California’s tax authorities require businesses to file CA Form 568 yearly to maintain the good standing status of their LLCs. Not filing CA Form 568 presents the danger of incurring fines, interest fees, or business suspension.
It doesn’t matter if you are a single-member LLC or a multi-member partnership, as this form takes care of all your tax requirements and legal challenges with the state.
Don’t worry if you’ve never heard of it or have no idea what it’s for, this guide is designed to cover everything you will need to know about CA Form 568.
What is CA Form 568?
Form 568 is the income tax return form for California issued to LLCs. It submits the income document on record for the LLC, computes the $800 franchise tax, and any other charges payable depending on income. This form is mandatory for all LLCs regardless of whether they are dormant or inactive, or even based outside the state.
Who Needs To File CA Form 568?
This question applies to those who associate with California and are just starting, managing an out-of-state LLC, or are in the process of restructuring. Wondering if CA Form 568 requires filing? Let’s clear things up:
Single-member LLCs: This includes businesses operated by just one person, even if the income is reported on their personal tax return.
Multi-member LLCs: These are treated as partnerships for tax purposes unless the LLC has elected to be taxed as a corporation.
Corporations Paying LLCs: This includes entities that have filed Form 8832 to be taxed as an S Corporation or C Corporation but are still registered as LLCs.
Foreign LLCs: These are LLCs formed outside of California but doing business within the state; they are also required to file CA Form 568
Additions: Some may forgo submitting Form 568 if they are sole proprietors with no California-sourced income, but those cases are uncommon.
Overview for Submitting CA Form 568
Paying taxes as a California LLC should not be a problem. Let us guide you through the steps, whether you are filing through hardcopy forms or filling out forms online.
E-filing or Paper Filing: Which Should You Go For?
If you enjoy mailing forms, then the paper Filing option will work for you, just know that it is slower, and could take weeks to process.
If e-filing, Acknowledgment is guaranteed within 24 hours, which cuts down on errors as the system checks all inputs. Recommended for LLCs with complex incomes or multiple members.
Sections of CA Form 568
Entity Information (Page 1, Top Section)
- Full Legal Title: Alongside your California Secretary of State, the LLC’s registered name must also be your legal name.
- Entity number: This information is either on your SOS registration or FTB notice if you have previously filed.
Use one address consistently for all tax documents, even when home-based, as the mailing address.
Warning: Mistyped lines can result in delays with processing. Make sure to double-check the legal name provided by the LLC!
Income & Deductions (Page 2, Schedule I)
- Total income – Report all CA-sourced revenue (even if your LLC lost money).
- Deductions – Ordinary business expenses (rent, payroll, supplies) reduce taxable income.
Common mistake: Remember to keep the profit/loss statement nearby! It can be helpful for the mixture of net income (after expenses) and gross receipts (total sales).
Member/Manager Details (Schedule K-1)
- Members’ share of ownership: Make sure the ownership percentages for all members add up to exactly 100%
- Distributions: If allocated profits were disbursed, show the amounts per member.
Tip: Even single-member LLCs need to take care of this by putting themselves down as 100% owners.
Fees & Taxes Due (Page 3, Schedule T)
- Annual tax of $800: An LLC, whether making any income or not, has to pay this tax every year.
- Additional Fee: A fee applies if the LLC’s total income exceeds $250,000 (refer to FTB’s fee chart).
Warning: Budget for this payment every year! It is the number one reason why penalties are issued.
Signature & Submission
Who signs the form? It must be signed by an authorized person, either a member, manager, or representative, especially if filing electronically.
How to pay the tax: You can pay online using ACH through the FTB website, or mail a check along with the completed paper forms.
Before final check: double-check all.
✔ All income/deductions align with the records.
✔ Name/Number of the LLC on the documents is correct.
✔ Payment of fees is calculated properly.
