What do I need to file for a LLC in California if ...
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Level 1

What do I need to file for a LLC in California if it made no income?

I formed an LLC in California with another person in 2020. I believe we are being taxed as a partnership. From what I understand, because our business made no money during that taxable year we do not have to file a federal tax return. However, we do have to file a state 568 form and pay the FTB fee of $800 using the voucher form. So here are my two questions.

 

Is there any other tax form that we have to fill out (This includes forms for my personal taxes which I am using Turbotax Premier for)?

 

Because we only need to fill out forms for our state, can we just purchase Turbotax Business for the state of California, or do we have to purchase Turbotax Business for Federal and add the state option to it?

 

Thanks in advance for any help. 

3 Replies
Employee Tax Expert

What do I need to file for a LLC in California if it made no income?

There is no TurboTax program that is just for a state. They all include the Federal.

 

Per the IRS:

 

Question

Must a partnership or corporation file an information return or income tax return even though it had no income for the year?

Answer

Partnerships and corporations have different standards for filing an information return or income tax return.

  • A domestic partnership must file an information return, unless it neither receives gross income nor pays or incurs any amount treated as a deduction or credit for federal tax purposes.
  • A foreign partnership generally must file an information return if:
    • It has gross income effectively connected with the conduct of a trade or business within the United States,
    • It has gross income derived from sources in the United States, or
    • It is making an election, such as an election to amortize organization expenses.

Refer to the Instructions for Form 1065, U.S. Return of Partnership Income for exceptions to filing requirements.

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Level 1

What do I need to file for a LLC in California if it made no income?

Thanks for letting me know. That clears things up a bit. We did not make any money. Also, we don't plan to deduct anything so I figure we will not be filing a federal tax return. It's unfortunate that Turbotax does not sell just a state version. Is the 568 difficult to fill out if your income is zero or would it be worth it to buy Turbotax business for the $150? Thanks for the reply.

Employee Tax Expert

What do I need to file for a LLC in California if it made no income?

I'd recommend getting TurboTax Business; the TurboTax program will ask you questions and provide guidance ("Help") that will minimize the chances of you making an error or omission on the return. The 2019 form is 7 pages long and the instructions appear to be at least 15 pages long (website only, no page numbers); that represents a lot of opportunities to miss something or misunderstand something.

 

Note: The 2020 CA Form 568 is not yet available from the state of CA (same for instructions).

 

How do I file CA form 568 for an LLC with zero profit

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