California LLC and S-Corp FAQ
Helpful answers for owners deciding how to form, organize, and tax their California business.
Is an LLC the same thing as an S-Corp?
No. An LLC is a legal entity type formed with the state. S-Corp status is generally a federal tax election for an eligible entity.
Can a California LLC elect S-Corp taxation?
Yes, if it is eligible and files the proper election. The election changes tax treatment, not the underlying state legal entity.
What information is needed to start an LLC?
Common startup information includes owner names, ownership percentages, business address, business purpose, registered agent details, and industry type.
What is reasonable compensation?
For S-Corp owners who work in the business, reasonable compensation is the wage amount paid through payroll for services performed. It should be reviewed with a tax professional.
Does an S-Corp require payroll?
Usually, owner-employees who work in the business need payroll. This is one reason the election should be evaluated before filing.
Can SmartBooks CPA help after formation?
Yes. SmartBooks CPA can help with bookkeeping setup, monthly accounting, estimated taxes, Statement of Information reminders, and tax planning.