Form 3522: Things You Need to Know Now

What is Form 3522?

Form 3522, officially called the “Limited Liability Company Tax Voucher”, allows LLCs in California to pay the mandatory annual tax of $800 to the Franchise Tax Board (FTB).

All LLCs registered or doing business in California must file this voucher each year by the tax deadline. The fee is fixed at $800 regardless of income and continues each year until the business is dissolved.

Who Has to File Form 3522?

Form 3522, known as the LLC Tax Voucher, is a mandatory filing requirement for all Limited Liability Companies (LLCs) registered in California. Regardless of income or business activity level, every LLC operating within the state is required to file this form.

This includes both domestic LLCs, which are formed in California, and foreign LLCs, which are formed outside of California but are registered to do business in the state.

It is crucial for LLCs to understand this obligation, as the failure to file Form 3522 can result in significant penalties and interest charges.

The form essentially ensures that all LLCs contribute the annual $800 tax, contributing to their legal compliance and continued good standing in California’s business landscape.Top of Form

Any LLC that meets one or more of the following criteria must file the 3522 voucher annually:

• Registered in California with the Secretary of State (SOS)
• Has articles of organization accepted by the SOS
• Doing business in California
• Has a certificate of registration from the SOS

This includes both LLCs formed in California as well as foreign LLCs registered to operate in the state. As long as the business remains active, annual submission of form FTB 3522 is required.

Exceptions to the $800 Tax

Certain types of companies are exempt from this fee:

• Nonprofit LLCs under Internal Revenue Code Section 501(c)(2)
• Nonprofit LLCs under IRC Section 501(c)(25)

When is Form 3522 Due?

Form 3522, which pertains to the annual $800 tax for LLCs in California, has a specific due date each year. It is due by the 15th day of the 4th month after the beginning of the LLC’s tax year. For most LLCs operating on a calendar year basis, this translates to April 15th.

It’s important to note that this deadline is consistent every year, regardless of the LLC’s income or business activity. Timely filing of Form 3522 is crucial to avoid late payment penalties and interest.

LLCs are advised to mark this date in their calendars and prepare their finances accordingly to ensure they meet this key compliance requirement in California’s business regulatory framework.

The due date for form 3522 is the 15th day of the 4th month after the beginning of the LLC’s tax year. Typically, this translates to:

• April 15 for calendar year filers
• 15th day of 4th month after fiscal year start

For example, if the tax year begins on June 1st, the deadline would be September 15.

LLCs formed mid-year have special rules for when the first 3522 voucher is due. See the FTB’s guidelines for details.

How Should Form 3522 Be Filed?

To correctly file form 3522, follow these key steps:

1. Download form FTB 3522 from the FTB website
2. Fill out all required identification details
3. Remit payment of $800 payable to the Franchise Tax Board
4. Mail the completed voucher and payment to the address on the form

Do not submit the form if you make the $800 payment electronically through the FTB’s online payment system. The voucher is only required for payments made by check or money order.

What Happens if Form 3522 Isn’t Filed?

Failing to file Form 3522 can lead to significant repercussions for an LLC in California. This form, essential for paying the annual $800 tax, is a key compliance requirement. If it isn’t filed, the LLC faces late payment penalties and accruing interest on the unpaid tax amount.

These penalties start accruing from the original due date of the tax. Additionally, consistent non-compliance can result in the LLC’s status being considered in ‘bad standing’ with the state, which could lead to further legal and financial consequences, including the potential for suspension or dissolution by the state.

This not only affects the LLC’s legal status but can also impact its creditworthiness and reputation. Therefore, it’s crucial for LLCs to file Form 3522 on time to maintain their good standing and avoid these detrimental outcomes.Top of Form

If an LLC does not file its annual tax voucher or pay the $800 fee by the deadline, penalties and interest may apply. The FTB will charge:

• Late payment penalty – 5% of unpaid tax for each month after due date
• Interest – At a defined rate on unpaid balance from original deadline

Repeated failures to file form 3522 or pay on time can lead to suspension or forfeiture of the LLC entity by the Secretary of State.

LLCs suspended by the SOS also face a $250 penalty collected by the Franchise Tax Board on the state’s behalf.

Special Rules for Single Member LLCs

Single member LLCs (SMLLCs) in California are treated as disregarded entities by default for tax purposes. This means the LLC’s income passes through to the sole owner’s personal tax return.

You must fill the Form 3522 annually and the $800 tax paid to keep the SMLLC’s status active in California. But you do not required separate income tax return.

However, SMLLCs can elect to be taxed as corporations at the federal level (IRS form 8832). Such LLCs are also treated as corporations for California tax purposes and have slightly different compliance rules.

