Form 3536-LLC (2018): Estimated Fee for LLCs

What California Form FTB 3536 (2020) Is ForWhat Form 3536-LLC (2018) Is For

Form 3536-LLC (2018) is the midyear payment voucher that a California LLC uses to submit the estimated income-based LLC fee for the applicable tax year. The payment applies when the limited liability company expects California-source gross receipts of $250,000 or more and must remit an advance fee to the California Franchise Tax Board. The form supports compliance with California LLC tax rules and ensures the LLC can later reconcile its final obligation on the Limited Liability Company Return of Income, filed through Form 568.

When You Would Use Form 3536-LLC (2018)

These situations determine when a taxpayer must rely on Form 3536-LLC (2018).

• Standard filing requirement: This applies when a limited liability company expects California-source gross receipts that meet or exceed the $250,000 threshold for the tax year, triggering the need to submit an estimated fee using Form 3536.
  
  
• Late filing situations: This applies when a California LLC misses the required June deadline and must pay promptly to avoid a penalty for failure and interest.
  
  
• Short tax year exceptions: This applies when the LLC operates for fewer than six months during the tax year and therefore pays the full fee on the annual return rather than using the midyear payment voucher.
  
  
• Additional estimated payments: This applies when projected income increases after the initial estimate and the LLC chooses to submit a supplemental payment to limit potential underpayment penalties.

Key Rules or Details for 2018 Form 3536-LLC (2018)

Several vital rules govern how a taxpayer must complete Form 3536-LLC (2018).

• Safe harbor calculation: The California LLC may rely on the prior year’s LLC fee to avoid a penalty for failure to estimate correctly if the estimated payment equals or exceeds the previous year’s obligation.
  
  
• Ten percent penalty rule: The California Franchise Tax Board may assess a penalty equal to ten percent of the underpayment when the estimated fee is less than both the current year’s fee and the prior year’s fee.
  
  
• California-source income measurement: The LLC must calculate total California-source gross receipts before deductions and follow the Schedule IW methodology, which is connected to CA Form 568.
  
  
• Form specificity requirement: The taxpayer must use the correct tax year version of Form 3536 and verify that the form year matches the period for which the estimated fee applies.
  
  
• Multiple LLC reporting: If the California Franchise Tax Board determines that multiple LLCs were created for the purpose of reducing fee brackets, the unitary business rules may permit the state to aggregate their income for fee calculation purposes.

Step-by-Step Filing Process for Form 3536-LLC (2018)

The following steps outline how a taxpayer prepares and submits Form 3536-LLC (2018).

• Determine whether filing is required: The California LLC must project its annual gross receipts for the tax year and determine whether total California-source income will exceed the $250,000 threshold that activates the estimated fee requirement.
  
  
• Calculate the estimated fee: The LLC must place itself within the correct income bracket and may reference prior year calculations, Real property allocations, or unitary business considerations that involve schedules such as Schedule R or Schedule F.
  
  
• Prepare and complete the form: The preparer must enter all identifying information, confirm the Articles of Organization record, and verify that the form year matches the proper tax year before entering the estimated payment amount.
  
  
• Submit Payment: The taxpayer may submit payment by check, Web Pay, or credit card. Electronic payments do not require mailing the voucher; mailed payments must include the correct identifying numbers.
  
  
• Reconcile on the annual return: The LLC must report the estimated payment when completing Form 568, Form 100S, or any required schedule, such as Schedule M-1, when finalizing the Limited Liability Company Return of Income.

Common Mistakes and How to Avoid Them

These frequent errors can be prevented with careful preparation.

• Confusing Form 3536 with Form 3522: Taxpayers avoid errors by reserving Form 3522 for the mandatory eight-hundred-dollar annual LLC tax and using Form 3536 exclusively for the income-based estimated LLC fee.
  
  
• Missing the June deadline: Taxpayers avoid penalties by reviewing projected income early and scheduling payment so that the California Franchise Tax Board receives it on time.
  
  
• Using net income rather than gross receipts: Taxpayers avoid incorrect estimates by calculating California-source gross receipts before deductions, which aligns with state rules and supports federal purposes.
  
  
• Submitting the wrong tax year: Taxpayers avoid processing delays by confirming that the year printed on Form 3536 corresponds to the tax year for which the payment applies.
  
  
• Failing to track multiple LLC payments: Taxpayers avoid underpayment issues by ensuring that each limited liability company with filing obligations submits its own voucher and maintains proof of payment.

What Happens After You File Form 3536-LLC (2018)

Once Form 3536-LLC (2018) is filed, the California Franchise Tax Board processes the payment and applies it as a credit to the LLC’s account for the applicable tax year. This credit remains on the account until the LLC files its annual Limited Liability Company Return of Income (Form 568). At that time, the LLC reconciles the estimated fee with the actual amount owed, and any remaining balance due, credit, or refund is resolved through the annual return. Penalties or interest may apply if the final tax is not paid in full by the due date.

