CA LLC/Inc Involuntary Dissolution FTB Waiver: how to avoid $800/year franchise fee tax to CA
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- Опубліковано 21 тра 2023
- If you formed an LLC or Corp in California, you must pay the $800 franchise fee each year. But what if you never launched the business, or if the business is shut down or closed?
In this video I share about a process to ask the FTB (CA Franchise Tax Board) to waive the $800 franchise fee so you can shut down your California LLC or Corporation (that is not making money) without paying any more money.
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Here's the link: www.ftb.ca.gov/help/business/voluntary-administrative-dissolution-cancelation.html to the franchise tax board (FTB) voluntary administrative dissolution
I don't find the ftb application for dissolution on my LLC because it's never been launched and is just been there and it's never been engaged
If I never registered my S corp with SOS of California (Wyoming) do I need to do anything except send the dissolution
form to them?
Oh my goodness this is my exact problem and I could not find a way!! And they were saying there’s no way to not pay it.
Thank you. Very clear and I like your vibe.
I appreciate that!
Thank you for this information!!
Welcome!
Thank you so much!
Thank you this explanation 👍
Welcome!
thank you so much I am this situation very helpful.
You are so welcome
Hey Elizabeth, thanks so much for this info! I formed an LLC back in July 2023, and now planning to dissolve it. Never launched the business or made any money. Should I file the dissolution forms prior to filing tax forms for 2023 or after? Just trying to avoid fines. Thank you!
Yes file the dissolution forms ASAP before Jan 14th so you don't have to worry about 2024 taxes
Hi Elizabeth! I'm not sure if you still respond to questions under this video but I cancelled my LLC right before the 12 month mark of its initial creation. I did not use the short form cancellation form to do this, but I have the regular certificate of cancellation already from the SOS, would I still have to pay the $800 annual tax? Your video was a breathe of fresh air after no help so far from the FTB!!
My understanding is that you have to file the short form to get the automatic waiver, but that's just based on their website www.ftb.ca.gov/file/business/types/limited-liability-company/index.html#Annual-Tax - if you are not sure then I'd apply for the waiver to make sure you don't have a problem
Hi Elizabeth, thanks for sharing this info with us! So if I changed my mind in 2 months after forming an LLC or Corp and would like to terminate it with the Secretary of State I still need to fill out this FTB waiver form?
My understanding is this is only for a company that has exisited for over 12 months
I started an LLC in June before the waiver for the $800 annual tax expired, when would that kick back into effect for me if I started my LLC June 2023? Any help is appreciated, THANKS! Great video as well! :)
So if you started an LLC early in 2023 in CA (so the waiver applies) then you don't pay the $800 franchise fee tax for tax year 2023
Thanks so much for the helpful video! If I want to apply for this one, but still did not file the taxes for the current year, what would you recommend: file the taxes before or after application for the waiver ?
If you look at the form it states that they want you to have filed all tax returns and taxes that are due, before filing this form
Thanks a lot!!
Hi Elizabeth. Thank you for this information. I did this and faxed it in a few weeks ago and was wondering if they will send a letter in response and how long does this typically take? Is there a way to check that it was received or is being reviewed and processed?
Check online at bizfileonline.sos.ca.gov/ to see if it went through
Hi Elizabeth. This was very helpful. I terminated my llc with state today and verified with franchise tax board that my first year tax fee is waived first year. Do I still need to file taxes? I’ve only had llc 9 months and terminated everything as of today. Never started running business and no income or money.
Since you terminated before 14 days you don't need to file for tax year 2024. My understanding is that for tax year 2023 you'd file the tax form but owe zero taxes -- but check with the FTB to make sure
How can I avoid the payment of first year of franchise in California? As you mentioned in the beginning of the video.
You dissolve the LLC and then try to get the waiver
Hi Elizabeth, what is the implication of having a balance on a bank account when filing the request for voluntary administrative dissolution? Should I close the bank account first? The S Corp ceased operation on 12/31/2023 but I still need the bank account to pay for certain utilities.
It is typical to still have a bank account open to pay the last fees/taxes
Hey Elizabeth, Thanks so much for this value. If I haven't filled taxes or paid the Franchise fee since 2021 when I registered my LLC and we are now in 2024 do I need to first file Taxes yet for those years and close everything down before I Dissolve? Also I have my sellers Permit and I have filled taxes on that end. so do I dissolve it first? I am not sure what to do and I have been stressing
In CA you can dissolve first, then you file the tax returns as soon as you can.
Hey I have question I opened as trucking corpotion back in 2020 (inc) and I thought I closed it out years ago. Do I still qualify for this program I have never done bussiness or used it before? What do you recommend
I started a Corp in early 2022 and used it for one job only. I filed my 2022 tax return and the $800 was waived because it was the first year. In 2023 there was ZERO activity and no assets. But I didn't formally dissolve with the CA Sec Of State until Sep 2023. Since Oct 2023, it shows "dissolved" on the SS website. Since the corp technically existed in 2023 (despite having no assets, income or activity) I would normally be liable for the $800. I'm going to mail in a Form 3715. My question is: Should I also file a 2023 "zero return" for 2023 with the IRS and FTB? Or just send in the 3715 only?
