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Forming An Llc In Nevada

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Forming An Llc In Nevada
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STATE OF CALIFORNIA

FRANCHISE TAX BOARD

PO BOX 942857

SACRAMENTO CA 94257-0540

Limited Liability Company Filing Information

Limited Liability Companies (LLC) combine traditional Due dates for first-year annual tax payment

corporate and partnership characteristics. The

Beverly-Killea Limited Liability Company Act of 1994 (Stats. Domestic LLCs have until the 15th day of the 4th

1994, Ch. 1200) authorizes the formation of LLCs in month after filing their Articles with the SOS to pay

California. It also recognizes out-of-state LLCs doing the first-year annual tax.

business in California.

Existing foreign LLCs that register or begin doing

General LLC Information business in California after the 15 th day of the 4th

month of their taxable year must pay the annual tax

For information on how to register or organize an LLC in either:

California, go to the Secretary of State (SOS) website at

sos.ca.gov or contact them by mail or phone at:

Immediately upon commencing business in

California.

SECRETARY OF STATE

DOCUMENT FILING SUPPORT UNIT Upon registering with SOS.

PO BOX 944228

SACRAMENTO CA 94244-2280 Avoidance of the annual tax payment is possible

for domestic LLCs beginning January 1, 2005. The

Telephone: 916.657.5448 (not toll-free) LLC must meet all of the following conditions:



For tax purposes, California classifies an LLC as a It files a first-year return that is also its final

partnership if it has more than one member. However, an return.

LLC may elect to classify as a corporation. If an LLC has a It did not conduct business.

single member, California classifies it as disregarded and It files a short form cancellation with the SOS.

treats it as sole proprietorship or a division of its owner,

unless it elects to classify as a corporation. The annual tax is not refundable once paid, even if

the LLC meets the avoidance of the annual tax

LLCs must have the same classification for both California payment requirements.

and federal tax purposes.

Annual Fee

LLCs classifed as partnerships generally determine their

California income, deductions, and credits under the

LLCs are also subject to an annual fee based

Personal Income Tax Law.

on their total income (R&TC Section 17942).

LLCs classified as disregarded calculate their tax "Total income", for purposes of the LLC fee

separately from their owners, with the exception of certain means "...gross income, as defined in Section

provisions relating to the LLC annual tax, annual fee, return 24271, plus the cost of goods sold that are paid

filing requirement, and credit limitations. or incurred in connection with the trade or

business of the taxpayer."

LLCs classified as corporations generally determine their

California income under the Corporation Tax Law. Refer to Prior to January 1, 2007, the fee was computed

FTB Publication 1063, California Corporation Tax Law, a on "total income from all sources reportable to

Guide for Corporations, for these types of entities. this state," which meant worldwide,

unapportioned income (R&TC Section

Annual Tax 17942(a)).



LLCs classified as partnerships or disregarded are subject Effective January 1, 2007, LLCs calculate the annual

to an $800 annual tax. This provision applies if they are fee on an apportioned basis based on "total income

doing business in California or the SOS accepts their from all sources derived or attributable to this state."

Articles of Organization (LLC-1) (Articles) or Application for LLCs determine "total income from all sources

Registration as a Foreign Limited Liability Company (LLC-5) derived from or attributable to this state" by using the

(Application). LLCs orgnized or registered in California are rules for sales assignment under Sections 25135 and

subject to the annual tax even if the LLC conducts no 25136 and the regulations thereunder, as modified by

business in California.

regulations under Section 25137, other than those

An LLC is not subject to the annual tax if both of the provisions that exclude receipts from the sales factor

following are true: (R&TC Section 17942(b)(1)(B)).



It did not conduct any business in California during The annual fee is due on the original due date of

the taxable year. the return, which is the 15th day of the 4th month

The taxable year was 15 days or less. following the close of its taxable year.



The annual tax is due on the 15th day of the 4th

month after the beginning of the taxable year.



FTB 3556 LLC MEO BETS (REV 07-2008) SIDE 1

The fee amount is: Forms

If the total 1996 2001

income is: 1994 & to 1999 2000 and All forms are available on the Internet. Go to our

1995 1998 after website at ftb.ca.gov and search for forms.

$250,000- $500 $500 $865 $1,042 $900

$500,000 Form FTB 3522, LLC Tax Voucher. File and pay the

annual tax payment by the 15th day of the 4th month

$500,000- $1,000 $1,500 $2,595 $3,126 $2,500 of the entity's taxable year.

