Tue 29 Sep 2015 | By:

California Business Taxes: Everything You Need to Know

Small Business Taxes

One of the most important steps when incorporating a business in California (LLC, Corporation, DBA, etc) is the strict compliance of California business tax requirements.

This not only ensures your legal status as an operating business in the state but also your compliance of federal and state laws with regard to tax obligations.

As processing all the requirements of your California business taxes can be a bit demanding, you can use this general guide on completing it.


California Business Income Tax

As a business operating in the state, it is subject to business income tax or corporate income tax. This tax is applicable to your business if you collect income from sources within the state. To help you facilitate the corporate income tax, you can refer to this California Tax Service Center guide.

California Franchise Income Tax

Technically, because your company is doing or going to do business in the state, then you are obliged to process your California franchise income tax. The fee imposed for the franchise income tax varies depending on the gross income of your company and its business structure.

For more information on fees and requirements for franchise income tax, refer to this guide from California Franchise Tax Board.

California Alternative Minimum Tax

In addition to the business income and franchise tax, federal tax policies also impose the Alternative Minimum Tax for businesses. All types of businesses are subject to this tax, unless your business is an S Corporation.  You can refer to this NOLO guide to check if you’re required for this specific tax type.

California Sales and Use Tax

Another important tax requirement you need to take note of is the California sales and use tax. As a business operating in California, especially if you are into retail, you are subject to sales and use tax. Visit the Sales and Use Tax section of the state website for more details.


1 Tool to Make Your California Business Tax Life Easier

Startup Tools and ResourcesManaging your California business taxes may be quite a hassle especially if you’re a startup entrepreneur. What taxes are you required to comply with, what you’re exempted from, and other factors could be enough to drive you temporarily insane.

To make your situation a lot easier when completing your California business taxes, you can use the tool type of below.

A Small Business Accounting Software

FreshBooks, Xero, and QuickBooks are small business accounting softwares that will simplify the accounting process for you. They help you keep track of your finances, taxes, and expenses – on a budget. Visit each review and start a free trial to see which is right for you.

Note to our readers to please consider this an informational article. This is not a tax or legal advice, nor should you consider it as one. Specifics on California business taxes or questions on starting a new business in general should be directed to your lawyer.

About Liesha Petrovich

Liesha is a small business owner of 20 years, host of Startup Savant, the owner of a karate dojo in Maine, and creator of Work Mobly. During free time she's with her family and working on a Doctorate in Entrepreneurship.