Tax planning in California
What a written, year-round plan covers for a California business, and when each decision has to be made.
Tax planning in CaliforniaCalifornia
A California CPA firm that plans for California's own tax rules.
California has its own tax rules on top of the federal ones: the franchise tax, the pass-through entity election that works around the SALT cap, different depreciation rules, state tax on capital gains, and residency tests. Out-of-state advice tends to miss them. Astute Advisors builds them into every plan for business owners and high earners statewide, entirely virtual.
Book Your Free ConsultationGo deeper on California
The engagements most California clients start with.
Tax preparation in California
How the return gets assembled, what to gather, and what most often delays a filing.
Tax preparation in CaliforniaCalifornia taxes are their own discipline
High earners and business owners in California carry a tax burden that is genuinely different from the rest of the country. On top of the federal return there is the franchise tax, California’s own entity treatment, the pass-through entity (PTET) election that can restore part of the lost SALT deduction, and a state that taxes capital gains as ordinary income. Get any of these wrong and the cost is real.
We are a California firm serving mostly California clients, so this is not an add-on. It is central to how we plan. We project your federal and state picture together, screen your facts against the strategies both allow, and put a written plan in motion while the timing is still yours.
Because every engagement runs over Zoom or Google Meet and a secure portal, distance is not a constraint. We work with business owners and households from the South Bay to the Bay Area, San Diego to Sacramento, and the Central Valley in between. A client in Palo Alto or San Diego gets the same year-round access and one-business-day responsiveness as a client down the street from our Torrance office.
California tax problems we plan for, and what we do about them
These are the places where a federal-only plan leaves California money on the table. Each one has a fix, and most of the fixes only work before year end.
- 01The SALT cap and the PTET election
The federal deduction for state and local taxes is capped, and the higher cap that started in 2025 phases back down for high earners. California's pass-through entity elective tax (PTET) lets an S corp or partnership pay the state tax at the entity level, where it is fully deductible, and hands the owners a credit. The election runs through 2030 and needs a prepayment by June 15 each year, so we model it in the spring, not at filing time.
- 02No bonus depreciation and a $25,000 Section 179 limit
The federal return lets you write off equipment and vehicles right away. California does not allow bonus depreciation and caps the Section 179 deduction at $25,000, so the same purchase produces two different deductions. We keep both schedules and time large purchases so the state difference does not surprise you.
- 03Capital gains taxed as ordinary income, up to 13.3%
California has no lower rate for long-term gains. A business sale, a stock sale, or an appreciated property sale is taxed at your regular state rate, on top of the federal capital gains tax. Timing, installment sales, and how the deal is structured can change the bill, and all of those are decided before closing.
- 04The $800 minimum franchise tax, on every entity, every year
Each corporation and LLC you own pays at least $800 a year whether it earns anything or not, S corporations pay 1.5% of net income, and LLCs pay an extra fee once gross receipts pass $250,000. We look at what each entity costs to keep and whether the structure should be simplified.
- 05No state exclusion for qualified small business stock
Founders who sell shares under the federal QSBS rules can exclude a large gain from federal tax. California does not follow that rule, so the state taxes the full gain. Anyone planning an exit needs the state number in front of them before the term sheet is signed.
- 06Residency, and California income after you leave
Moving out of California does not end the state's interest in you. Property exchanged out of state under a 1031 exchange keeps a California reporting requirement, and the state looks closely at part-year and departure situations. We plan the timing and the records before the move.
4xPlanning checkpoints a year
1 dayReply standard for questions
$10M+Saved through proactive planning
200+Business owners & households served
Federal and California, in one plan.
The same planning and preparation work, wherever in the state you are.
Tax Planning
Year-round strategy that plans federal and California together: entity, PTET, capital-gains timing, retirement, and residency.
Tax PlanningTax Preparation
California and federal returns, business and individual, prepared to execute the plan. Digital and CPA-reviewed.
Tax PreparationFor Attorneys
Law firms anywhere in California: professional corporations, partner K-1s, contingency-fee years, and multi-state obligations.
For AttorneysWho we help across California
The plan pays off when there is real income and California complexity to manage, generally $500,000 and up.
- 01Business owners statewide
Practices, agencies, contractors, and product companies where entity choice and the PTET election move real money.
- 02High earners with multi-state income
Equity compensation, remote teams, or income sourced outside California, where allocation and credits have to be planned.
- 03Real estate investors
Depreciation, passive-activity limits, and California capital gains on a sale, modeled before the transaction closes.
- 04Anyone moving in or out of California
Residency timing and documentation, which are decided in advance or not at all.
Where we started
We serve the whole state from the South Bay, and those pages go deeper on the local picture.
Torrance
Our office on Hawthorne Blvd and the base for everything we do.
TorranceManhattan Beach
Founders, executives, and high-net-worth families in the South Bay.
Manhattan BeachPalos Verdes
Appreciated real estate, capital-gains timing, and business transitions.
Palos VerdesPlan for California's tax rules before they cost you.
Book a discovery call. Thirty minutes, statewide, and an honest read on where a plan would help.
Book Your Free Consultation No pressure, no obligation. Just clarity.Questions we hear most.
01Can Astute Advisors work with me if I am not in the South Bay?+
Yes. We are based in Torrance, but every engagement is virtual, so we work with business owners and high earners throughout California - the Bay Area, San Diego, Sacramento, the Central Valley, and everywhere between. You get the same year-round access wherever you are.
02Why do California's own tax rules matter so much?+
Your federal return is only half the picture. California adds the franchise tax, its own entity rules, the pass-through entity (PTET) election, different depreciation rules, and a state tax on capital gains that stacks on top of the federal one. Out-of-state advice routinely misses these. As a California firm of Certified Public Accountants serving mostly California clients, those rules are core to every plan.
03What is the PTET election, in simple terms?+
Normally you pay California income tax personally, and the federal deduction for that tax is capped. With the PTET election, your S corporation or partnership pays the California tax instead. The business gets a full federal deduction for it, and you get a California credit for the same amount. The net effect is a lower federal bill for most owners who are over the SALT cap. It is voluntary, runs through 2030, and needs a prepayment by June 15 to get the full credit.
04Does Astute Advisors handle California capital gains planning?+
Yes. California taxes capital gains as ordinary income at the state level, so a sale can carry a meaningful state bill on top of the federal one. The levers - timing, installment treatment, entity, and residency - are only open before the transaction closes, which is why we plan it in advance.
05I might move in or out of California. Can Astute Advisors advise on residency?+
Residency is one of the most consequential and most misunderstood California tax questions. The state applies specific tests and looks closely at part-year and departure situations. We plan the timing and documentation with you before the move, not after a notice arrives.
06How does Astute Advisors work with clients it never meets in person?+
Video calls for the planning conversations, a secure portal for documents, e-signature for anything that needs a signature, and a one-business-day reply standard in between. Most clients find it faster than driving to an office once a year.