Tax Requirements

Business taxes in California are some of the most oppressive of any state. We will summarize the tax requirements for common business types. Note that California also levies personal incomes taxes after the corporate tax (double taxation), but we will focus on the corporate tax. Keep in mind that business operating in California are also subject to federal taxes, but we will focus on state taxes here. To understand federal tax requirements, refer to the “United States” section in the left menu.

Corporations (C Corporations)

• This is a great source for better understanding tax rates in California. Also See the California Tax Board website for tax information for C Corporations.

• Corporations in California pay a flat 8.840% corporate tax rate. 

• If a corporation receives tax breaks, it still must pay at least as much as the alternative minimum tax of 6.65%.

• Note that California has double taxation, which means that personal income is also taxed after the corporate tax. Personal incomes in California are some of the highest in the country. Personal tax rates for Single, married filing jointly, or head of household families are found here.
 LLCs
• Find tax rates for California LLCs here. 

• Note that LLC owners must also pay personal income tax on income from the LLC. Again, personal tax rates for Single, married filing jointly, or head of household families are found here.


S Corporation

• Under CA Law, S corporation is subject to a 1.5 percent tax on its net income or $800, whichever is larger. (source)


Non-profits

501(c)(3) non-profits who have applied for tax-exempt status in California and have obtained an IRS nonprofit Tax-Exempt ID Number is exempt from the corporate tax.

Other details: Note that California has no special capital gains tax. All capital gains are also taxed at the same rates as personal income in California.

Audit Requirements

As per this source, there is no requirement for private companies to perform audits in the United States. Banks and other private businesses, however, may ask your organization to perform an audit in order to do business with it.

Sources:

• California Corporate Income Tax Summary
• Tax Rates for California Corporatios
• Tax Rates for California LLCs
• California Personal Income Tax