They require that "You must complete all of the following in order to be approved for Voluntary Administrative Dissolution: All tax returns filed up to the date the entity ceased doing business.All taxes, penalties, and interest paid up to the date the entity ceased doing business" ... so as long as you did zero business in 2023, you have already filed all returns for up until the date the entity ceased doing business. So I'd just file the 3715
Hi! I just opened my business a couple days ago but want to close it. So what goes first step by step? Like example, close with Secretary of State and then die this and then what?
Yep you close with the secretary of state first, then close anything else you did (like a business license), then file tax forms and close the EIN
Hi Elizabeth, your “Superthanks” aren’t working by the way. If I started my LLC Jan 2022 through a company like Inc Auhtority, Legalzoom etc. do I have to go through them to shut the LLC down or can I do everything myself? I never officially did open my business everything fell through for me so do you think I qualify for the FTB Waiver?
You can do it yourself.
Hi Elizabeth, this is helpful. I have a question, I have a foreign single-member LLC registered for 14 months already. I am non-US based with no transactions, no income, just a dormant LLC that I want to dissolve. Is this $800 fee still applicable to me?
If it never operated and existed for more than a year, then I'd try under this rule. Make sure to dissolve it asap
Do you have to pay taxes if you have a LLC less than 12 months and have never used it but may in the future? My apologies I'm brand brand new to this.
If you want to keep the LLC open for using it in the future, you have to pay the $800 taxes each year, even if you are not using it.
Hello! I was wondering what would i do if my business was formed in May 2023 & I want to dissolve it now. Basically my business is less than 12 months old. I also want to avoid paying $800 as i did not conduct business
You file the "Short form" termination with the secretary of state
What happens if your business is less than 1 year old, you have some money in the checking account, which was the initial deposit from the members, and you want to dissolve the LLC. Do you have to pay the Franchise tax and income tax? Started the business August 2023 and haven't done any business.
There is a special rule that if you formed in 2023 you don't have to pay $800 tax for 2023 www.ftb.ca.gov/file/business/types/limited-liability-company/index.html#Annual-Tax and also if file the short form and cancel you don't pay the $800 for the first tax year ... but you want to file the short form cancellation ASAP
Would a 'CA Nonprofit Corporation - Public Benefit' need to pay the $800 FTB annual fee?
The $800 franchise fee is a minimum tax on profits, so a non-profit would not be paying that. But that's only if you get the tax exemption from the FTB - www.ftb.ca.gov/file/business/types/charities-nonprofits/index.html
Hi Elizabeth. I created a LLC in CA back in April 2022. However, after not using it at all (no expenses, no income, no NOTHING) I filed my articles of dissolution and my LLC was terminated in November 2022. The same year. After searching the business on the SOS website, it says I’m in good standing. However, I received a letter saying I may have “potential withholding responsibilities”. I now I realize I never filed my state taxes for the LLC, I simply didn’t know I had to. Would I just need to file a 2022 Form 568? Or How would I proceed to handle this?
Any input would be great. Thank you!
My understanding is that if you file the short form and the LLC no longer exits, you don't have to pay the $800 but you still file a tax form with zero's for that year (otherwise, the FTB has no idea whether you made money or not). www.ftb.ca.gov/file/business/types/limited-liability-company/index.html#Annual-Tax
Hello, Elizabeth. I filed the Articles of Organization - CA LLC today and it is still Pending Review. However, I immediately noticed that I made a mistake and needed it to be canceled. Is there any way to do so? or file the LLC-4/8 is the only to do so? Thank you
I haven't seen a way -- usually you just have to let it go through and then shut it down (just do it fast, under 14 days)
Formed LLC in July 3
2021 never launched or made any money. I already filed my personal taxes but not the business tax. Will I have to wait till next year to file everything together? & then dissolve the LLC or can I file business tax returns separately. As today is April 15.
If you are shutting down the LLC then you can shut it down first and file the returns as soon as you can -- you are promising to file them, they don't have to be done first
LLC was granted 4yrs ago and wasn’t launched. Lost track and has a suspended status with SOS (did not file SOI). Do we submit new SOI then apply for administrative dissolution or we can go ahead and apply for dissolution since LLC is suspended. Thank you
I'd apply for the admin dissolution right away
@@ElizabethPWthank you!
Hi,
I created a LLC in April of 2023. I haven't filed any taxes yet. I have not used the LLC Should i dissolve the LLC first then and then fill out the FTB forgiveness.
If you dissolve via the short form before one year then you don't need the forgiveness. If you missed the one year mark, then yes dissolve and apply for forgiveness
Hi! I’m trying to look this info. I made the llc on April 24, 2023. If I dissolve before April 24, 2024 do I have to pay the $800?
