Taxes
Tax Payment Requirements
If a corporation sells tangible personal property at retail in California, it will be subject to the California sales tax unless the property sold is specifically exempted. California also imposes a “use tax” on most retail purchases that occur outside of California but are intended for use within California. Any retailer engaged in business in California is required to collect the sales and use taxes and remit them to the state. A retailer is deemed to be “engaged in business” in California if it has any kind of an establishment in the state or if it has representatives operating in any kind of sales activity in the state. This law applies whether the retailer is involved directly or through a subsidiary agent.
The holder of a seller’s permit must file sales and use tax returns and pay or prepay the taxes collected, generally on a quarterly basis. The corporation should promptly consult its accountant regarding the dates on which these returns must be filed.
Personal and Real Property Taxes
The corporation must pay annual property taxes based on the value of the taxable real and personal property it owns or possesses on the immediately preceding March 1 (lien date). Usually, this tax is paid to the county assessor of the county in which the property is located. The county has a priority tax lien on the property as of the lien date, which is removed by the payment of this tax.
If the corporation owns taxable personal property with a cost of a predetermined amount, it must file each year, on or before the date designated by the County Assessor (usually between April 1 and the last Friday in May), a written property statement. In cases in which the cities do their own assessing, a separate written property statement should be filed with the city. If the corporation owns taxable personal property less than $ 30,000, it need file a written property statement only on the County Assessor’s request. Real property taxes are payable in two installments, the first due before April 10th and the second due before December 10th of each year. Personal property taxes must be paid by the due date specified in the County Assessor’s notice.
You should consult your accountant for advice regarding filing property tax statements because there are substantial penalties for late payment and there are numerous special provisions (e.g., an exemption for “intangibles”). This area is very complex, and competent accounting advice is essential to ensure full compliance.
Other Taxes
Depending on the nature of your business, there may be special taxes imposed by federal, state, or local governments, such as those on alcohol, tobacco, gross receipts, and real estate transactions. Your accountant should be able to assist you in preparing the proper tax forms and in making the necessary tax payments.