California Bookkeeping and Monthly Close

California Bookkeeping and Monthly Close v0.1

Source-cited draft — not reviewed by an accountant. This guide is general bookkeeping reference material for AI-assisted workflows. A credentialed California reviewer must review the working papers before a return is prepared, a payment is made, a journal is posted to a client ledger, or a compliance position is taken.

What this file is

This is the California companion to the universal bookkeeping-workflow-base. It supplies the California chart of accounts, management-reporting layout, transaction patterns, agency-control reconciliations, 2026 calendar inputs, and tax-return handoff rules that the base requires. The base supplies the nine-step close, three classification tiers, five core outputs, and twelve integrity checks.

This guide is a bookkeeping and working-paper guide. It does not calculate or file a California or federal return, choose an entity classification, decide worker status, decide whether a sale is taxable, give employment-law advice, respond to a notice, or resolve an audit. California rules are separated from federal inputs. When a federal or California tax skill is loaded, that skill owns the tax computation; this guide owns the ledger tie-out and handoff.

Tax-year coverage. The control-account rules and cited 2026 figures in this draft were checked on 2026-09-20. Rates, assigned filing frequencies, agency notices, and deadlines can change. Refresh the linked agency source before using a number in a client workpaper.

Section 1 — Scope statement

In scope

Use this guide for:

• Sole proprietors.
• Disregarded single-member LLCs (SMLLCs).
• Multi-member LLCs and partnerships.
• S corporations and C corporations.
• California employers and entities with California payroll.
• Operating nonprofits with ordinary revenue and expense streams. Full fund accounting, donor-restricted fund releases, and grant compliance are outside this guide.
• Calendar-year or fiscal-year monthly closes, provided the entity year-end is confirmed before the calendar is built.
• Bank, credit-card, merchant-processor, marketplace, invoice, receipt, payroll-register, and general-journal data.

The close produces a balanced trial balance, a profit and loss statement, a balance sheet, a transaction register, a reviewer brief, California agency control reconciliations, a compliance calendar, tax-return handoff schedules, and a missing-information report.

Explicit exclusions and hard stops

Stop and refer to a qualified reviewer when the request asks the AI to:

• Prepare, sign, submit, or amend a tax return or payroll return.
• Choose federal or California entity classification, make a tax election, or decide whether an S election or PTE election should be made.
• Decide worker classification, apply the AB 5 test, or give a reasonable-compensation opinion.
• Decide sales-tax nexus, taxability, exemption, resale, district allocation, or marketplace liability when the source records do not establish the treatment.
• Calculate payroll, advise on wages, benefits, workers' compensation, leave, termination, or other employment-law matters. Payroll registers may be posted and reconciled when a payroll provider or reviewer supplies the amounts.
• Resolve tax notices, audits, appeals, liens, levies, penalty abatement, or collection matters.
• Prepare trust, estate, public-company, regulated-industry, assurance, or cannabis accounting.
• Prepare full nonprofit fund or grant accounting.
• Calculate city or county business taxes.

An excluded request becomes a handoff item with the source documents, ledger balance, and exact question for the reviewer. It is never silently answered.

Section 2 — California agency map and source register

The following sources are primary agency sources for this guide. They describe filings and control evidence; they do not authorize this guide to file anything.

California agency map and source register (FTB business e-file forms and other agency sources cited in the table cells)

Area	Primary source	Bookkeeping use
FTB forms and entity returns	FTB business e-file forms, business due dates, and FTB forms	Map the entity, return, payment, extension, withholding, and handoff balances.
FTB LLC tax and fee	FTB business due dates and Form 568 materials	Keep the annual LLC tax, LLC fee, estimated fee, payments, and return balance separate.
FTB PTE elective tax	FTB PTE elective tax and PTE help	Track the June payment, return payment, credit support, and payment-to-year mapping.
FTB withholding	2026 Form 592 instructions and Form 592-B	Reconcile California-source withholding, payee schedules, vouchers, and statements.
CDTFA sales and use tax	Publication 51 filing frequencies, marketplace facilitator guide, Publication 109 Internet sales, and Publication 116 records	Separate gross sales, taxable sales, district tax, use tax, marketplace tax, prepayments, returns, and payments.
EDD payroll	2026 payroll calendar, rates and withholding, required filings, payroll deposits, and Employer Guide DE 44	Reconcile payroll journals, wage bases, deposits, DE 9, DE 9C, DE 88, new-hire, and contractor-reporting evidence.
EDD new hires and contractors	New Employee Registry and Independent Contractor Reporting	Create a reporting handoff; do not decide employee versus contractor status.
Secretary of State	Statement of Information tips and entity FAQs	Maintain the entity-compliance calendar and proof of filing.
IRS federal inputs	Employment tax due dates, 2026 Form 941 instructions, 2026 Forms 1099 instructions, and employment-tax recordkeeping	Tie federal payroll and information-return schedules to the ledger; delegate federal tax calculations.
California record retention	FTB keeping tax records and CDTFA Publication 116	Keep a retention index and preserve records during audits or disputes.

