SMLLC filing as Schedule C offers consulting services all over the US. He is based in Texas and is all done remotely. 2 of his biggest clients are in California. He has never been to California or intends to go. Per my research (online articles), it seem like he will need to file a CA state return for the revenue from those 2 clients. Is this correct and were can I find additional information on how to do this? Is it only at year end based on the net income or gross revenue? We expect that there will be loss in 2021 since the business just started.
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Start here: https://www.ftb.ca.gov/file/business...llocation.html
This will lead you to the instructions for Schedule R, where you will also find statutory support:
"R&TC Section 25136 requires all taxpayers to assign sales, other than sales of tangible personal property, using market assignment. The market assignment method and single-sales factor apportionment may result in California sourced income or apportionable business income if a taxpayer is receiving income from intangibles or services from California sources. Such income is determined as follows:- Sales from services are assigned to California to the extent that the purchaser of the service receives the benefit of the service in California.
There are further instructions about how to allocate expenses and so on."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard -
Are we tax preparers "financial" per CA and use the three-factor apportionment? Or, single factor? How are you preparers with a couple of CA clients handling this? Is it different if the clients are individuals as opposed to businesses?Comment
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