FAQs

Does a new California LLC formed under Articles of Organization need to file Form 3536-LLC (2018) in its first year

A new California LLC must file Form 3536-LLC (2018) only if it expects California-source income of two hundred fifty thousand dollars or more during its initial tax year.

Does the LLC fee apply to income from Real property located in California

The LLC fee applies to California-source income, which includes Real property revenue when it is correctly attributed to the state.

Does a unitary business that files Form 100S also need to submit a separate Form 3536 payment?

A unitary business that files Form 100S must still submit a separate Form 3536 payment if the company operates as an LLC with California-source income that triggers the estimated fee.

How does the California Franchise Tax Board calculate a penalty for failure to pay accurate estimates?

The California Franchise Tax Board calculates a penalty for failure by assessing ten percent of the underpayment when the estimated payment is less than both the current and prior year obligations.

Can multi-state LLCs use Schedule R or Schedule F to allocate income before completing Form 3536-LLC (2018)

Multi-state LLCs may rely on Schedule R or Schedule F to allocate California-source income when determining the correct estimated fee for the payment voucher.

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California Form FTB 3536 is the payment voucher LLCs use to submit the estimated LLC fee during the tax year. This fee applies only to LLCs with total California income of $250,000 or more, and the form’s sole purpose is What Form 3536-LLC (2020) Is For

Form 3536-LLC (2020) is a payment voucher used by limited liability companies (LLCs) to make estimated income-based fee payments to the California Franchise Tax Board during the taxable year. This fee applies only if the total California-source income exceeds $250,000 and is in addition to the $800 annual tax. The form ensures that business entities fulfill their mid-year obligation under California law and avoid underpayment penalties when filing their final Limited Liability Company Return of Income (Form 568).

When You’d Use Form 3536-LLC (2020)

There are specific scenarios where Form 3536-LLC (2020) becomes necessary for California LLCs:

• Mid-year income projection above threshold: If your California LLC anticipates gross receipts or business income of $250,000 or more during the taxable year, this form must be filed to submit the estimated LLC fee.
  
  
• Safe harbor penalty protection: You should use Form 3536 to pay an amount equal to or greater than last year's LLC fee to qualify for the safe harbor and avoid the 10% underpayment penalty.
  
  
• Income-Based Fee Estimate: This form is exclusively for estimating the LLC fee and should not be confused with Form FTB 3522, which is used for paying the mandatory $800 annual franchise tax.
  
  
• Series LLC compliance: If your business is a series LLC, each separate series must file its own Form 3536 and Form 568 to remain compliant with California Franchise Tax Board rules.
  
  
• Late realization of obligation: If your business activities grow unexpectedly and push your income above $250,000 mid-year, you should file Form 3536 immediately to reduce interest and penalties.

Key Rules or Details for 2020

LLCs must follow several vital rules when filing Form 3536-LLC (2020):

• $250,000 income threshold: The form only applies if your California-source gross receipts meet or exceed $250,000 during the 2020 tax year, regardless of net profit.
  
  
• Tiered fee schedule: The estimated LLC fee is calculated using a tiered structure, ranging from $900 to $11,790, based on the total amount of California income reported.
  
  
• Due by the 15th day of the 6th month: For calendar-year LLCs, the estimated fee must be paid by June 15, 2020, in accordance with California’s filing requirements.
  
  
• 10% underpayment penalty: If your estimated payment is less than the fee ultimately owed, you may be assessed a penalty equal to 10% of the underpaid amount, unless you qualify for safe harbor.
  
  
• Not used for annual tax: You must not use Form 3536 to pay the $800 annual tax, which is submitted separately using Form FTB 3522 by the 15th day of the 4th month of your taxable year.

Step-by-Step (High Level)

The process of filing Form 3536-LLC (2020) involves several clear steps to ensure proper payment and compliance:

• Step 1 - Confirm if you need to file: You must file Form 3536 only if your California LLC expects to earn $250,000 or more in total California-source income during the 2020 taxable year.
  
  
• Step 2 - Estimate total California income: Use Schedule IW to calculate your projected gross receipts, including business income, portfolio income, and other California-source revenue before deductions.
  
  
• Step 3 - Determine the Estimated Fee: Refer to the tiered fee schedule outlined by the California Franchise Tax Board and match your income estimate to the corresponding fee bracket.
  
  
• Step 4 - Evaluate safe harbor eligibility: If you paid a fee in 2019 and pay at least the same amount by June 15, 2020, you qualify for safe harbor and are protected from penalties.
  