Section 3 — Filing requirements and compliance calendar

Close cadence

The calendar has two layers. The close cadence is an internal accounting control. Agency due dates are external obligations and are copied from the current agency calendar only after the entity, filing frequency, and tax year are confirmed.

Close cadence

Frequency	Close action	Evidence
Every month	Lock the source-data period, reconcile every bank and card, reconstruct processor and marketplace activity, post payroll-provider journals, update agency controls, and review suspense.	Bank reconciliations, processor roll-forward, payroll register tie-out, control-account roll-forward.
Each payroll	Post gross-to-net and employer-tax journals supplied by the payroll provider; reconcile the cash withdrawal to the payroll clearing account.	Payroll register, provider journal, funding report, deposit confirmation.
Each CDTFA period	Reconcile sales, exemptions, district allocation, use-tax purchases, marketplace evidence, prepayments, return, and payment.	CDTFA workpaper and filed-return copy supplied by the reviewer.
Each quarter	Tie the EDD DE 9 and DE 9C wage totals to the payroll register and GL; tie DE 88 deposits to the liability roll-forward.	DE 9, DE 9C, DE 88, payroll register, and bank confirmation.
Year-end	Freeze the close, count or verify inventory, update fixed-asset and loan schedules, reconcile all agency balances, and package the tax-return handoff.	Final trial balance, statements, reconciliations, handoff worksheet, reviewer brief.

2026 California events

The dates below are control-calendar inputs, not filing instructions. If a due date falls on a weekend or legal holiday, use the agency's next-business-day rule and preserve the source page in the calendar.

2026 California events (Sources for this calendar are the FTB business due-date page, FTB Form 592 instructions, FTB PTE guidance, EDD 2026 calendar, CDTFA filing-frequency guidance, SOS filing guidance, and the IRS employment-tax calendar.)

Obligation	2026 control rule	Bookkeeping action
EDD DE 9 and DE 9C, Q1	Due April 1, 2026; the EDD calendar shows April 30 as the delinquent date.	Close March payroll, tie the wage file, and attach the filed reports and payment evidence.
EDD DE 9 and DE 9C, Q2	Due July 1, 2026; the EDD calendar shows July 31 as the delinquent date.	Same tie-out for April–June.
EDD DE 9 and DE 9C, Q3	Due October 1, 2026; the EDD calendar shows November 2 as the delinquent date.	Same tie-out for July–September.
EDD DE 9 and DE 9C, Q4	Due January 1, 2027; the EDD calendar shows February 1, 2027 as the delinquent date.	Close December payroll and carry the calendar item into the next work year.
EDD DE 88	Quarterly, monthly, next-day, or semi-weekly cadence depends on the employer's federal deposit schedule and California PIT withheld.	Read the assigned schedule from EDD; never infer a deposit frequency from the bank feed.
FTB C corporation	Form 100/100W original return and payment are generally due the 15th day of the fourth month after year-end; the FTB page gives the applicable extension rule.	Set the client year-end, attach the FTB estimate and return handoff, and keep payments out of expense until the reviewer directs the tax entry.
FTB S corporation	Form 100S original return and payment are generally due the 15th day of the third month after year-end; the extended date is the 15th day of the ninth month.	Reconcile shareholder payroll, distributions, estimates, and return handoff.
FTB SMLLC	The annual $800 LLC tax is due by the 15th day of the fourth month after the beginning of the tax year. Form 568 and the LLC fee follow the entity's return due-date rules.	Keep Form 3522, Form 3536, Form 568, and payment confirmations in separate control schedules.
FTB PTE elective tax	The first payment is due June 15 during the election year; the second payment is due by the original return due date without extension.	Maintain a PTE payment-to-tax-year schedule and do not net it into owner distributions.
FTB withholding	2026 Form 592 remittance periods end March 31, May 31, August 31, and December 31, with the due dates in the current Form 592 instructions.	Tie each period's payee ledger, withholding payable, remittance, and Form 592-B support.
CDTFA sales/use tax	CDTFA assigns quarterly prepay, quarterly, monthly, fiscal-yearly, or yearly frequency based on the account.	Record the assigned frequency and exact due dates from the CDTFA account; file a zero return when the assigned return requires one even if no taxable sales occurred.
Secretary of State	California and out-of-state stock corporations generally file annually; California nonprofits and LLCs generally file every two years. LLCs file an initial statement within 90 days. The filing window is tied to the registration month.	Calendar the next window from the SOS record and retain the filed Statement of Information.
Federal Forms 941 and 940	Form 941 is quarterly; Form 940 is annual when required.	Tie each federal return or provider report to the payroll register and federal liability accounts.
Federal W-2/W-3 and 1099 series	W-2/W-3, 1099-NEC, 1099-MISC, and 1099-K handoffs use the current IRS instructions and recipient/agency dates.	Complete the payee and wage schedules, then hand them to the preparer; do not make a filing determination from a vendor name alone.