Today, April 15, is last day to fill taxes for the llc but I didn’t use it at all and didn’t even open an account. Do I have to still fill taxes? I’m in the county of San Diego and I hear we have until June. Does that apply to llc?
I’m been looking for answers during 2 days and this is giving me hopes!!
I really need help on this!! I have been checking every day for a reply 😢
If you are going to dissolve do it asap (!!!) so you can use the short form online. If you have not used the business you don't file taxes -- it is only if it existed for more than one year www.ftb.ca.gov/file/business/types/limited-liability-company/index.html#Annual-Tax (see the info about short form cancellation)
We shut down our LLC/LLP in November/December 2023. We had no income or profit. Do we have to pay the $800 tax? I tried calling Franchise Tax Board but couldn't get through.
Depends on when the LLC was formed. If it was formed in 2023 then no, but if it was formed in the past yes you pay the $800 unless you get a waiver from the FTB
I started an LLC in April 2020 - 2023 never use it and make no money. I didn't filing the Franchise Tax Report for all those years. Do I need to pay $800 each years for those year I fail filing franchise tax? My business status still Active/Good Standing.
I'd try to get the waiver like I talk about in the video
Thanks @@ElizabethPW
Hi Elizabeth
I registered my business in June of 2022. I stopped conducting business in 2023 due to retirement but I never cancelled my LLC until 2024. Do I still have to pay the $800 for 2024 or do I qualify for relief?
Thanks
You'd have to apply for relief using what I talk about in the video
My daughter is in exactly the same situation and the FTB has garnished her bank account and she is in a panic. Do you offer your services ? She opened a corp because her employer demanded it not sure why ? in 2018 and only operated it for 6-7 months. She had a better job opportunity in NY proceeded to move to NY and forgot all about it.
Sorry to hear that! No I don’t - you may want to contact a CPA who handles business taxes so they can negotiate with the FTB about it.
I filed my LLC in June 2023 and am wondering should I have paid the $800 Franchise tax on April 15, 2024 or am I exempt from that this year and only have to pay next year?
There was a special exemption for the first year tax for LLCs created in 2023 www.ftb.ca.gov/file/business/types/limited-liability-company/index.html#Annual-Tax
@@ElizabethPW Awesome, thank you so much!
Hi Elizabeth, how can you tell if they suspended your business or not?
Search on bizfileonline.sos.ca.gov/ for your business and you'll see the status
Can I move an existing active California Llc to another state (Wyoming) to avoid the ftb cost and still operate in California?
Depends what you mean by “operating.” If you have a physical in-person aspect in California, like inventory/warehouse, employees, in-person store, in-person clients, etc then you’d have “nexus” and need to register as a “foreign llc” in CA anyway, and need to pay the $800. But if there is no physical aspect (example: you sell e-books online), it could work.
Darn. Thx
Hello, I just file for LLC today, is there a form to waive the $800 for the first year or os ot automatic?
If you file before 1/1/24 then the first tax year being free is just part of your regular filing
I started an LLC in 2022. I paid the $800 in 2023. I want to dissolve the LLC and do business as a sole proprietor until I bring in enough income to warrant having an LLC again. If I dissolve in March 2024, would I need to pay the $800 for this year?
The default rule is yes you'd have to pay for 2024 but I'd try to get the FTB waiver, assuming you didn't use the LLC in 2024 at all
What if you’re business wasn’t making money for the first two year and only started making money in the third year?
If your LLC is suspended due to not paying/filing taxes, check out this page www.ftb.ca.gov/help/business/my-business-is-suspended.html . Otherwise, if the business is still operating and making money, then it can't do the involuntary dissolution process. You might be able to get the FTB to agree to a payment plan for the back taxes owed, but they will need the tax returns filed. I'd recommend either speaking to a business tax person to help you, or call the FTB and see what you need to do: www.ftb.ca.gov/help/contact/phone-fax.html?WT.ac=ContactUs_Phone
Hello if your still answering question I have one. I had my business since January 2020 and would like to shut it down in 2024 would I still need to pay the $800 fee. I have not been using my llc for 2 years so I haven’t made any income.
I would like to know what forms I need. to dissolve my llc.Thank you
Here's a playlist ua-cam.com/play/PLd0wcIHXfOTe3dkvsmMExs4VO2ywaU_WY.html
How can I do the taxes where do I find rhat
Here’s the LLC tax form www.ftb.ca.gov/forms/2023/2023-568.pdf
I started my business in 2023. Does the franchise fee automatically get waived or is that something I have to apply for
It's an automatic waive, but check to see if that rule is still there. It was there for me in 2021 when I started my company. You just don't file taxes and they leave you alone.
It is automatic but you'd want to file the tax form
what if ur llc was dissolved within 12 months?
If it satisfies the requirements (never operating etc.) then it doesn't need to file the taxes