California LLC

[Bill Tubbs]

Ok, client formed an LLC last year (I just found that out a couple days ago) -- a Single-Member LLC that will be taxed as Sole Proprietor (1040 Sch C).

Did some reading this morning and hopefully I'm on the right track. For Federal, 1040 with Sch C. For CA, file 540, but then also have to file 568 as a separate return? Both CA 540 & CA 568 (and the $800 annual tax) due by April 15.

Then also, file an "LLC fee protective claim" -- according to http://www.ftb.ca.gov/forms/misc/3556.html

The CA 568 seems easy enough. As a SMLLC, fill in the "LLC Income Worksheet" (pg 17 of instructions), pg 1, Sch B on pg 2, and pg 3. With the LLC just incurring start-up expenses last year (the rest of the costs went into WIP/COGS) the income worksheet will be all zeroes. Basically, it looks like Sch B (CA 568) will need to match up with the 1040 Sch C.

And, from what I've seen, CA says the $800 annual fee is not a deductible business expense???

http://www.tax.ca.gov/limliacobus.html

"Is the annual tax deductible? "
"No, the annual tax is not deductible."
As it would be an ordinary and necessary expense of doing business in CA, why wouldn't it be deductible?!?

Any help will be appreciated! Thanks,
Bill