Sources for this calendar are the FTB business due-date page, FTB Form 592 instructions, FTB PTE guidance, EDD 2026 calendar, CDTFA filing-frequency guidance, SOS filing guidance, and the IRS employment-tax calendar.

Section 4 — 2026 rates, thresholds, and control facts

These facts are used to set up reconciliations. They are not a return calculation. If a tax skill or the current official source gives a different year-specific value, stop and escalate the difference.

2026 rates, thresholds, and control facts (Citations embedded in table cells (CDTFA Publication 51, CDTFA MPFAct guide, FTB Form 568, FTB PTE, EDD rates and withholding, DE 44, EDD taxable wages, Form 592 instructions, CDTFA Publication 116, FTB record keeping))

Control fact	2026 value or rule	Source and treatment
California statewide sales/use tax base	7.25%; district taxes vary by location.	CDTFA Publication 51. Use the current CDTFA rate lookup in the sales-tax workpaper; do not apply 7.25% to every transaction.
Marketplace economic-nexus test	Combined sales of tangible personal property for California delivery by the retailer and related persons exceeding $500,000 in the preceding or current calendar year is an important registration test.	CDTFA Marketplace Facilitator Act guide. The guide does not decide nexus or taxability; it flags the threshold for reviewer review.
California LLC annual tax	$800 for an LLC doing business in California or registered with the Secretary of State.	FTB Form 568 materials and FTB business due dates. Post the payment against the FTB LLC-tax control, not automatically to expense.
PTE elective tax	9.3% of qualified net income for the qualified entity's election computation.	FTB PTE elective tax. This guide only reconciles the payment and handoff; the PTE skill or reviewer computes it.
EDD UI	2026 schedule is 1.5%–6.2%; a new employer rate is 3.4% for the period stated by EDD.	EDD rates and withholding. Use the employer's DE 2088 or e-Services rate for the journal.
EDD UI and ETT wage base	First $7,000 of subject wages per employee per calendar year.	2026 Employer Guide DE 44. Track employee-level wage-base exhaustion in the payroll workpaper.
EDD ETT	0.1% of UI-taxable wages for employers to which the ETT applies.	EDD rates and withholding. Do not apply when the employer's notice or EDD guidance says the employer is exempt.
EDD SDI	1.3% for 2026; all wages are subject to SDI contributions after the wage-ceiling change described by EDD.	EDD rates and withholding and EDD taxable wages.
EDD PIT withholding	No universal rate belongs in the chart of accounts. Use the employee's DE 4 and the current EDD withholding schedules.	EDD 2026 rates and withholding.
California backup withholding	7% of the payment when California backup withholding applies.	2026 Form 592 instructions. Use a separate withholding control and refer classification questions to the reviewer.
Record retention	CDTFA records should generally be kept at least four years; FTB generally uses a four-year examination period, with longer periods for exceptions, audits, disputes, and property-basis records.	CDTFA Publication 116 and FTB record keeping. IRS employment records also generally require at least four years.

Section 5 — California chart of accounts

The codes below are a compact management chart, not a mandated California chart. Map them to the client's existing ledger before posting. Do not invent codes in a transaction register: if the client's chart differs, show the client code and this guide's suggested mapping side by side.

