All Forum Posts by: Account Closed

@David Tipton True, I forgot the mention that the said $800-tax only applies to LLC incorporated in CA or doing business in CA (generating revenue from being active in CA). As far as I know most other states don't have this mandatory tax.

@Lauren A. Here you can find all the information on mandatory tax and LLC fees in CA https://www.ftb.ca.gov/forms/misc/3556.pdf

A few more thoughts of mine: I am not a CPA nor an attorney, but as far as I know an LLC is usually setup as a passthrough entity. This means that all profits "go through" the LLC but are only taxed once at your personal tax rate. So from personal taxation there is no difference if you have your property in an LLC or not. As @Charles Biter mentioned, you may be able to save some taxes expenses that you may have for maintenance of you peppery (I am not an expert on this). 

However, depending on if you are thinking about selling your property at some point, you may incur the CA LLC fee that starts at $900 for $250k in income (see the link above, there you can find more details). And of course there is the mandatory $800-tax per year.

What I would ask myself, does the limited liability that comes from the LLC (given that your property is an official asset of your LLC and shows up on its balance sheet) make me sleep better at night and does the cash flow from your property cover the mandatory tax of $800 as well as the cost that you have for maintaining your LLC (e.g. for a CPA to do your tax report etc.).

Keep in mind that you need to pay the mandatory annual tax of $800 on your LLC and file a Statement of Information (Form LLC-12 or Form LLC-12NC, if you didn't have anyone join or leave your LLC) every two years. Also, keep in mind the LLC fee that is due on revenues over $250k.