Common Mistakes when Filing CA Form 568
We can all agree that even the most organized business owners can trip up with tax forms. Here, let us clear up some common mistakes
Assuming “No Income = No Filing”
This mistake involves assuming that your newly formed LLC or dormant business requires dismantling.
California doesn’t care how much revenue you have: You still need to pay the $800 tax and submit the files.
Incorrect Identification of your LLC
Calling your multi-member LLC a “sole proprietorship” is incorrect and can lead to confusion or tax issues.
Forgetting to file a Schedule K-1 for each owner is another common mistake that can result in penalties.
To avoid these errors, make sure your tax filings match your federal tax classification—check your most recent IRS filing or refer to your LLC operating agreement for guidance.
Mathematical Errors
Mathematical blunders like transposing numbers in income/expense totals, an Increase in Tax-Related Business Changes income fee based on the $250K revenue cap, also easily misclassify under ‘adding extra obligations.’
Best trick: Calculate totals using a template and later use the form for submission.
Forsaking Submission Dates
April 15 isn’t just for personal taxes—it’s CA Form 568 due date too. Late filings trigger:
- A $18/month penalty (5% of unpaid tax per month)
- Possible LLC suspension
Ignoring Multi-State Requirements
For out-of-state LLCs: If you sell goods or services in California (even online), you likely owe CA Form 568.
Even having remote employees or contractors in California can trigger a filing obligation.
What’s New: CA Form 568 Updates You Need to Know
Tax regulations will be added every year. Here is what has been changed for Californian LLC’s filing in the previous season:
Increased Revenue Increase Fees
The additional charge for high-revenue LLCs now begins at $ 300 K.
If your LLC makes between $ 300 K and $ 500 K, you’ll owe $900 on top of the $800 franchise tax. Fees scale up from there.
E-File Requirement for Bigger LLCs:
LLCs with assets of $10 million or more than 100 members are required to e-file.
Positive outcome: Smaller LLCs are still permitted to file using traditional methods (though e-filing is decidedly quicker).
New Tax Credits for Green Businesses
Eco-friendly LLCs could be eligible for a new credit of $1500 for sustainable improvements (such as supporting solar and electric vehicle charging stations)
Catch: To receive this, you will need to submit Schedule 3508 along with your Form 568.
Out-of-State LLCs’ Standalone Rule
The FTB now explicitly counts online ad revenue from CA customers as taxable activity.
Example: Does your Delaware-based LLC run Facebook ads targeting Californians? You likely owe CA taxes now.
If you wish to know more about filing for updated information, check FTB’s official page. They update every year. For information regarding rules about LLCs, check the CA Secretary of State’s website. Accounting software integrates tax form updates automatically.
Final Thoughts
You’re now equipped to tackle filing CA Form 568, one of the more mundane tasks for a business owner, especially if you’re an LLC running a business in California. The good news is that it’s less scary than what people make it out to be once you have a clear understanding of what it is and how to manage it.
Need help staying compliant? Try EasyFiling for fast, accurate submissions.
Whether you’re filing for the first time or need a quick refresh, understand if there’s a filing obligation on your end, be aware of the deadlines, and renew any necessary licenses or permits.
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Frequently Asked Questions
What if my LLC isn’t generating any revenue?
That’s not a problem. Even if your LLC has no revenue, you are still required to complete and submit Form 568. This is a mandatory requirement for every year your LLC operates, with or without business activity in California.
How do I correct an error that I made on CA Form 568?
You can still file an amended return. This is simple to do by checking the Amended Return mark and submitting a new Form 568, including original details and all relevant changes.
How do I pay the annual $800 LLC tax?
Payment is possible through the California Franchise Tax Board website or by sending a check and Form 3522. That is the payment voucher for tax. Simply ensure that payment is made within the first few months of forming an LLC.
What if I’m no longer operating my LLC — do I need to continue filing?
You can stop operating your business, however, a Form 568 still needs to be filed for the year the business is closed. An application to cancel an LLC that is registered with the state is also needed; this can be done to cut future unsolicited costs.
Swostika Silwal