California chart of accounts

Code	Account	Type	Normal balance	California use
1000	Operating bank	Asset	Debit	Primary operating account.
1001	Payroll bank	Asset	Debit	Separate payroll funding account.
1002	Savings or tax reserve bank	Asset	Debit	Reserve account; reconcile like any bank.
1010	Undeposited funds	Asset	Debit	Cash, checks, and card receipts awaiting deposit.
1020	Stripe clearing	Asset	Debit	Gross Stripe activity before fees, tax, refunds, and payout.
1021	PayPal or Square clearing	Asset	Debit	Gross processor activity before payout.
1022	Marketplace clearing	Asset	Debit	Gross marketplace activity and settlement deductions.
1030	Accounts receivable	Asset	Debit	Accrual-basis invoices not yet collected.
1040	Inventory	Asset	Debit	Goods held for resale.
1050	Prepaid expenses	Asset	Debit	Insurance, software, rent, and other future-period items.
1060	Security deposits	Asset	Debit	Refundable deposits.
1070	CDTFA tax receivable	Asset	Debit	Refunds or overpayments supported by a CDTFA workpaper.
1080	FTB tax prepayments	Asset	Debit	Estimates, PTE, or other payments awaiting return application.
1090	EDD overpayment receivable	Asset	Debit	EDD credit supported by an account statement.
1100	Computer and equipment	Asset	Debit	Fixed assets; capitalization and depreciation are reviewer decisions.
1110	Furniture and fixtures	Asset	Debit	Fixed assets.
1120	Vehicles	Asset	Debit	Fixed assets; business use is a reviewer input.
1130	Leasehold improvements	Asset	Debit	Fixed assets.
1190	Accumulated depreciation	Contra-asset	Credit	Year-end depreciation supplied by the tax or financial-reporting reviewer.
2000	Accounts payable	Liability	Credit	Accrual-basis vendor invoices.
2010	Accrued expenses	Liability	Credit	Unbilled or estimated obligations supported by a close schedule.
2020	Credit-card payable	Liability	Credit	Statement balance and unreconciled card activity.
2030	Short-term loan payable	Liability	Credit	Principal due within twelve months.
2040	Long-term loan payable	Liability	Credit	Principal due after twelve months.
2050	Customer deposits and deferred revenue	Liability	Credit	Cash received before the earning event.
2060	Payroll wages payable	Liability	Credit	Net wages and payroll-clearing amounts awaiting funding.
2061	Federal income-tax withholding payable	Liability	Credit	Employee federal withholding.
2062	Federal Social Security and Medicare payable	Liability	Credit	Employee and employer federal payroll controls.
2063	California PIT withholding payable	Liability	Credit	Employee California PIT withholding.
2064	California SDI withholding payable	Liability	Credit	Employee SDI withholding.
2065	EDD UI payable	Liability	Credit	Employer UI liability.
2066	EDD ETT payable	Liability	Credit	Employer ETT liability.
2067	Federal FUTA payable	Liability	Credit	Federal unemployment control.
2068	EDD DE 88 and DE 9 clearing	Liability	Credit	Temporary clearing when provider reports and bank payments settle separately.
2070	CDTFA state sales-tax payable	Liability	Credit	State sales-tax component supported by the CDTFA workpaper.
2071	CDTFA district-tax payable	Liability	Credit	District tax component by location.
2072	CDTFA use-tax payable	Liability	Credit	Use tax on taxable purchases where the reviewer establishes liability.
2073	CDTFA prepayment clearing	Liability	Credit	Prepayments awaiting the return period application.
2080	FTB LLC annual-tax payable	Liability	Credit	Form 3522 and annual tax control.
2081	FTB LLC-fee payable	Liability	Credit	Form 3536 and Form 568 fee control.
2082	FTB corporation-tax payable	Liability	Credit	Form 100 or 100S estimate and return control.
2083	FTB PTE-tax payable	Liability	Credit	Form 3893 and Form 3804 handoff control.
2084	FTB withholding payable	Liability	Credit	Forms 592, 592-Q, 592-PTE, and 592-B support.
2085	Other agency-tax payable	Liability	Credit	Temporary, identified control only; never a dumping account.
2090	Payroll-provider clearing	Liability	Credit	Payroll-funding and provider settlement bridge.
2091	Shareholder, member, or partner loan payable	Liability	Credit	Related-party debt with written terms or reviewer confirmation.
3000	Sole-proprietor owner capital	Equity	Credit	Owner investment.
3001	Sole-proprietor owner draws	Equity	Debit	Personal withdrawals; never a business expense.
3010	Member contributions	Equity	Credit	LLC member contributions.
3011	Member distributions	Equity	Debit	LLC distributions.
3020	Common stock and additional paid-in capital	Equity	Credit	Corporation equity.
3030	Retained earnings	Equity	Credit	Prior-year corporation or nonprofit earnings.
3040	Dividends	Equity	Debit	Corporation distributions after reviewer confirmation.
3050	Net assets without donor restrictions	Equity	Credit	Operating nonprofit presentation.
3051	Net assets with donor restrictions — tracking only	Equity	Credit	Use only when the reviewer supplies the restriction policy; full fund accounting is excluded.
4000	Service revenue	Revenue	Credit	Professional and other services.
4001	Product revenue	Revenue	Credit	Direct product sales.
4002	Marketplace product revenue	Revenue	Credit	Gross marketplace sales before fees and refunds.
4003	Other operating revenue	Revenue	Credit	Revenue supported by source documents.
4010	Operating support or contribution revenue	Revenue	Credit	Basic nonprofit operating support; restricted-grant accounting is referred out.
4020	Returns, refunds, and allowances	Contra-revenue	Debit	Reduces the related revenue stream.
5000	Inventory cost of goods sold	COGS	Debit	Cost of goods sold when the inventory schedule supports the entry.
5001	Freight-in and inbound shipping	COGS	Debit	Inventory cost when the accounting policy treats it as cost of inventory.
5002	Fulfillment and pick-pack	COGS	Debit	Product fulfillment costs.
5003	Packaging	COGS	Debit	Packaging treated as COGS under client policy.
6000	Bank fees	Expense	Debit	Bank and wire fees.
6001	Merchant-processor fees	Expense	Debit	Stripe, PayPal, Square, and marketplace fees.
6002	Payment-gateway fees	Expense	Debit	Gateway and card-not-present fees.
6003	Advertising and promotion	Expense	Debit	Google, Meta, print, and other ads.
6004	Software and SaaS	Expense	Debit	Software subscriptions and cloud tools.
6005	Professional fees	Expense	Debit	Accounting, legal, consulting, and tax-preparation fees.
6006	Insurance	Expense	Debit	Business insurance and employee benefits insurance as directed.
6007	Rent and occupancy	Expense	Debit	Office, studio, and storage rent.
6008	Utilities	Expense	Debit	Electricity, water, gas, and other utilities.
6009	Internet and telecom	Expense	Debit	Internet, phone, and data plans.
6010	Office supplies	Expense	Debit	Consumable office supplies.
6011	Postage and shipping	Expense	Debit	Outbound shipping and postage not treated as COGS.
6012	Travel	Expense	Debit	Travel with source support.
6013	Meals	Expense	Debit	Meals held for reviewer tax treatment; no deduction is inferred.
6014	Vehicle and mileage	Expense	Debit	Vehicle costs held for reviewer-apportioned treatment.
6015	Repairs and maintenance	Expense	Debit	Repairs not identified as capital improvements.
6016	Wages and salaries	Expense	Debit	Gross wages from the payroll provider.
6017	Employer payroll taxes	Expense	Debit	Employer UI, ETT, federal payroll taxes, and other provider-supplied taxes.
6018	Employee benefits	Expense	Debit	Benefits from payroll or benefits-provider reports.
6019	Contractors and subcontractors	Expense	Debit	Vendor payments after the reviewer supplies worker-status treatment.
6020	Dues, licenses, and permits	Expense	Debit	Ordinary business registrations and licenses.
6021	Depreciation	Expense	Debit	Reviewer-supplied depreciation entry.
6022	Bad debt	Expense	Debit	Accrual-basis bad debt only after reviewer approval.
6023	Non-income taxes and licenses	Expense	Debit	Property, business-license, and similar items only when in scope.
6024	Interest expense	Expense	Debit	Loan and credit-card interest.
6025	Charitable contributions	Expense	Debit	Held for reviewer treatment; no tax deduction is inferred.
6026	Nonprofit program expenses	Expense	Debit	Operating nonprofit expenses without fund-accounting allocation.
6027	Review suspense	Temporary	Debit/Credit	Temporary only; every balance requires a question and resolution.
6028	Penalties and interest — review	Expense	Debit	Separate account; no deductibility conclusion is made.
6029	Cost-of-sales adjustments	COGS	Debit/Credit	Inventory count and period-end adjustment bridge.

