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Navigating California Tax Laws for Small Businesses

Navigating California tax laws for small businesses? Explore expert accounting services in California to streamline your financial processes and compliance.

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Navigating California Tax Laws for Small Businesses

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  1. Navigating California Tax Laws for Small Businesses

  2. Business Entity Types • Sole Proprietorship: As a sole proprietor, you report business income and expenses on your personal tax return (Form 1040). • Partnership: Partnerships file an information return (Form 565) to report income, deductions, and credits, but they don't pay income tax at the entity level. • Limited Liability Company (LLC): LLCs in California are subject to an $800 annual tax and a gross receipts fee. • Corporation: C-corporations and S-corporations have different tax treatment. C-corps pay corporate income tax, while S-corps pass income through to shareholders' personal tax returns.

  3. Sales and Use Tax In California, businesses must collect and remit sales tax on taxable goods and certain services. The current statewide sales tax rate is 7.25%, but additional district taxes may apply, making rates vary by location. It's essential to register for a seller's permit with the California Department of Tax and Fee Administration (CDTFA) if you plan to sell tangible goods.

  4. Employment Taxes If you have employees in California, you must withhold state income tax, federal income tax, and FICA (Social Security and Medicare) taxes from their wages. Additionally, employers must pay state unemployment insurance (UI) tax and employment training tax (ETT).

  5. Franchise Tax California imposes an annual franchise tax on corporations and LLCs for the privilege of doing business in the state. The minimum franchise tax is $800 per year for LLCs and corporations, regardless of income. Corporations also pay a corporate income tax based on their net income.

  6. Best Accounting Services in California Call: +15596693000 Email: fresno@aspiretax.com

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