California Company Annual Renewal and Maintenance Guidelines
After successfully registered in California, the Corporation or LLC are required to operate in compliance with the General Corporation Law/Limited Liability Company Act of the State of California. All Corporation and LLCs must have and maintain a Registered Agent, which has a physical street address in California; must file Statement of Information with the California Secretary of State every year or every two years; must file and pay the USD 800 minimum franchise tax; must renew the Business License/Permit periodically.
According to Federal and State tax rules, all active business registered in California must file tax returns on time, including business income tax, sales tax, payroll tax and other relevant taxes returns.
The following four sections describe the California company’s renewal and maintenance services and fees. The first section is the information about California annual renewal requirements, including statement of information filing, franchise tax report, registered office and registered agent and business license renewal.
The second section describes relevant tax filing services, including business income tax filing, sales tax. payroll tax filing and foreign person’s U.S. source income subject to withholding tax. All U.S. companies are required to file tax returns on time to comply with tax laws.
The third section is the information about other maintenance services. Kaizen can provide high-quality audit service for you in compliance with accounting rules. Kaizen also offer bookkeeping service to develop and maintain your overall financial processes and management.
The fourth section summarize the above services and fees. The fees listed are based on estimation and only for your reference. The final service fee may be different according to actual circumstances.
Kaizen will send you the annual renewal notice and invoice two months before the due date via email. The service fee for the annual renewal includes provision the of registered office, registered agent, statement of information fling and franchise tax report filing (excluding tax payment) fees, but not including business license renewal service. Kaizen will indicate the payment due date for renewal service on the notice, please be sure to pay the entire amount before the deadline, so that Kaizen can arrange further annual renewal process for your U.S. company. Kaizen shall not be liable for late penalty if Kaizen cannot receive the full service fee from you before the deadline.
1.
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Annual Renewal Requirements
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(1)
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Statement of Information
All active business entities registered at California must file Statement of Information with the California Secretary of State every year or every two years.
Failure to file the required Statement of Information may result in penalties being assessed by the Franchise Tax Board and suspension or forfeiture.
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(2)
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Annual Franchise Tax Report
California Franchise Tax Board requires that all active business entities registered at California or doing business in California must file and pay the USD 800 minimum franchise tax. The due date is the 15th day of the 3rd month (LLC) or 4th month (Corporation) after the close of your tax year.
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(3)
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Registered Office and Registered Agent
California law requires that every business entity must have and maintain a Registered Agent in the State of California. The registered agent must have a physical street address in California. Kaizen provides professional service to help you maintain and renew the registered agent annually.
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(4)
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Business License/Permit Renewal (extra fee required)
Generally, the state and local business licenses registered in California must be renewed each year.
Kaizen will send an annual renewal notice to you two months before the due date.
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2.
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Tax Relevant Services
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(1)
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Income Tax Filing
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(a)
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Federal Income Tax Return
According to Internal Revenue Service (IRS), all business entities must file an income tax return on or before the following April 15th (Corporation) or March 15th (LLC) of the tax year, or Oct 15th (Corporation) or Sep 15th (LLC) with extension, if calendar year is applied on tax purpose. However, the business entity must pay the tax due in full no later than the original due date for filing its tax return (not including extensions). Interest and penalty will be charged on taxes paid late even if an extension of time to file is granted.
Note: LLC should file federal income tax return each year without paying any income tax based on pass-through principle. LLC can also choose to file as a Corporation, which should file and pay federal income tax each year.
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(b)
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California State Income Tax Return
Every business entity doing business in California is required to file a state income tax return regardless of the amount, if any, of its net taxable income. California state business income tax returns are due on the 15th day of the fourth month (Corporation) or third month (LLC) after the close of the year. If the due date falls on a Saturday, Sunday, or legal holiday, the filing date becomes the next business day.
The annual tax for Corporation is the greater of 8.84% of the corporation’s net income or USD 800 minimum franchise tax.
California LLCs doing business in California are taxed and classified the same as for federal income tax purposes. In addition, if the LLC makes more than USD 250,000, LLC must estimate and pay the LLC fee, starting from USD 900, by the 15th of the sixth month, of the current tax year.
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(2)
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Payroll Tax Filing and Relevant Services
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(a)
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Federal Payroll Taxes
If the business entities have employees and pay wages in U.S., they must report income and payroll taxes withheld from their employees to Internal Revenue Service (IRS) periodically and deposit these taxes in full to an authorized bank or financial institution pursuant to Federal Tax Deposit Requirements. The business entities are also responsible for filing and paying Social and Medicare Taxes (employer share amount) and Federal Unemployment Taxes.
The deposit schedule for the payroll taxes depend upon the amount of the business entity’s payroll tax liability. Employers may be subject to criminal and civil sanctions for wilfully failing to pay employment taxes.