Financial-statement presentation

Use a vertical, current/non-current balance sheet. Treat an item as current when the client's accounting policy and expected settlement place it within twelve months; document the policy rather than presenting a legal conclusion. Present the P&L as:

1. Revenue by service, product, marketplace, or operating support.
2. Less returns and allowances.
3. Less COGS, when inventory or fulfillment records support it.
4. Gross profit.
5. Operating expenses.
6. Operating profit.
7. Non-operating income and expense, if any.
8. Net income before tax. Tax expense and tax-basis adjustments belong to the reviewer or tax skill.

For a sole proprietor, show owner capital, owner draws, and current-period profit. For an LLC or corporation, show contributions, distributions or dividends, retained earnings, and shareholder or member loans separately. For an operating nonprofit, show net assets with the client's policy labels and refer restricted-fund accounting out.

Accounting basis and local GAAP handoff

California does not supply a universal internal-bookkeeping basis for every entity in this guide. Confirm whether the client and reviewer require cash-basis, tax-basis, or US-GAAP management statements before finalizing the presentation. The sole-proprietor and disregarded-SMLLC defaults in Section 10 are workflow starting points, not accounting elections or tax conclusions. If statutory, GAAP, audit, grant, or full nonprofit fund-accounting statements are required, load the applicable financial-statements skill and have the reviewer set the policy. This guide records the ledger and California control evidence; it does not certify GAAP compliance or choose a depreciation, inventory, accrual, or fund-accounting policy.

