CPA for Business Owners with $1M+ Revenue in Los Angeles
MangoBooks, a Los Angeles CPA firm, provides bookkeeping, payroll, tax planning and tax returns for businesses with $1,000,000 or more in annual revenue and for their owners. We keep the company's books, run its payroll, plan the year's tax and prepare the company's return together with the owner's personal return, so both come from the same records. A business tax return typically costs $2,000–$3,500 per year, monthly bookkeeping $650–$1,400 per month, and the owner's return $1,100–$1,800 with a business or $2,500–$4,500 with K-1s.
The work is led by Felix Park, CPA, MBA, a licensed California CPA with an MBA from the UCLA Anderson School of Management. Several California rules change at $1,000,000, and some turn on the company's revenue while others turn on the owner's own income.
Revenue or Profit
Rules that turn on the company's revenue. The California LLC fee is based on total income from California sources: $900 at $250,000–$499,999, $2,500 at $500,000–$999,999, $6,000 at $1,000,000–$4,999,999 and $11,790 at $5,000,000 or more. The City of Los Angeles business tax is also figured on gross receipts; see CPA in the San Fernando Valley.
Rules that turn on the owner's income. The 1 percent Behavioral Health Services Tax applies to taxable income above $1,000,000, and once California adjusted gross income reaches $1,000,000 ($500,000 if married filing separately) the owner's estimated payments must cover 90 percent of the current year's tax. For 2026 the 37 percent federal bracket begins at $640,600 of taxable income for single filers and $768,700 for married couples filing jointly.
Situations We Handle
Salary and distributions in an S corporation. Payments to a shareholder-employee for services must be treated as wages to the extent they are reasonable compensation, before non-wage distributions are made. Wages above $200,000 ($250,000 for joint filers, $125,000 if married filing separately) also carry the 0.9 percent Additional Medicare Tax, and California taxes the S corporation's net income at 1.5 percent with an $800 minimum. We set the salary with the owner, run it through payroll and revisit it in tax planning. See Payroll.
An LLC with $1,000,000 or more of total income. The LLC files Form 568, pays the $800 annual tax by the 15th day of the 4th month and estimates and pays the LLC fee, $6,000 at this level, by the 15th day of the 6th month on form FTB 3536. We calculate both payments and compare the LLC's tax with what it would pay as an S corporation. See Business Tax Preparation.
A partnership or S corporation electing the pass-through entity tax. For tax years through 2030, the entity can elect each year to pay California 9.3 percent of its qualified net income, and owners who are individuals, fiduciaries, estates or trusts subject to California personal income tax and who consent claim a credit for their share. The first payment, $1,000 or 50 percent of the prior year's elective tax, whichever is greater, is due June 15, and from 2026 a missed or short June payment reduces the credit by 12.5 percent of the unpaid share. See Tax Planning.
The operating company and its building. An owner who holds the company's premises in a separate LLC has two returns: the operating company's and Form 568 for the property LLC, with depreciation on the building and, on a sale, California withholding of 3 1/3 percent of the price. See Rental Property Owners.
Estimates from year-to-date books. When we keep the books, the year-to-date profit and loss statement feeds the projection of the owner's federal and California tax and the four estimated payments. Federal payments avoid a penalty when they cover 90 percent of this year's tax or 100 percent of last year's, 110 percent when last year's adjusted gross income was over $150,000 ($75,000 if married filing separately); California asks for 30 percent by April 15, 40 percent by June 15, nothing in September and 30 percent by January 15. See Bookkeeping.
A planned sale of the business. Before a sale closes, we project the federal and California tax on the terms being discussed, so the owner knows what to set aside and when the estimated payments fall due. California has no lower rate for capital gains and taxes them as ordinary income. See Tax Planning.
California Specifics
- LLC tax and fee. An LLC pays the $800 annual tax by the 15th day of the 4th month of its tax year and estimates and pays the LLC fee by the 15th day of the 6th month on form FTB 3536; the fee tiers are listed above.
- S corporation tax. California taxes an S corporation's net income at 1.5 percent, with an $800 minimum franchise tax.
- Pass-through entity elective tax. For tax years through 2030, an S corporation or partnership can elect each year to pay 9.3 percent of its qualified net income at the entity level. Owners who are individuals, fiduciaries, estates or trusts subject to California personal income tax, or a disregarded single-member LLC owned by one, and who consent claim the credit on their own California returns.
- Behavioral Health Services Tax. California adds 1 percent on the owner's taxable income above $1,000,000.
Federal Thresholds
- Qualified business income deduction. Owners of a sole proprietorship, partnership or S corporation may deduct up to 20 percent of qualified business income, limited by taxable income, by the W-2 wages the business pays and by the unadjusted basis of its qualified property; it is not available for C corporation income or for wages earned as an employee. For tax years beginning after 2025 a minimum deduction for active qualified business income applies.
