Franchise Tax Board Forms
Franchise Tax Board provides California state taxpayers with the necessary tax forms they need to use to file their returns. Among the hundreds of tax forms, three of them are the ones that are most commonly used. These are Forms 540, 593, and 3588. Although each form has a different purpose, many California state residents use them to fulfill their tax obligations. In this article, we'll go over these tax forms and help you file them to prepare your California state income tax return for both individual and business taxes.
Contents
California LLC owners must file Form 568 annually as part of their annual return of income. This form considers franchise tax and the LLC fee you paid during formation.
If you fail to pay what is owed, the California Franchise Tax Board will levy a penalty of five percent of the unpaid tax plus an additional 0.5 percent for every month or part of a month that it remains unpaid.
Corporate Returns
Corporate tax returns report profits and losses from a corporation’s business operations. They also contain details regarding the assets owned by the business, such as securities held and real estate owned.
After an accounting period has ended, corporations should file their corporate tax return as quickly as possible. Depending on the circumstances, this can be done by the corporation or its accountant.
Companies typically receive a ‘Notice to Deliver a Company Tax Return’ from HMRC, informing them they must complete and pay any applicable tax. Usually, these returns are completed within 12 months after a company’s accounting period ends.
Businesses of various types must file a corporate tax return. These include partnerships, limited liability corporations (LLCs), sole proprietorships, and other business entities that have elected to be classified as corporations for taxation purposes.
Corporations must deduct expenses associated with operating their business, such as employee salaries, insurance payments, taxes, and investment expenditures. However, some of these deductions have limitations and exceptions, so it’s wise to consult a qualified tax professional for further clarification.
Another advantage of forming a corporation is that it may be taxed at lower rates than personal income tax returns, making it more straightforward for business owners to manage their financial affairs.
When a business owner has substantial debt to be paid, the Franchise Tax Board can consider payment deferral. In this process, FTB staff review an organization’s account history and decide if it makes financial sense for them to postpone payment of their entire balance due.
In the United States, corporations that belong to a group may be able to share losses or tax credits with other members of that same organization. This practice, a consolidated return, is available in many jurisdictions.
Tax professionals can assist you in determining which tax structure best fits your needs, as well as assist with completing necessary paperwork. They may also offer advice on minimizing any penalties for tax violations.
Statements of Information
A correctly filed and paid-for statement of information (SOS Form SI-100 or Form SI-350) is mandatory for any corporation, nonprofit organization, or a foreign entity incorporated or qualifying to do business in California. Furthermore, every domestic nonprofit corporation that manages a joint interest development must file the same data statement.
The FTB does not levy a penalty for filing an incorrectly sized or misfiled SOS form, but it’s wise to consult your tax preparer before making a mistake. The FTB is friendly and responsive, ready to help with your filing needs. Plus, their website provides helpful tax tips and hints if you need help. To learn more, visit our website and request a free consultation with an experienced advisor – but listen carefully as they offer expert advice!
Minimum Franchise Tax
Corporations subject to the franchise tax, such as banks and financial corporations, RICs, REITs, FASITs, general corporate partners of partnerships, and LLC members doing business in California, must file Form 100 and pay at least the minimum franchise tax. This tax applies regardless of if they are active, inactive, operate at a loss, or file returns for short periods of less than 12 months.
Newly formed or qualified LLCs that file an initial return for their first taxable year do not need to pay the minimum franchise tax if classified as S corporations. If a newly formed or qualified LLC is not an S corporation, it must pay the $800 minimum franchise tax in its initial taxable year if filed and paid by the first quarter of its accounting period.
Depending on the entity type, certain minimum franchise taxes may be waived. For instance, a corporation holding an ownership interest in a FASIT must write “FASIT” in black or blue ink at the top margin of its tax return to avoid payment of this fee.
Small businesses owned solely by deployed members of the United States Armed Forces are exempt from paying the minimum franchise tax for taxable years beginning after January 1, 2020, and before January 1, 2030. If the owner is deployed during the taxable year, the corporation must be classified as a small business rather than a partnership and may have no more than five shareholders.
A homeowners association does not owe the minimum franchise tax in its first taxable year if it receives nonexempt function gross income over $100 during that year. The association must file Form 199 or FTB 199N (California e-Postcard) to report such income.
Corporations required to make estimated tax payments must make those payments by April 15, June 15, September 15 of the taxable year, and January 15. To avoid an Electronic Fund Transfer (EFT) penalty, all estimate payments must be sent via EFT, Electronic Fund Withdrawal (EFW), Web Pay, or credit card.
Payments
Payments are voluntary transfers of money or other goods or services from one party to another in exchange for those items or services. Payments may be made in cash, check credit card, or a combination thereof; the payee is known as the recipient and typically must acknowledge receipt with appropriate proof such as a bill, check, or credit card statement.
Payments are transactions in which two or more parties exchange goods or services for an agreed-upon price in advance. They could be a considerable cash sum, lump sum payment, or series of payments made over time. Payment could also involve barter exchanges such as gift certificates or prepaid phone cards.
The Franchise Tax Board is pleased to offer an online filing and payment system for franchise and excise taxes. While some taxpayers still prefer paper filing their returns, the electronic filing and payment system provides a more efficient, user-friendly method of managing your tax dollars – ultimately saving time and effort in the long run. To learn more about our paperless filing and payment process, visit our website today to get started!
Form 540 – California Resident Income Tax Return
California residents must use Form 540 to file their state income tax returns. This is your 1040 but for California state income taxes. Use the necessary tax forms and attach them to the 540 to file your California state income tax return properly.
Form 540 is mandatory to file for anyone who’s not tax-exempt in California that earned individual income. You can get 540 Form 2021 which you’ll file for the 2020 taxes in online fillable and printable format.
Form 593 – Real Estate Withholding Statement
Form 593 must be filed after every real estate transaction. The dynamics of how real estate withholding was changed in 2020. Starting from January 1, 2020, file Form 593 with the Franchise Tax Board after every real estate transaction. This is mandatory for every real estate transaction which shouldn’t take more than ten minutes of the filer’s time to complete.
Get 593 Form 2021 to file it online and print out a paper copy.
Form 3588 – Payment Voucher for LLCs e-filed Returns
Form 3588 is the payment voucher for electronically filed returns for Limited Liability Companies. As an LLC, Form 3588 must be filed with the FTB. If you have balance due, don’t pay your balance right away. You’ll need to round up the payment due. For example, if you have $135.49 remaining to pay, round it up to $135. If the payment needed is $135.50, round it to $136, and so on.
Get Form 3588 for 2021 payments.