Section 6 — Classification rules

Apply the bookkeeping base's three states: Tier 1 (confident), Tier 2 (assumed and flagged), and Tier 3 (needs input). Every source line appears exactly once in the transaction register, either posted or excluded with a reason.

Classification rules

#	Pattern	Debit	Credit	Control or handoff
1	Direct customer payment with a matching invoice or sales report	Bank or A/R	Service or product revenue	Separate any tax amount only when the reviewer or tax skill supplies the treatment.
2	Stripe, PayPal, Square, or other processor settlement	Processor clearing	Bank	The payout is not revenue; reconstruct gross receipts, fees, refunds, and tax.
3	Processor fee on a settlement	Merchant-processor fees	Processor clearing	Tie to the processor fee report.
4	Marketplace settlement	Marketplace clearing	Bank	Post gross sales and deductions from the marketplace report before the payout.
5	Marketplace facilitator-collected tax	Marketplace clearing or tax clearing	CDTFA tax control only when the source establishes the seller's liability	Do not infer marketplace responsibility; retain the facilitator statement.
6	Customer refund or chargeback	Returns, refunds, and allowances	Bank or processor clearing	Link to the original sale.
7	Inventory purchase for resale	Inventory or freight-in	A/P or bank	Do not post all merchandise purchases directly to expense when an inventory schedule is required.
8	Cost of goods sold at shipment or period end	Inventory COGS	Inventory	Use the client's inventory method and reviewer-approved count.
9	Untaxed business purchase that the reviewer identifies as use-taxable	Expense or asset plus use tax	A/P or bank plus CDTFA use-tax payable	The guide records the control; a sales-tax skill decides taxability and rate.
10	Bank, wire, and monthly account fee	Bank fees	Bank	Match the bank statement line.
11	Payroll-provider gross wages	Wages and salaries	Wages payable and payroll withholdings	Use provider journal; never reconstruct gross-to-net from a single bank debit.
12	Employer payroll taxes in a provider journal	Employer payroll taxes	EDD UI, ETT, federal, or other payroll payable	Tie employee-level wage bases and rate notices.
13	Net payroll funding	Wages payable or payroll-provider clearing	Bank	The clearing account must return to zero after provider settlement.
14	EDD DE 88, DE 9, or DE 9C payment	EDD liability or EDD clearing	Bank	Match the payment to the report period and account number.
15	FTB LLC annual tax payment	FTB LLC annual-tax payable or FTB prepayment	Bank	Use the FTB Form 3522 evidence; do not assume expense treatment.
16	FTB LLC fee payment	FTB LLC-fee payable or FTB prepayment	Bank	Tie Form 3536, Form 568, and payment year.
17	FTB corporate or individual estimated payment	FTB tax prepayments	Bank	Keep taxpayer/entity and tax year separate.
18	FTB PTE payment	FTB PTE-tax payable or FTB tax prepayments	Bank	Link the payment to Form 3893 and the election year.
19	California withholding remittance	FTB withholding payable	Bank	Tie Forms 592, 592-Q, 592-PTE, or 592-B support.
20	Owner or member contribution	Bank	Owner capital or member contributions	Confirm owner and entity before posting.
21	Owner draw or member distribution	Owner draws or member distributions	Bank	Never post to wages or an operating expense without a reviewer-provided payroll entry.
22	Shareholder or member loan advance	Bank	Related-party loan payable	Require terms, counterparty, and repayment schedule.
23	Shareholder or member loan repayment	Related-party loan payable and interest expense when supported	Bank	Principal and interest must be separated from the source.
24	Fixed-asset purchase	Fixed asset or expense suspense	Bank or A/P	Ask before capitalizing; attach invoice and placed-in-service date.
25	Depreciation journal from the reviewer	Depreciation	Accumulated depreciation	Do not invent a tax or book life.
26	Contractor invoice or payment	Contractors and subcontractors or A/P	Bank or A/P	Do not decide employee status; create a DE 542 and 1099 handoff flag when the facts indicate one.
27	DE 34 new-hire evidence	No journal	No journal	Calendar and document control only; the form is not a ledger transaction.
28	SOS Statement of Information fee	Dues, licenses, and permits or prepaid compliance cost	Bank or A/P	Keep entity-compliance evidence with the calendar item.
29	Federal Form 941, 940, W-2/W-3, or information-return handoff	No journal unless the provider supplied an unposted liability	No journal	Tie the schedule to federal payroll and information-return controls.
30	Transfer between two business bank accounts	Receiving bank	Sending bank	Exclude from revenue and expense; match both sides.
31	Credit-card payment from the operating account	Credit-card payable	Bank	Exclude the payment from expense; expense was recorded on the charge.
32	Duplicate bank-feed and processor line	No journal	No journal	Exclude one line with a duplicate source reference.
33	Unexplained round-number transfer	Review suspense	Bank or receiving account	Tier 3; ask whether it is a contribution, draw, loan, refund, or revenue.
34	Mixed personal and business purchase	Business portion of expense only	Bank or card	Ask for the business percentage; if the user selects “do not know,” use 0% business and post the personal portion to the owner account.
35	Nonprofit donor receipt	Bank	Operating support or contribution revenue	If restricted or grant-conditioned, stop and refer to the nonprofit reviewer.

