Texas LLC, CA LLC Tax?

Question

Steven Hamilton II · Answer

As long as they are 100% passive and do not spend time voting or are involved in ultimate business decisions it should not be subject to the Franchise tax. https://www.ftb.ca.gov/businesses/Doing-Business-in-California.shtml

Steven Hamilton II · Answer

If your LLC owns or operates property in CA, you are subject to the tax. You should be paying the $800 franchise tax and filing all applicable forms including Form 568 annually.

Steven Hamilton II · Answer

Are they in any way involved in the management of the entity? If so, you'll have to pay it.

Helen Zhang · Answer

@Logan Allec @Steven Hamilton II Thank you for the response, your contribution to this thread is super helpful. I am curious if my LLC would incur $800 LLC fees as well. My LLC is texas LLC and it has a property in California. I am a Texas resident and I am actively managing the property. Is it fair to say that it will not incur $800 LLC fees?

Marco G. · Answer

Thanks for the confirmation and reference @Steven Hamilton II

Marco G. · Answer

CA member (thanks @Logan Allec, you’re right!) would be passive. Other member would be boots on the ground and responsibile. It’s a single tenant with existing business lessee. @Basit Siddiqi @Steven Hamilton II

Thanks for your responses.

Basit Siddiqi · Answer

@Marco G.If the CA resident is a managing-member of the LLC - the LLC will be required to file form 568 with CA and pay the $800 minimum fee.

Logan Allec · Answer

@Marco G.

For starters, the California resident wouldn't incur the LLC tax.  The LLC would.

And whether or not it does depends on if the LLC is "doing business" (according to the California Franchise Tax Board rather broad definition) in California.  What is the California resident's involvement in the business?

Also, this is kind of nitpicky, but LLCs don't have "shareholders"; they have "members".  :)

Texas LLC, CA LLC Tax?

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