Requirements for Foreign LLCs in California\

Foreign LLCs, those formed outside of California but conducting business within the state, must adhere to specific requirements to maintain compliance with California’s business regulations. Firstly, they are required to register with the California Secretary of State, a process that involves filing a Statement of Information and providing details about the LLC.

Like domestic LLCs, foreign LLCs are also obligated to pay the annual $800 tax and must file Form 3522. Additionally, they must appoint an agent for service of process in California and ensure that their business name is available and compliant with California naming laws.

It’s essential for foreign LLCs to understand and meet these requirements to legally operate in California. Non-compliance can lead to penalties, fines, and the potential loss of good standing in the state, impacting the LLC’s ability to conduct business effectively

LLCs formed in other states that register or do business in California must also comply with form 3522:

• File and pay $800 annual tax
• Submit income tax returns – Form 565 or 568 generally
• Use Schedule R when apportioning multi-state income

Income sourced to California through business activities or ownership of certain assets is taxable by the state for foreign LLCs.

Form 3522 vs. Form FTB 3536

While all LLCs must file the 3522 annual tax voucher, they may also need to submit form FTB 3536. This covers an additional tiered fee based on the business’s total income from all sources.

Applicable only to LLCs grossing over $250,000, these fees range from $900 to $11,790. FTB 3536 payment must be remitted by the 15th day of the 6th month of the LLC’s current tax year.

Form 568 Ties to Form 3522

Form 568 is the actual tax return that California LLCs must file, while form 3522 allows payment of the flat annual tax amount. These two FTB forms are closely connected.

• 3522 tax payments are reported on form 568
• 568 is due on same date as 3522 plus extensions
• LLC suspensions impact deadline to file form 568

Tax prep software and professional accountants automate linking these reports. But LLCs should understand the synchronization of California’s form 568 and form 3522 requirements to avoid issues.

Maintaining Compliance for CA LLCs

Maintaining compliance is crucial for California Limited Liability Companies (LLCs) to ensure their legal and operational integrity. Key to this is the timely filing of Form 3522, which involves paying the annual $800 tax, irrespective of the LLC’s revenue or activity levels.

Additionally, California LLCs must submit a Statement of Information to the Secretary of State every two years, updating any changes in business addresses or management. Adhering to state-specific tax obligations, including income and employment taxes, is also essential.

Compliance extends beyond filing and tax payments; it includes maintaining accurate records, adhering to operating agreements, and ensuring that any business activities align with California laws and regulations.

Failure to comply can lead to penalties, fines, and even the dissolution of the LLC, making it imperative for LLCs to stay informed and up-to-date with their responsibilities.Top of Form

Staying compliant means adhering to all filing and payment deadlines for forms 3522, 3536, 568 and other requirements mandates by:

• California Secretary of State
• Franchise Tax Board
• IRS

Do not ignore notices from state agencies about annual taxes, returns, required filings or fees. Repeated failures can put your LLC status at risk.

Dissolving an LLC in California

To formally dissolve a California LLC, owners must file paperwork with the SOS and notify the Franchise Tax Board by submitting a final tax return. This terminates future 3522 voucher obligations.

LLCs canceling registration in-state should request a Certificate of Cancellation from the Secretary of State after concluding operations and settling tax liabilities.

Conclusion

Compliance with annual tax and administration requirements is vital for all types of limited liability companies in California. By correctly managing filings like form FTB 3522 and related returns, LLCs avoid costly penalties and remain authorized to operate in the state.

Use this guide as a reference point as you track 3522 deadlines, fee rules, and synchronization with other reports like the 568 return. Pay attention to notices related to tax payments or submittals and seek professional advice if you have questions about properly maintaining active status. Keeping current with compliance ensures your LLC’s privileges continue uninterrupted year after year.

Frequently asked questions

Does the $800 Tax Apply Every Year?

Yes, the $800 amount is due annually by the deadline outlined above until the LLC legally dissolves the business.

Where is Form 3522 Filed?

The completed voucher, with payment enclosed, must be mailed to the Franchise Tax Board at PO Box 942857, Sacramento, CA 94257-0531.

What if No Tax is Owed?

You should still access and print form 3522 to keep on file, checking the box indicating zero dollars owed. Retain your proof that the voucher was completed with $0 liability.

Can I Pay the Tax Online?

Yes, electronic payment via the FTB website is an option, eliminating the need to mail in form FTB 3522. But all mandated tax amounts must still be satisfied by the deadline.

How LLC services like ZenBusiness can help me with Form 3522?

LLC services like ZenBusiness can help you with Form 3522 by providing guidance on how to fill it out, reminding you of deadlines to ensure timely filing, and sometimes even submitting it on your behalf if they offer full-service options.