$1,000,000

$1,000,000- Send payment with completed FTB 3522 to:

$2,000 $3,000 $5,190 $6,251 $6,000

$5,000,000

FRANCHISE TAX BOARD

$5,000,000 or $4,000 $4,500 $7,785 $9,377 $11,790 PO BOX 942857

more

SACRAMENTO CA 94257-0631

For tax years beginning on or after January 1, 2001,

the definition of total income excludes amounts Form FTB 3537, Payment for Automatic Extension

already included in the calculation of an LLC fee. for LLCs. We grant an automatic 6-month

extension of time to file a return. The automatic

Example

extension applies if you file the tax return by the 15 th

LLC A does business only in California during 2001 and day of the 10 th month following the close of the

LLC B has a 50 percent member interest in LLC A. LLC A taxable year. An extension of time to file is not an

has $1,200,000 of total income during 2001. LLC B has extension of time to pay. You must pay the full

$900,000 of total income during 2001, which includes balance by the original due date of the return to avoid

$600,000 from LLC A ($1.2 million X 50 percent member penalties and insterest.

interest).

Send payment with FTB 3537 to:

The filing requirements are as follows:

FRANCHISE TAX BOARD

2001 Annual PO BOX 942857

Entity Form Tax Total Income LLC Fee SACRAMENTO CA 94257-0651



Form 568, Limited Liability Company Return of

LLC A 568 $800 $1,200,000 $6,000 Income. File and pay the applicable fee plus any

th

nonconsenting nonresident member tax by the 15

$300,000 th

day of the 4 month following the close of the

LLC B 568 $800 $900 taxable year, unless filing an extension. If filing an

(900,000 - extension, file by the 15 th day of the 10th month

600,000)* following the close of the taxable year.

* For tax year 2001, LLC B excludes $600,000 of total Send form, necessary schedules, and payment for

income because it was already used to calculate the fee applicable fee to:

of LLC A.

FRANCHISE TAX BOARD

Refer to the instructions for Form 568, Limited Liability PO BOX 942857

Company Return of Income, for 2007 and later tax years. SACRAMENTO CA 94257-0601

Total income calculation changed starting with the 2007

year. The instructions provide information and examples If no payment is due, send form and necessary

about conducting business within and outside of California. schedules to:

Filing Requirements, Forms, and Mailing FRANCHISE TAX BOARD

Addresses PO BOX 942857

SACRAMENTO CA 94257-0600

Although California law uses the same entity classification

as federal, an LLC classified as a partnership must file Limited Liability Company Income Worksheet.

Form 568, pay an annual tax of $800, and an annual fee LLCs with ownership interests in pass-through

based on total income, if it meets any of the following entities must report their distributive shares

conditions: of the pass-through entities' total income excluded

from the calculation of an LLC income fee. Their

It organized in California. distributive share cannot include any deductions

If registered with the SOS to transact business in subtracted from gross ordinary income to obtain

California. net ordinary income. Also, the LLC must enter the

It is doing business in California (R&TC Section matching cost of goods sold on line 3b. Contact the

23101). pass-through entity to get the necessary information

for lines 3, 9c, 10c, 13b, 14b, 15b, 16b, and 17b.

An LLC with California source income that does not meet

any of the above requirements is required to file Form 565, A disregarded LLC also computes total income on the

Partnership Return of Income. LLC Income Worksheet. Use the applicable lines and

ignore the line items that address Schedule B.



FTB 3556 LLC MEO BETS (REV 07-2008) SIDE 2

LLCs that own a disregarded LLC must report the Example 1

disregarded LLC items on Schedules B and K. Do not

separately enter any amounts from a membership interest Paul is a California resident and a member of a

in a disregarded LLC on the LLC Income Worksheet. Nevada LLC. The Nevada LLC owns property in

Nevada. The LLC hires a Nevada management

California Schedule K-1 (568), Member's Shares of company to collect rents and provide maintenance.

Income, Deductions, Credits, etc. An LLC that elects Paul has the right to hire and fire the management

classification as a partnership for tax purposes uses this company. Paul occasionally has telephone

the

schedule to report individual member's shares of t LLC's discussions with the management company

income, deductions, credits, etc. We accept this document regarding the property. Paul is ultimately responsible

in a paperless format via CD, diskette, or cartridge. For for the property, oversees the management company,

information about the Paperless Schedule K-1 Program, and, therefore, is conducting business in California on

go to our website at ftb.ca.gov and search for K-1. behalf of the LLC. The Nevada LLC is considered

doing business in California. It must file Form 568.