  
• Step 5 - Complete the form accurately: Fill in your LLC name, California Secretary of State file number, federal employer identification number, and payment amount using black or blue ink.
  
  
• Step 6 - Submit your payment: Choose from Web Pay, credit card, or check; do not submit Form 3536 by mail if you pay electronically, as the online payment captures all necessary details.
  
  
• Step 7 - Keep your records: Retain a copy of the completed Form 3536 along with proof of payment to reconcile against Form 568 when filing your LLC Return of Income.

Common Mistakes and How to Avoid Them

Several common errors lead to penalties or delays when using Form 3536-LLC (2020):

• Confusing Form 3536 with Form FTB 3522: Always use Form 3536 for the estimated LLC fee and Form FTB 3522 for the $800 annual tax, as they serve different purposes and have different due dates.
  
  
• Basing the fee on net profit: Use total California income before deductions, including gross receipts and portfolio income, rather than calculating based on net profit.
  
  
• Missing the safe harbor opportunity: To avoid the 10% underpayment penalty, pay at least the amount of your prior year's LLC fee by the June 15 deadline.
  
  
• Mailing the form after paying electronically: Do not mail Form 3536 if you have already submitted payment through Web Pay or a credit card, as this creates confusion and may result in duplicate entries.
  
  
• Using the wrong year’s version of the form: Ensure you are using the 2020 version of Form 3536 for payments related to the 2020 taxable year.
  
  
• Entering incorrect identification numbers: Double-check that both your California Secretary of State file number and federal employer identification number are entered correctly to prevent delays in processing.

What Happens After You File

Once Form 3536-LLC (2020) is submitted with payment, the Franchise Tax Board applies the amount to your account for the 2020 taxable year. This estimated payment will be reconciled when you file Form 568, the Limited Liability Company Return of Income. If your actual LLC fee is higher than your estimate, you will need to pay the remaining balance, possibly with penalties and interest, unless the safe harbor applies. 

Overpayments may be refunded or applied to future tax obligations. Always verify your payment using the Tax Board’s online tools or official records.

FAQs

Do I need to file Form 3536-LLC (2020) if my LLC is a disregarded entity for tax purposes?

Yes, disregarded entities treated as single-member LLCs must still file Form 3536 if total California-source income meets or exceeds the $250,000 threshold for the 2020 taxable year.

Can Form 3536 be filed using California’s Business e-file system?

No, business e-file is not available for Form 3536; you must submit the form manually or use Web Pay or credit card options through the California Franchise Tax Board’s payment portal.

Is Schedule R required when submitting Form 3536?

Schedule R is not required when submitting Form 3536; however, if your LLC is involved in unitary business activities, you will need Schedule R when completing your final California Form 568.

Does the Internal Revenue Code apply when estimating income for Form 3536?

The Internal Revenue Code provides the federal framework, but California uses its own Revenue and Taxation Code to determine gross receipts and taxable income for LLC fee calculations.

Should we submit Form 3536 if we plan to file an amended return later?

Yes, if you expect to owe the LLC fee based on your current-year income, submit Form 3536 by the deadline. The form serves as a payment voucher and does not prevent you from filing an amended return for corrections later.

to transmit that mid-year estimated payment to the Franchise Tax Board (FTB).

This fee is separate from the $800 annual LLC tax paid with Form FTB 3522. While the annual tax applies to all LLCs, the LLC fee is income-based and uses the following 2020 tiers:

• $250,000–$499,999: $900
• $500,000–$999,999: $2,500
• $1,000,000–$4,999,999: $6,000
• $5,000,000 or more: $11,790

Form 3536 is due by the 15th day of the 6th month of the LLC's taxable year—June 15, 2020, for calendar-year filers. If your income stays below $250,000, you do not file Form 3536.

When You’d Use California Form FTB 3536 (2020)

You use Form 3536 when your LLC expects income of at least $250,000 for the year and must make its estimated fee payment by the June 15 deadline. Fiscal year filers follow the same rule using the 15th day of the 6th month.

Because Form 3536 is strictly a payment voucher, there is no “amended” version. If you underpay or miss the deadline, you simply submit the voucher later with payment. However, late payments may trigger the 10% underpayment penalty.

You also use Form 3536 again when filing your 2020 Form 568 to pay any remaining LLC fee. LLCs with a short year ending before the 15th day of the 6th month do not make estimated payments; they pay the entire LLC fee with Form 568.

Key Rules or Details for the 2020 Tax Year

Income Threshold Determines Filing

Only LLCs with total California income of $250,000 or more need to submit Form 3536. “Total income” means income before deductions and includes business receipts, rental income, portfolio income, and capital gains sourced to California.