Conservative defaults

These are bookkeeping defaults, not tax positions:

• Unknown entity type or accounting basis: Tier 3; do not produce final statements until confirmed.
• Unknown owner transfer: Tier 3 review suspense; do not call it revenue or expense.
• Unknown personal/business purpose: ask. If the user selects “do not know,” treat the business percentage as zero and record the personal side as owner draw, member distribution, or shareholder distribution as appropriate.
• Unknown processor settlement composition: hold in processor clearing and request the gross activity report; never book the payout as gross revenue.
• Unknown marketplace tax responsibility: hold the tax component in review suspense and request the facilitator statement; do not decide nexus or taxability.
• Unknown FTB, CDTFA, EDD, or IRS payment period: hold in the relevant prepayment or agency-clearing account until the notice or confirmation is obtained.
• Unknown capital-versus-expense treatment: flag the invoice and use expense suspense until the reviewer approves capitalization or expense.
• Unknown contractor-versus-employee status: do not classify the worker; post only the supplied provider or invoice amount to a clearly labeled review account and create the EDD and federal handoff.
• Unknown current rate or due date: use the agency's current source and record the retrieval date; never copy a prior-year rate.

Materiality policy

California does not supply one universal bookkeeping materiality threshold for this guide. The reviewer must set a threshold for the client and period. Until the reviewer does so, treat every uncategorized item as material, do not group sundry transactions, and do not suppress a Tier 2 or Tier 3 flag.

Section 7 — Supplier and payee pattern library

These are recognition patterns, not proof of tax treatment. Confirm the account, period, and source report before applying a recurring pattern.

Supplier and payee pattern library

Payee or description pattern	Default mapping	Required evidence or flag
Stripe, Stripe Payments	Stripe clearing and merchant-processor fees	Stripe balance and payout reports.
PayPal, Venmo Business	PayPal clearing and merchant-processor fees	PayPal transaction and fee reports.
Square, Block	PayPal/Square clearing and merchant-processor fees	Square deposit and fee report.
Shopify Payments	Marketplace or processor clearing	Shopify Payments report and order export.
Amazon, Amazon Marketplace	Marketplace clearing, fees, refunds, and product revenue	Settlement report and facilitator-tax evidence.
Etsy, eBay, Walmart Marketplace	Marketplace clearing	Settlement report, returns, and tax statement.
Gusto, ADP, Rippling, Paychex	Payroll-provider clearing	Payroll register and funding report.
Employment Development Department, EDD	EDD payroll liability or clearing	DE 88, DE 9, DE 9C, and account statement.
Franchise Tax Board, FTB	FTB tax prepayment or liability	Form, voucher, tax year, and payment confirmation.
CDTFA	CDTFA sales/use-tax liability or prepayment	Return, prepayment schedule, and payment confirmation.
Internal Revenue Service, IRS, EFTPS	Federal payroll or income-tax control	Form, tax period, and EFTPS confirmation.
Secretary of State, bizfile	Compliance fee or prepaid filing cost	Statement of Information confirmation.
Google Ads, Microsoft Advertising, Meta Ads	Advertising and promotion	Invoice and business purpose.
Amazon Web Services, Microsoft Azure, Google Cloud	Software and SaaS	Invoice and service period.
Adobe, QuickBooks, Xero, Zoom, Slack	Software and SaaS	Invoice and prepaid-period review.
Verizon, AT&T, T-Mobile, Comcast	Internet and telecom	Business-use support for mixed-use plans.
PG&E, SCE, SDG&E, municipal utility	Utilities	Business premises or reviewer-approved allocation.
USPS, UPS, FedEx	Postage, shipping, or COGS fulfillment	Order or shipment support.
Bank, wire, ACH, service charge	Bank fees	Statement detail.
Insurance carrier or broker	Insurance or prepaid expenses	Policy term and coverage period.
Owner, member, shareholder by name	Capital, draw, distribution, or loan	Tier 3 unless the description and support are explicit.

