (Form 540-ES).

September 15th

    • Federal Q3 Estimate: 25% of total estimated tax (Form 1040-ES).
    • California Q3 Estimate: $0 (No payment due).

January 15th

    • Federal Q4 Estimate: 25% of total estimated tax (Form 1040-ES).
    • California Q4 Estimate: 30% of total estimated tax (Form 540-ES).

Weekend/Holiday Rule

    • If a deadline falls on a weekend or legal holiday, the payment is due on the next business day.

 

Managing LLC and personal tax obligations can be a logistical challenge. To ensure your payments are applied correctly and to avoid penalties, please follow this guide for your California and Federal filings.

 

Where to Pay:

LLC Entity Taxes: Pay via the California FTB Web Pay for Business portal.

    • Annual Tax (Form 3522): The standard $800 yearly tax.
    • Estimated Fee (Form 3536): Required if LLC gross income exceeds $250k.
    • Return Payment (Form 3588): For the balance due on your filed return.
    • PTE Elective Tax (Form 3893): For the 9.3% elective tax (if applicable).

Member Estimates (Individual Level):

FTB Web Pay for Business: Step by Step Instructions

The California Franchise Tax Board (FTB) offers a free, secure service called Web Pay for Business to pay your taxes directly from your bank account. 

    1. Access the Portal: Go to the FTB Web Pay page.
    2. Select Method: Select the Bank Account option.
    3. Choose Category: Choose the tab for Business.
    4. Launch Web Pay: Click the button Use Web Pay Business.
    5. Identify Entity Type: Choose Limited Liability Company (LLC).
    6. Enter Entity ID: Enter your 9 or 12-digit Secretary of State Number.⚠️ Do not use your 9-digit Federal EIN.🔍 If you don’t know it, use the California Business Search to find it.
    7. Contact Info: Enter your personal or business Contact Information.
    8. Select Payment Type: Choose the specific form you are paying: Annual Tax (Form 3522): For the standard $800 yearly tax, Estimated Fee (Form 3536): If your LLC earns over $250k, or Return Payment (Form 3588): For the balance due on your filed return, etc.
    9. Enter Dates & Amount: Input the Period Beginning and Ending Dates for the payment, Enter the Payment Amount and the desired Payment Date. Tip: You can schedule payments up to one year in advance.
    10. Bank Details: Enter your routing number, account number, and Account Type (Checking/Savings).
    11. Review & Submit: Double-check all numbers before clicking submit.
    12. Save Confirmation: 🚩 Crucial: Save or print the confirmation screen. This is your only proof of payment until the transaction clears your bank. 

Common Pitfalls to Avoid

    • Selecting “Partnership”: This is reserved for General Partnerships (GP) or Limited Partnerships (LP) that are not organized as LLCs.
    • Selecting “Corporation”: Only use this if you have filed an election (Form 8832) to be taxed as a C-Corp or S-Corp.
    • Pass-Through Entity (PTE) Elective Tax: Only select this if you are making the optional elective tax payment (Form 3893) to allow members to claim a credit on their personal returns. 
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