LLCs classified as corporations, should refer to FTB

Publication 1060, Guide for Corporations Starting Business Example 2

in California. This publication provides information for

corporate filings. Rachel is a California resident and a member of an

Oregon LLC. The Oregon LLC has a retail store in

Converted Business Entities Information Oregon. Rachel uses a California address for the LLC

tax filings and a California accountant to prepare the

If any type of business entity converts to an LLC during LLC tax returns. Rachel, therefore, is conducting

the current year, it generally will have a tax liability and business in California on behalf of the LLC. The

return filing requirement as both the previous business Oregon LLC is considered doing business in

entity and the new LLC. California. It must file Form 568.



Nonresident Members Example 3



An LLC must file an FTB Form 3832, Limited Liability Sara is a California resident and a member of a

Company Nonresident Members' Consent, with its Form Texas LLC. The Texas LLC receives royalties from

568. The form 3832 must have each nonresident members' Texas oil wells. Sara maintains a California business

signed consent to California's jurisdiction to tax the bank account and secures financing in California for

members' distributive share of the LLC's income it attributes the LLC's Texas investments. Sara is conducting

to California sources. The nonresident member of a single business in California on behalf of the LLC. It must

member LLC consents to California tax jurisdiction by file Form 568.

signing the Single Member LLC Information and Consent on

Side 1 of Form 568. Example 4



If the LLC fails to obtain the signature of any nonresident John is a member of an Arizona LLC. The Arizona

member, it must pay tax on each of its nonconsenting LLC operates a repair shop in Arizona. John moved

nonresident members' distributive share of income at the to California and no longer works as a mechanic for

members' highest marginal tax rate. The tax is due at the the LLC. John is still responsible for some of the

time for filing Form 568, without extensions. general and financial administration of the business,

including bill payment and bookkeeping. John is,

Use Schedule T, Nonconsenting Nonresident Members' therefore, conducting business in California on behalf

Tax Liability, to calculate and report nonconsenting of the LLC. The Arizona LLC is doing business in

nonresident members' taxes the LLC must pay. Completing California. It must file Form 568.

FTB Form 3832, Single Member LLC Information and Consent,

or Schedule T does not safisfy the consenting member's Tiered Entity

California filing requirement.

A tiered entity is considered doing business in

Refer to the Form 568 instructions for Schedule T for California if one of the following applies:

additional information.

It is a nonregistered foreign LLC that is a

Doing Business in California member of an LLC doing business in

California.

The definition of doing business is "actively engaging in It is a general partner in a limited partnership

any transaction for the purpose of financial or pecuniary that is doing business in California.

gain or profit" (R&TC Section 23101). Regardless of

where the LLC primarily conducts business, if any of Tiered entities should file Form 568.

its members, managers, or other agents conduct

business in California on behalf of the LLC, the LLC

is considered to be doing business in California.









FTB 3556 LLC MEO BETS (REV 07-2008) SIDE 3

Example Past Due Notice to all types of LLCs for tax liabilties,

penalties, and interest unpaid 45 days from the first

LLC A holds rental real estate properties within notice's mail date.

California and is considered to be doing business

here. One of its members, LLC B, is not registered in LLCs may be subject to penalties and interest if either:

California and has no activities in this state other than

holding a membership in LLC A. Since LLC B is a member

of LLC A, it is also considered to be doing business in The tax or fee is late or unpaid.

California and must file Form 568. The tax return is filed beyond the extended due

date.

Series LLCs

We impose penalties under the following R&TC

California recognizes Series LLCs that form in other states if Sections:

the laws of the LLC's formation state provide for the

designation of a series of interests and (1) the holders of Underpayment and monthly (Section 19132).

the interests in each series are limited to the assets of that Delinquent (Section 19131).

series upon redemption, liquidation, or termination and may Late filing (Section 19172).

share in the income only of that series, and (2) under the

home state law, the payment of expenses, charges, and liabilities No additional penalties or interest will accure if we

is limited to the assets of that series.

receive payment in full within 15 days of the notice

Each series in a Series LLC is considered a separate LLC. date.



Each Series LLC must:. Canceling an LLC

File a separate Form 568. Beginning September 29, 2006, the requirement for

Pay its own LLC annual tax and fee. LLCs to obtain a Tax Clearance Certificate from us in

order to cancel their registration with the SOS has

If the Series LLC has registered in California, the first ended. This affects tax years on or after January 1,

LLC in the series uses the SOS number as an entity 2006.

identification number for its initial payment voucher. All

other LLCs in the series must leave the entity identification In addition, LLCs may avoid the annual tax for current

numbers blank on their first payment vouchers.

and subsequent taxable years if all of the following

When completing payment vouchers and tax returns, write requirements are met:

"Series LLC # _______" after the LLC name. In addition,

write "Series LLC" in red on the top of these documents. The LLC files a timely final tax return, including

extension, for the proceding taxable year.

