What Form 100S (2018) Is For
S corporations use Form 100S (2018) to file their annual California franchise tax return with the Franchise Tax Board. Although S corporations pass income through to shareholders for federal tax purposes, California still taxes the business entity itself. The form calculates the corporation’s income tax based on net income or the required Minimum Franchise Tax, whichever is greater. Form 100S also helps the Tax Board track business income and verify compliance with California tax laws.
When You’d Use Form 100S (2018)
Below are the situations in which a business entity must file a Form 100S (2018):
- An S corporation is registered with the California Secretary of State. The business must file Form 100S if it is actively doing business in California or earning income from within the state, regardless of profitability.
- Corporations meet California business activity thresholds: Corporations with California sales, property, or compensation exceeding the state's minimum thresholds are required to file, regardless of their organization's location.
- Limited liability company elects to be taxed as an S corporation: An LLC treated as an S corporation for federal tax purposes must file Form 100S to report California franchise taxes.
- Disregarded entity or a limited partnership converts to S corporation status: These entities must file the correct franchise tax return in the year of conversion and comply with applicable income tax rules.
- A qualified corporation must pay the Minimum Franchise Tax: A corporation must file and pay the annual $800 minimum tax beginning in its second taxable year, even with no business income.
Key Rules or Details for 2018
These rules and details apply specifically to Form 100S (2018) for the 2018 tax year:
- Tax obligations based on net income or Minimum Franchise Tax: S corporations are taxed at 1.5% of net income or $800, whichever is higher; financial S corporations are taxed at 3.5%.
- California’s nonconformity with federal tax law changes: The state does not adopt many federal changes under the Tax Cuts and Jobs Act, including provisions under IRC Section 965 and bonus depreciation.
- Payment thresholds for electronic submissions: If any tax payments exceed $20,000 or if the total tax liability exceeds $80,000, payments must be submitted electronically using Web Pay, a credit card, or Electronic Funds Transfer.
- Entities using a Water's Edge basis or holding voting shares abroad: Corporations that operate internationally or own outstanding voting shares must apply apportionment rules and file Schedule R.
- Differences between C corporations and S corporations: S corporations file Form 100S, while C corporations use Form 100W; both must comply with California tax forms related to business property and personal property.
- Estimated tax and extension payments: Use Payment for Automatic Extension for Corporations and Exempt Organizations when extending the deadline, and apply proper installment rates using Form FTB 3805Q or FTB 3807 as applicable.
Step-by-Step (High Level)
Below is the high-level process to complete and submit Form 100S (2018):
- Gather all necessary federal and state documentation: Corporations should collect Federal Form 1120S, the Employer Identification Number, and California Secretary of State identification numbers, along with all supporting schedules.
- Reconcile net income with California rules: Use the federal return as a starting point, then adjust for California-specific items using Schedule M-1 and other applicable schedules to determine taxable income.
- Complete Form 100S and required attachments: Fill out Form 100S using whole dollar amounts, print in capital letters, and include all relevant California tax forms, such as Form 568 or Schedule R if applicable to business activities.
- Verify all tax payments and calculate liabilities: Confirm estimated tax payments, apply the correct franchise tax rate, and include any extension payments using the appropriate method.
- Assemble, sign, and file the return correctly: Include all attachments in the correct order, ensure the return is not stapled or permanently bound, and have an authorized officer sign and submit the franchise tax return to the Franchise Tax Board.
Common Mistakes and How to Avoid Them
These are the most frequent issues related to Form 100S (2018) and ways to avoid them:
- Missing the filing deadline: Always submit the return by the 15th day of the 3rd month after the taxable year ends to prevent a penalty for failure to file.
- Underestimating or misapplying the Minimum Franchise Tax: Ensure payment of at least $800, even when the corporation reports no business income or is inactive.
- Failing to follow apportionment rules for multistate operations: Use Schedule R to allocate California income properly when a corporation operates across multiple states or countries.
- Applying federal provisions California does not conform to: Exclude benefits such as bonus depreciation or deductions under IRC Section 965 when preparing the state return.
- Sending incorrect or incomplete payments: Corporations must verify that their tax payments match the required thresholds and must use electronic methods when amounts exceed $20,000.
- Omitting required schedules or signatures: Ensure that all California tax forms, such as FTB 3805Q or Form 568, are attached and signed by a corporate officer before submitting them to the Tax Board.
What Happens After You File
Once Form 100S (2018) is filed, the Franchise Tax Board reviews the return for completeness, accuracy, and compliance with California income tax rules. If required schedules, signatures, or payments are missing, the Tax Board may issue a notice or request additional information. If tax is owed, penalties and interest will accrue until the tax is fully paid.
If a refund is due, the Franchise Tax Board processes it either by direct deposit or check. Returns may also be selected for audit based on business income, discrepancies with the federal return, or irregularities in business activities.
FAQs
Do all S corporations need to file Form 100S (2018)?
Yes, all S corporations doing business in California or registered with the California Secretary of State are required to file Form 100S (2018) annually.
Is Schedule C required when filing Form 100S?
Schedule C may be required if the corporation has specific deductions or tax adjustments not reported directly on Form 100S.
What is the role of gross receipts in determining filing obligations?
A corporation must file Form 100S if its gross receipts from California exceed the state’s doing-business threshold for that year.
Can a business that previously filed Form 100W switch to Form 100S?
Yes, if a corporation properly elects S corporation status for federal tax purposes, it may file Form 100S instead of Form 100W.
Does filing Form 100S replace the California Statement of Information requirement?
No, filing Form 100S does not replace the Statement of Information requirement, because S corporations must separately file the Statement of Information with the California Secretary of State to keep ownership, address, and officer records current.