10% Underpayment Penalty

If the estimated payment is less than the final calculated fee, the FTB charges a penalty equal to 10% of the underpaid portion. For example, if your actual fee is $6,000 and you paid only $900 by June 15, the underpayment is $5,100, and the penalty is $510.

Safe Harbor Rule

There is no penalty if your June 15 payment equals or exceeds your prior-year LLC fee. For example, if you paid $2,500 in 2019, paying at least $2,500 by June 15, 2020 prevents penalties—regardless of your 2020 income.

Not for the Annual LLC Tax

Form 3536 should never be used for the $800 annual tax. That payment uses Form FTB 3522, due by the 15th day of the 4th month (April 15 for calendar-year filers).

Payment Options

You can pay by:

• Mailed check with Form 3536
• Web Pay for Businesses
• Credit card via officialpayments.com
• Electronic withdrawal through tax software

If paying electronically, do not also mail Form 3536.

Series LLCs

Each series within a series LLC is treated as a separate entity. Each series must file its own Form 3536 and calculate the fee based on its own California income.

Step-by-Step (High Level)

Step 1: Determine Whether the Fee Applies

Estimate your total California income for 2020. If it's below $250,000, no estimated fee is required. If you’re close to the threshold, consider making a cautious payment to avoid penalties if income rises unexpectedly.

Step 2: Estimate Your Total California Income

Use Schedule IW (LLC Income Worksheet) as your guide. Include all California-source receipts and portfolio income before deductions.

Step 3: Select the Fee Tier

Apply the income tiers to determine the estimated fee amount:

• $900
• $2,500
• $6,000
• $11,790

Step 4: Consider Safe Harbor

Review your 2019 LLC fee. To eliminate penalty risk, pay at least that amount by June 15 even if your 2020 estimated fee is lower.

Step 5: Complete Form 3536

Enter:

• LLC name
• California SOS file number
• FEIN
• Address
• Payment amount
• Tax year dates

Make sure IDs are accurate so payments post properly.

Step 6: Submit Your Payment

Mail the voucher and check, or use one of the approved electronic payment options. Ensure payment is submitted or postmarked by June 15, 2020.

Step 7: Retain Records

Keep a copy of Form 3536 and proof of payment. You’ll need this information when preparing your 2020 Form 568 to apply your estimated payment credit.

Common Mistakes and How to Avoid Them

• Confusing the LLC fee with the $800 annual tax
  Use Form 3536 only for the LLC fee; use Form 3522 for the annual tax.
• Using net income instead of total income
  Calculate income before deductions using Schedule IW.
• Missing the safe harbor opportunity
  Paying at least your 2019 fee protects you from penalties even if your 2020 income surges.
• Failing to pay when income passes $250,000
  If unexpected income pushes you over the threshold mid-year, submit a payment quickly.
• Using the wrong year’s form
  Always use 2020 Form 3536 for 2020 estimated fees.
• Double-paying by mailing after paying electronically
  Choose one payment method only.
• Entering incorrect identification numbers
  Verify your SOS file number and FEIN to avoid misapplied payments.
• Not keeping proof of payment
  You will need accurate records when filing Form 568.

What Happens After You File

Once submitted, the FTB processes your Form 3536 payment and credits it to your LLC’s account. The payment remains as a credit until you file Form 568.

When filing the 2020 Form 568 (due March 15, 2021 for calendar-year LLCs), you:

• Report your actual LLC fee
• Apply your estimated payment credit
• Pay any remaining balance (using another Form 3536)

Depending on the final fee calculation, you may owe:

• A remaining balance
• A refund
• Penalties and interest for underpayment

The FTB may also issue notices if discrepancies arise when reviewing your Form 568. Keep Form 3536 records for at least four years along with your 2020 tax documents.

FAQs

Do we need to file Form 3536 if our income is under $250,000?

No. The estimated fee applies only when total California income is $250,000 or more.

How does safe harbor work?

If your June 15 payment equals or exceeds your prior-year LLC fee, you avoid the 10% underpayment penalty—even if your actual 2020 fee is higher.

Can we pay electronically instead of mailing the form?

Yes. Web Pay, credit card payments, and software-based EFW all satisfy the requirement. Do not mail the voucher if you pay electronically.

What happens if we miss the June 15 deadline?

Pay as soon as possible. You may owe the 10% penalty and interest, but paying quickly reduces additional charges.

Does a newly formed LLC in 2020 owe the fee?

Yes. For 2020, first-year LLCs owe both the $800 annual tax and, if applicable, the LLC fee.

How do we handle Form 3536 for a series LLC?

Each series must prepare its own Form 3536 and pay its own LLC fee separately.

For official forms and instructions, visit: https://www.ftb.ca.gov/forms/2020/2020-3536.pdf

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