We will assign an identification number to the remaining The LLC conducts no business after the last

LLCs in the Series LLC. We will notify each series of its day of the preceding taxable year.

assigned number after we receive its initial payment The LLC files the appropriate documents with

voucher. the SOS within 12 months of the filing date of

its final tax return. (For additional information,

Example refer to FTB Publication 1038, Guide to

ABC LLC is a Series LLC registered in Delaware. It Dissolve, Surrender, or Cancel a California

contains three series and files in California using the Business Entity.)

names: ABC LLC, ABC LLC Series 1, and ABC LLC

Series 2. Documents to file to cancel



Billings and Notices File one or more of the following forms with the

SOS, as their office handles cancellations:

We will bill LLCs classified as partnerships or disregarded

for unpaid annual tax and the annual fee. Domestic LLCs - File SOS form Certificate of

Dissolution (LLC-3).

We will bill LLCs classified as corporations for unpaid

estimated tax. Foreign and domestic LLCs - File SOS form

Depending upon the filing situation for each LLC, we mail Certificate of Cancellation (LLC 4/7).

one of the following:

Send forms:

Return Information Notice to LLCs for failing to show

the correct annual tax, annual fee, or nonconsenting Mail DOCUMENT FILING SUPPORT UNIT

nonresident members' taxes and applicable interest. SECRETARY OF STATE

We mail this notice to LLCs classified as corporations PO BOX 944228

if they fail to show the correct estimated tax and SACRAMENTO CA 94244-2280

applicable penalties and interest.

In Person SECRETARY OF STATE

Notice of Balance Due to LLCs for failing to pay the LLC 1500 11TH STREET, THIRD FLOOR

annual tax, LLC fee, or nonconsenting nonresident SACRAMENTO CA 95814

members' taxes plus applicable penalties and interest.

We mail this notice to LLCs classified as corporations

if they fail to pay the estimated tax plus applicable For more information, contact the SOS by calling

penalties and interest. 916.657.5448 (not toll-free), or visit their website at

sos.ca.gov.

FTB 3556 LLC MEO BETS (REV 07-2008) SIDE 4

Short Form Cancellation Signature of the LLC's managing member or the

representative with power of attorney.

Beginning January 1, 2005, a domestic LLC organized in

California qualifies to file a Short Form Cancellation if it Send the letter to FTB by:

meets all of the following:

Fax 916.845.9796

It files its Certificate of Cancellation (LLC 4/7) within

12 months of filing its Articles. Mail FRANCHISE TAX BOARD

It has no debts or liabilities, except those PO BOX 942867

described as tax liabilities. SACRAMENTO CA 94267-8888

It filed or will file a final franchise or annual tax

return with us. We will send a fax confirmation receipt. We cannot

It distributed the remaining assets after payment of, confirm by email because the letter will contain

or adequately providing for, known debts and liabilities confidential information that we cannot send over the

to the persons entitled to them. Internet.

It did not conduct any business since

organizing.

A majority of the managers or members (if no

managers or members, the person or majority of

the persons signing the Articles) votes to dissolve

the LLC.

It returned all payments it received for

members' interest to investors.

A majority of the members, or if there are no members,

a majority of the managers (or if there are no managers

or members, the person or majority of persons who

signed the Articles) execute the cancellation.



A domestic LLC meeting these conditions must file SOS

Form LLC-4/8, Limited Liability Company Short Form

Certificate of Cancellation, available at sos.ca.gov.



Protective Claims



To protect the statute of limitations on a claim, the taxpayer

may file a request with us to withhold any action on the

claim while an audit determination or litigation is still pending.

The taxpayer may claim pending the outcome of:



An appeal to the State Board of Equalization.

A court case.

An audit by the Internal Revenue Service.

An audit by another California taxing agency.

Other litigation.



Filing a protective claim



To file a protective claim based on recent court cases,

including Northwest Energetic Services, challenging the

constitutionality of LLC fees, the representative or LLC

should send a letter to us with the following information:



LLC name and identification number issued by the

SOS. Unregistered LLCs use the identification

number issued by us.

A statement indicating that this is a protective

claim.

The tax years involved.

The amount of the claim (which should match

the amount of the annual fee that the LLC paid).

A description of the issue. Stating that the LLC

fee is unconstitutional is enough.

Name, phone number, and fax number of contact

person.



FTB 3556 LLC MEO BETS (REV 07-2008) SIDE 5


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