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(b)
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State Payroll Taxes
California payroll tax is administered by the State of California’s Employment Development Department and consists of four separate taxes: Unemployment Insurance Tax (UI), Employment Training Tax (ETT), State Disability Insurance Tax (SDI), and California Personal Income Tax (PIT). UI and ETT are paid by employers, while SDI and PIT are paid by employees, but employers are required to withhold taxes from employees?pay-checks.
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(c)
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Payroll Service
Kaizen also provides professional services to collect wage and hour information from the employer and use that information to calculate gross wages, subtract all pertinent withholdings and deductions, print checks, make direct deposits and prepare all employment tax filings. Kaizen can also prepare W-2 and 1099 forms for you and resolve any inquiries from the IRS or other government agency.
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(d)
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Foreign Person’s U.S. Source Income Subject to Withholding
According to Internal Revenue Code, the payments that certain foreign persons received from U.S. sources, are subject to tax withholding. And they must report the amount withheld to IRS, if any. The sources include dividends, interest, rents, annuities, etc. Kaizen can help you prepare Form 1042, 1042-S, W-8BEN or other forms required by government agencies.
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(3)
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Sales or Use Tax
Retailers engaged in business in California must register with the California Department of Tax and Fee Administration (CDTFA) and pay the state’s sales tax. The use tax generally applies to the storage, use, or other consumption in California of goods purchased from retailers in transactions not subject to the sales tax. Use tax may also apply to purchases shipped to a California consumer from another state, including purchases made by mail order, telephone, or Internet. The sales and use tax rate in California consist of the state tax rate, the local tax rate, and any district tax rate that may be in effect.
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(4)
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Foreign Banks and Financial Accounts Filing
If a business entity in US held bank or financial account out of US, the entity maybe required to file FBAR with Department of Treasury, or FATCA related forms with IRS. Please consult with Kaizen professional consultants for more information on filing process and fees.
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3.
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Other Maintenance Services
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(1)
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Audit Service
Public companies are required to submit the audit reports to the U.S. Securities and Exchange Commission annually. Private company may also need to prepare audited financial statements annually or periodically for some reasons, such as submitting audit report to lending party.
Kaizen can offer high-quality audit service for you in compliance with accounting rules.
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(2)
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Bookkeeping Service
Kaizen provides bookkeeping service to develop and maintain your overall financial processes and management. According to the supporting documents provided by you, Kaizen will maintain and update the accounting books in accordance with the tax and business law.
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4.
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Our Service Fee
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As discussed above, all active California Corporations and LLCs are required to operate in compliance with the California business laws. The business entities may also need to apply for the license and permits with state according to different industries. Kaizen U.S. office is a professional CPA firm, offers complete compliance services and business support, such as bookkeeping, financial statement audit, filing tax return, making payroll, etc. The partial services for California company’s annual renewal and maintenance are listed for your reference,
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Item
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Description
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Service Fees
(USD)
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1
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Annual renewal including registered agent, registered office, statement of information fling and franchise tax report filing (excluding tax payment) fees
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Yearly
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900
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2
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Business license/permits renewal
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Yearly
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TBD
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3
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Federal and California state income tax returns filing
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Each filing
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800/up
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4
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Payroll tax filing and relevant services
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TBD
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TBD
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5
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Sale or use tax filing
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Each filing
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150
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6
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Foreign banks and financial accounts filing
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Yearly
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TBD
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7
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Audit service
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Yearly
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15,000/up
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8
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Bookkeeping service
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monthly
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300/up
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Note:
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(1)
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Kaizen service fee for the annual renewal includes provision of the registered office, registered agent, statement of information filing and franchise tax report filing, but not including business license renewal service and the USD 800 minimum Franchise tax.
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(2)
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Government service fee for business license/permits renewal varies depending on different industries, Kaizen will not charge extra fee for this service.
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(3)
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Kaizen service fee for Federal and California state business income tax returns is depending on complexity and transactions of financial statements.
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(4)
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Kaizen service fee for payroll tax filing and relevant services is based on numbers of employees. Please consult with Kaizen consultants for more details.
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(5)
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Kaizen service fee for quarterly sales/use tax filing is USD 150. If you need to file monthly return, our service fee is USD 120.
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(6)
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Kaizen can handle foreign accounts filing. Please consult with Kaizen consultants for more details.
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(7)
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Kaizen service fee for audit service is based on the complexity of the financial conditions. Please consult with Kaizen consultants for more details.
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(8)
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Kaizen service fee for bookkeeping is depending on the number of transactions. Please consult with Kaizen consultants for more details.
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(9)
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Fees above do not include delivery fee.
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You may also be interested in articles:
California Limited Liability Company Registration Package
California Corporation Registration Package
California Limited Liability Company Dissolution Package
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