Bookkeeping Services for California Businesses

The $800 minimum, and the fee that follows it

Every LLC, corporation and limited partnership registered in California owes an $800 annual minimum franchise tax. It is owed on existence rather than income, so a dormant entity, a loss-making entity and a profitable one all pay it. The temporary first-year waiver that applied to entities formed between 2021 and 2023 has lapsed, so an entity formed today owes the $800 in its first year, due the 15th day of the fourth month after formation and every April thereafter.

On top of that, an LLC with California-source gross receipts of $250,000 or more owes a separate annual fee, and this is where the real money hides. The fee is a flat amount per band rather than a percentage, so it steps: $900 from $250,000, $2,500 from $500,000, $6,000 from $1 million, and $11,790 from $5 million.

Because they are steps, a single dollar of revenue can cost you $1,600. Crossing $500,000 on December 30 rather than January 2 is a genuinely material decision, and it is one you can only make deliberately if you know where you stand in November.

We track California-source gross receipts against those bands throughout the year, so the estimated fee paid during the year is close to right and reconciles cleanly on the annual return rather than producing a penalty.

Which return you file, and when

An LLC files Form 568, a C corporation Form 100, an S corporation Form 100S, and a partnership Form 565. Each carries its own due date, and single-member and multi-member LLCs do not share one, which is a common source of a missed deadline in a group of related entities.

The pass-through entity elective tax is worth a deliberate decision rather than a default. It lets a qualifying entity pay tax at the entity level so owners can claim a credit, working around the federal cap on state and local tax deductions, and it was extended through the 2030 tax year in 2025.

The mechanics changed with that extension. A missed June 15 prepayment used to bar the election outright; for years from 2026 the election survives, but the credit available to owners is reduced. That is a cash-flow date to hold rather than a filing date to catch up on.

Whether the election helps depends on the owners' own positions, not just the entity's. We model it rather than assume it, and the books have to carry the detail either way.

Sales tax, districts, and where the sale happens

California's statewide sales and use tax rate is the floor, not the answer. District taxes are layered on top by counties and cities, so the rate that applies depends on where the goods are delivered or first used, and two customers in the same county can attract different rates.

That makes rate table maintenance and product taxability mapping ongoing work rather than a setup task, particularly for anyone shipping across the state or selling through more than one channel. Use tax on out-of-state purchases is reviewed in the same pass, because that is a common starting point for a CDTFA inquiry.

Filing frequency is assigned by the CDTFA and changes as you grow, and prepayment obligations arrive with it. Businesses often keep filing on the old frequency for a period after being moved, which is a penalty rather than a saving.

We reconcile tax collected in your billing system against tax remitted every period, so a discrepancy is a question this month rather than a finding in an audit two years from now.

Payroll, classification and the local layer

California payroll runs through the EDD, covering unemployment insurance and the employment training tax on a low wage base, personal income tax withholding, and state disability insurance. Since 2024 the SDI wage cap has been removed, so it applies to all wages - a meaningful change for anyone with senior staff whose payroll cost was previously capped part-way through the year.

Worker classification deserves more care here than almost anywhere else. California applies a strict test to whether someone is an employee or a contractor, and a misclassification is assessed with back taxes, interest and penalties rather than corrected prospectively. The bookkeeping consequence is that how a payment is coded matters, and 1099 relationships need to be documented as they are set up.

Retirement access is now effectively mandatory too: an employer without a qualifying plan is expected to register for the state program, and that obligation has extended down to very small employers.

Then there is the local layer. City business taxes vary widely, and San Francisco's gross receipts regime in particular is a substantial filing in its own right. We identify which local registrations apply and keep them on the same calendar as everything else.

Industries we work with in California

Technology and SaaS companies across the Bay Area and Los Angeles, where revenue recognition, the pass-through election and San Francisco's gross receipts tax all interact, and where headcount growth changes the payroll picture quickly.

Ecommerce and consumer brands dealing with district rates and multi-channel sales, professional services firms weighing the pass-through election, restaurants and hospitality groups across multiple locations and city jurisdictions, real estate and construction entities holding several LLCs each owing its own $800, and healthcare and wellness practices managing payroll and classification carefully.