- State and local tax deduction for 2025. Capped at $40,000 ($20,000 if married filing separately) and reduced once modified adjusted gross income exceeds $500,000 ($250,000), though not below $10,000 ($5,000).
- Additional Medicare Tax and net investment income tax. 0.9 percent on wages and self-employment income above $250,000 (joint filers), $125,000 (married filing separately) or $200,000 (others), and 3.8 percent on net investment income when modified adjusted gross income is above the same amounts.
- Depreciation for 2025. The section 179 limit is $2,500,000, reduced once purchases exceed $4,000,000, and the 100 percent special depreciation allowance applies to qualified property acquired and placed in service after January 19, 2025. California does not follow the federal additional first-year depreciation under section 168(k), so we keep both depreciation schedules.
Services Involved
- Bookkeeping, monthly and catch-up
- Payroll, including the owner's salary
- Tax Planning: the projection, estimates, owner salary and the pass-through entity election
- Business Tax Preparation
- Individual Tax Preparation: the owner's return with its K-1s
- Business Formation: an entity change, such as an LLC electing S corporation status
- Financial Statements: statements for the owner's own use and for lenders
Where We Work
We serve clients throughout Los Angeles, including the San Fernando Valley communities around our office in Woodland Hills (Encino, Sherman Oaks, Tarzana, Calabasas and Burbank) and the Conejo Valley (Thousand Oaks, Westlake Village and Agoura Hills). Meetings are scheduled in advance, and documents are exchanged electronically. A company in the City of Los Angeles also registers with the city's Office of Finance and files an annual business tax renewal, and Burbank, Calabasas, Thousand Oaks, Westlake Village and Agoura Hills each have rules of their own: see CPA in the San Fernando Valley and CPA for the Conejo Valley.
Fees
| Service | Typical range |
|---|---|
| Monthly bookkeeping | $650–$1,400 per month |
| Catch-up bookkeeping | From $1,500 |
| Payroll | $175–$400 per month |
| Business tax return (1120-S, 1065 or 1120 with the California return) | $2,000–$3,500 per year |
| LLC or S corporation setup | From $950 plus state fees |
| Owner's individual return with a business | $1,100–$1,800 |
| Owner's individual return with K-1s | $2,500–$4,500 |
Tax planning and financial statements are quoted after a consultation. 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
Is the $1M threshold revenue or profit?
This page is about businesses with $1,000,000 or more in annual revenue. Some rules turn on revenue: the California LLC fee is based on total income from California sources and is $6,000 from $1,000,000 to $4,999,999. Others turn on the owner's own income: the 1 percent Behavioral Health Services Tax applies to taxable income above $1,000,000, and California's rule that estimates must cover 90 percent of the current year's tax applies at $1,000,000 of California adjusted gross income. We work out which rules apply from the company's books and the owner's return.
Should a $1M+ LLC become 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. An LLC taxed as a partnership or disregarded entity pays the $800 annual tax plus the LLC fee, which is $6,000 at $1,000,000 to $4,999,999 of total income. We compare the tax under each structure using your figures before you decide. See Business Formation.
What is the California LLC fee at $1M of income?
$6,000 for total California income of $1,000,000 to $4,999,999, and $11,790 at $5,000,000 or more. The fee is estimated and paid by the 15th day of the 6th month of the tax year on form FTB 3536, in addition to the $800 annual tax due by the 15th day of the 4th month.
Why does the pass-through entity election matter when the state and local tax deduction is capped?
For 2025 the federal deduction for state and local taxes is capped at $40,000 ($20,000 if married filing separately) and is reduced once modified adjusted gross income passes $500,000 ($250,000), though not below $10,000 ($5,000). Under California's pass-through entity elective tax, an S corporation or partnership pays 9.3 percent of its qualified net income at the entity level and the consenting owners claim a credit for their share on their California returns. The election is available through 2030, and we review it each year with the owner's figures. See Tax Planning.
How much salary must an S corporation owner take?
The IRS requires an S corporation to pay reasonable compensation to a shareholder-employee for services before non-wage distributions are made to that shareholder, and lists factors such as duties, time devoted to the business and what comparable businesses pay for similar services. We review the salary with the owner, run it through payroll and revisit it during tax planning. See Payroll.
What does the owner's personal return cost?
An individual return with a business or rental properties typically costs $1,100–$1,800, and a return with K-1s, stock compensation or several states $2,500–$4,500. The business return itself is $2,000–$3,500 per year. Each fee is set out in a written engagement letter before work begins. See the Fee Guide.
Schedule a Consultation
Call (213) 255-4665 or send us a short message about your situation.
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