This guide provides a comprehensive overview of the tax obligations for Agency LLCs operating in California as of 2026. We'll cover federal and state taxes, available deductions, quarterly obligations, and common mistakes to avoid. You might also find our guide on how to register an LLC in California useful here. Managing these complexities is crucial for your agency's financial health, which is why Lovie offers an AI-powered solution to automate company formation and ongoing compliance.
As an Agency LLC in California, your tax structure depends on elections made with the IRS. By default, a single-member LLC is treated as a disregarded entity for federal income tax purposes, meaning profits are taxed at the individual level. Multi-member LLCs are taxed as partnerships. This connects to our resource on setting up your California LLC, which covers the details. However, you can elect to be taxed as an S-Corp or C-Corp for potential tax advantages. California also imposes its own set of taxes, including the annual franchise tax.
Single-member LLCs pay self-employment tax (15.3%) plus income tax on all net profits, reported on Schedule C of the owner's personal tax return.
Deduct expenses for the portion of your home exclusively used for business. Limited to the area used regularly and exclusively for business.
Deduct ordinary and necessary business expenses, such as client meetings, marketing, and software subscriptions. Deduct payments made to independent contractors. Ensure proper 1099 reporting.
Pay estimated federal income tax and self-employment tax quarterly if you expect to owe at least $1,000.
Pay estimated California income tax quarterly if you expect to owe at least $500. Deposit federal and state payroll taxes withheld from employee wages. Agencies with employees must adhere to strict deposit schedules.
Start your formation with Lovie — $499 one-time, state filing fee included.
State-specific formation guides, cost breakdowns, compliance checklists, and expert comparisons — updated for 2026.