Tax Planning in Los Angeles
MangoBooks provides tax planning during the year for small business owners, rental property owners and people with stock compensation in Los Angeles. Planning covers the current year: the size of each estimated payment, the salary an S corporation owner takes, and the tax on a planned sale, a move or a stock vesting.
The work is led by Felix Park, CPA, MBA, a licensed California CPA. The projection carries into the returns we prepare at year end.
What's Included
- A projection of the current year's federal and California tax, updated when income changes.
- Quarterly estimated payment amounts for the IRS and the Franchise Tax Board.
- A review of S corporation owner salary against the requirement to pay reasonable compensation before other distributions.
- A review of California's pass-through entity elective tax for S corporations and partnerships.
- The tax side of an entity change, such as an LLC electing S corporation status.
- Planning before the sale of a business or a rental property, a move into or out of California, or the vesting or exercise of stock compensation.
Who This Is For
- Owners of S corporations, partnerships and LLCs who want to set salary, distributions and estimates with the year's numbers in view. See Small Businesses and Their Owners.
- Rental property owners planning a purchase or a sale. See Rental Property Owners.
- Employees and executives whose RSUs, options or ESPP shares make withholding and estimates uneven. See Executives with Stock Compensation.
How It Works
- Consultation. We talk by phone or video about your income, your entities and the decisions coming up this year.
- Engagement letter. We send a written engagement letter that sets out the planning work and the fee before work begins.
- Document exchange. You send pay stubs, year-to-date books, equity plan statements and last year's returns electronically.
- Projection and follow-up. We walk you through the projection and the recommended payments, and update them when something changes during the year.
What to Bring
- Last year's federal and California returns.
- Year-to-date pay stubs, or the year-to-date profit and loss statement for your business.
- Equity plan statements showing upcoming vesting dates and grants.
- Records of estimated tax payments already made this year.
- Details of any planned sale, purchase, move or change in entity.
The full list is in our New Client Checklist.
Key Dates
- Federal estimated payments are due April 15, June 15, September 15 and January 15.
- California estimated payments are 30 percent by April 15, 40 percent by June 15 and 30 percent by January 15, with no payment due in September.
- June 15. An S corporation or partnership electing California's pass-through entity elective tax for the year makes its first payment: $1,000 or 50 percent of the prior year's elective tax, whichever is greater.
- Two months and 15 days into the tax year is generally the last day to file Form 2553 for an S election that takes effect that year.
When a due date falls on a Saturday, Sunday or legal holiday, it moves to the next business day.
Fees
Fees are quoted after a consultation.
Factors affecting fees: the number of people and entities in the plan, how often the projection is updated during the year, and whether the plan covers a specific event such as a sale, a move or an entity change. Fees depend on the scope of work and are set out in a written engagement letter before work begins. See the Fee Guide.
Frequently Asked Questions
How are quarterly estimated payments calculated?
Federal payments generally avoid a penalty if they cover 90 percent of this year's tax or 100 percent of last year's, rising to 110 percent of last year's when last year's adjusted gross income was over $150,000 ($75,000 if married filing separately). California follows similar rules, but when the current year's California adjusted gross income is $1,000,000 or more ($500,000 if married filing separately), estimates must be based on 90 percent of the current year's tax.
Should an LLC elect to be taxed as an S corporation?
It depends on the numbers. An S corporation must pay its owner-employees reasonable compensation before other distributions, and in California it pays a 1.5 percent tax on its income with an $800 minimum. We compare the tax under each structure using your figures before you decide.
What is California's pass-through entity elective tax?
S corporations and partnerships, including LLCs taxed as either, may elect each year to pay a 9.3 percent California tax at the entity level. Owners who are individuals, trusts or estates and who consent receive a credit against their own California tax. The election is available through 2030 and is made on a timely filed original return. The first payment is due June 15 of the election year. From 2026, a missed or short June 15 payment no longer rules out the election, but it reduces the owners' credit by 12.5 percent of the unpaid amount.
What should be planned before a move out of California?
In the year you move, California taxes all income received while you were a resident and California-source income received after you left. We plan the estimated payments for the year of the move and review large items expected that year, such as a sale or stock compensation.
Schedule a Consultation
Call (213) 255-4665 or send us a short message about your situation.
Please do not include Social Security numbers, bank account numbers or tax documents in the form.