What California Form 3536 Is For
California Form 3536 (2018) is the payment voucher LLCs use to make their mid-year estimated LLC fee payment. This fee is separate from the $800 annual LLC tax and applies only when an LLC expects California-source income of $250,000 or more during the tax year.
The LLC fee is based on gross California income, not net profit. Because the calculation uses gross receipts minus cost of goods sold, an LLC can show a net loss yet still owe an income-based fee. Form 3536 is simply a payment method—you estimate your total income, pay the corresponding fee by mid-year, and later reconcile the actual amount on your annual return, Form 568.
When You’d Use California Form 3536
LLCs must file Form 3536 when:
- They expect California-source income of at least $250,000 for 2018
- They must make their estimated fee payment by the 15th day of the sixth month of the tax year
For calendar-year LLCs, the deadline was June 15, 2018. Fiscal-year LLCs count six months from the start of their tax year. Short-year LLCs that end before the sixth month do not file Form 3536 and instead pay the full fee with Form 568.
If you miss the June deadline, you should still make the payment as soon as possible to reduce penalties. You cannot formally amend Form 3536, but you may submit additional payments later if your income estimate increases. Any overpayment becomes a credit or refund when the annual return is filed.
Key Rules or Details for 2018
LLC Fee Brackets for 2018
The California LLC fee schedule for 2018 was:
- $900 for income between $250,000 and $499,999
- $2,500 for $500,000 to $999,999
- $6,000 for $1,000,000 to $4,999,999
- $11,790 for $5,000,000 or more
If projected income is below $250,000, no Form 3536 payment is needed.
Safe Harbor for Avoiding Penalties
California applies a 10% underpayment penalty if your estimated payment is too low. You can avoid the penalty entirely by paying at least the prior year’s LLC fee by the June deadline. This approach protects you even if your 2018 income significantly exceeds the estimate.
Gross Income Basis
The fee is calculated using “total California income,” meaning your gross receipts from California sources and other income before most deductions. Schedule IW (included with Form 568) is used to compute total California income.
Multiple Payment Options
LLCs can pay the estimated fee by:
- Mailing Form 3536 with a check
- Using Web Pay for Businesses
- Credit card payments via the approved vendor
- Electronic Funds Withdrawal (if supported by software)
If paying electronically, you should not mail Form 3536.
Not the Same as the $800 Annual Tax
Do not use Form 3536 to pay the annual LLC tax. The annual tax is paid separately using Form FTB 3522, which has its own deadline and rules.
Step-by-Step (High Level)
Step 1: Decide Whether You Must File
Estimate your total California-source income for 2018. If your estimate exceeds $250,000, you must complete Form 3536.
Step 2: Project Annual Income
Use your year-to-date revenue through May or through five months of your fiscal year. Compare results with the prior year to determine the likely fee bracket. If unsure, consider paying the safe harbor amount.
Step 3: Complete Form 3536
Fill in your LLC’s legal name, SOS file number, FEIN, tax year, and the fee amount you intend to pay. Use black or blue ink if mailing.
Step 4: Prepare and Submit Payment
If paying by check:
- Make it payable to Franchise Tax Board
- Write your SOS file number, FEIN, and “2018 FTB 3536” on the memo line
- Use U.S. funds from a U.S. bank
Mail to:
Franchise Tax Board
PO Box 942857
Sacramento CA 94257-0531
If paying electronically, follow the online instructions and do not mail the voucher.
Step 5: Keep Documentation
Save a copy of Form 3536 and proof of payment for your business tax records. You’ll need this when completing Form 568.
Step 6: Reconcile on Form 568
When you file Form 568 for 2018, use Schedule IW to determine your actual California income. Enter the estimated fee you paid on Form 3536. Any difference will be either refunded or added to your balance due.
Common Mistakes and How to Avoid Them
- Confusing the LLC fee with the annual tax — Form 3536 is only for the income-based fee.
- Not filing because income is uncertain — When unsure, pay the safe harbor amount.
- Using net income instead of gross receipts — The fee is based on total California income before most deductions.
- Missing the June 15 deadline — Penalties apply even if you file the annual return on time.
- Using the wrong tax-year voucher — Always use the Form 3536 for the correct year.
- Paying electronically and mailing the voucher — If paying online, do not send the paper form.
- Forgetting to report estimated payments on Form 568 — You could accidentally pay the fee twice.
What Happens After You File
After receiving your Form 3536 payment, the FTB credits it to your LLC’s account under your SOS file number and FEIN. This credit remains on file until you submit Form 568 for the year. No midyear adjustment is made unless you voluntarily submit an additional payment.
When you file Form 568, the FTB calculates whether an underpayment penalty applies. If you used safe harbor or paid the correct fee, no penalty is assessed. Overpayments may be refunded or applied to the following year’s obligations.
You should retain all payment confirmations and copies of Form 3536 for at least four years. These records support Form 568 calculations and help resolve any issues during FTB inquiries, audits, or reconciliation requests.
FAQs
What if my LLC is new for 2018?
If the LLC was formed after the sixth month of the tax year or won’t reach $250,000 in income, no Form 3536 payment is required. Otherwise, pay the estimated fee like any established LLC.
Can I pay more than the safe harbor amount?
Yes. You may pay any amount on Form 3536. Overpayments become credits or refunds when you file Form 568.
What if my income falls below $250,000 after I already paid the fee?
You will receive a refund or credit when you file Form 568.
Do I file one form if I own multiple LLCs?
No. File a separate Form 3536 for each LLC expecting California income of $250,000 or more.
What if I pay via Web Pay—do I still use Form 3536?
No. Electronic payments replace the voucher entirely. Do not mail the form if paying online.
Is the LLC fee deductible?
Generally yes—the LLC fee is deductible on your federal return as a state tax on business income. The $800 annual tax, however, is not deductible.