Section 8 — Exclusion and duplicate patterns

Exclude a line from posting only with a reason in the transaction register:

• Transfer between two accounts belonging to the same entity.
• Payment of a business credit-card statement when the underlying card charges are already imported.
• Bank-feed duplicate of a processor or payroll-provider line.
• Repeated import of the same invoice or receipt.
• Opening-balance or feed-reconnect adjustment without source support.
• Reversal of a journal that has already been reversed.
• A marketplace payout when the settlement report has already posted the same payout.
• A personal purchase: it is excluded from the P&L but remains in the ledger as an owner, member, or shareholder transaction when the evidence supports that treatment.
• A tax payment: it is not an expense merely because cash left the bank; post it against the agency liability or prepayment control.

Section 9 — Bank, card, and merchant-processor handling

Bank statement normalization

• Normalize dates to ISO YYYY-MM-DD internally while preserving the source date and statement page.
• Accept US MM/DD/YYYY, ISO dates, and a client's documented export format; do not reinterpret an ambiguous date without asking.
• Use USD as the default currency for California books. Store ISO code USD, use a period as the decimal separator, a comma as the thousands separator, and retain two decimal places. Keep foreign-currency source amounts and conversion evidence when a non-USD account exists.
• Reconcile from opening statement balance to closing statement balance. A bank-feed balance is not evidence of completeness.
• Preserve check number, ACH trace, processor payout ID, invoice number, and statement page where available.

Processor and marketplace roll-forward

For each processor or marketplace and each close:

1. Start with the prior clearing balance.
2. Add gross sales and other receipts from the settlement report.
3. Subtract refunds, chargebacks, fees, reserves, advertising, shipping, and tax withheld as separately identified.
4. Add or subtract currency or rounding adjustments only with source evidence.
5. Agree the resulting clearing balance to the report and clear the payout to the bank statement.

A payout without a settlement report is Tier 3. A payout must never be posted as gross revenue merely because its description says “payout.”

Section 10 — Entity-type defaults

These are workflow defaults, not entity-classification advice.

Entity-type defaults

Entity	Default ledger approach	Equity and handoff controls
Sole proprietor	Cash basis unless the client or reviewer confirms accrual; simple chart with owner capital and draws.	Owner draws are equity; federal Schedule C and California Form 540 handoff are separate.
Disregarded SMLLC	Separate entity books; cash basis only when confirmed; maintain owner-equity and FTB LLC controls.	Form 568, Form 3522, Form 3536, and owner return handoff; do not collapse the LLC's $800 payment into owner tax.
Multi-member LLC or partnership	Accrual management books unless confirmed otherwise; track member capital, distributions, guaranteed payments, and loans separately.	Form 565 or 568 and K-1 support; PTE and withholding controls require reviewer instructions.
S corporation	Accrual management books unless confirmed otherwise; payroll and shareholder accounts must be separate.	Form 100S, payroll, shareholder basis/distribution, K-1, and optional PTE handoffs.
C corporation	Accrual management books unless confirmed otherwise; corporate equity, loans, dividends, and payroll are separate.	Form 100/100W, estimates, payroll, fixed assets, and tax-provision handoffs.
Operating nonprofit	Accrual management books; ordinary operating revenue and expense only.	Form 199 or 109 handoff as directed; refer restricted funds, grants, and full fund accounting.

Calendar-year versus fiscal-year status is confirmed in Step 4 of the base workflow. All return and payment dates are keyed to the confirmed year-end, not to the month in which the books happen to be closed.

Section 11 — California agency-control reconciliations

11.1 FTB

Maintain a roll-forward for each entity and tax year:

FTB roll-forward

Roll-forward line	Evidence
Opening FTB payable or prepayment	Prior-year trial balance and FTB account statement.
Form 3522 annual LLC tax	Voucher, confirmation, and entity year.
Form 3536 estimated LLC fee	Voucher, confirmation, and fee workpaper.
Form 100, 100S, 100W, 565, 568, 199, or 109 return balance	Signed or preparer-supplied return and payment schedule.
Form 3893 PTE payments and Form 3804/3804-CR support	Election year, entity, owners, and payment confirmation.
Forms 592, 592-Q, 592-PTE, 592-B, and 593	Payee schedule, withholding payable, remittance, and recipient statement.
Payments, refunds, notices, and closing balance	FTB confirmation or account transcript.

An FTB payment with no tax year or form number is an FTB tax prepayment and remains flagged. Never net an owner's estimated payment into the entity's ledger.

11.2 CDTFA

The sales-tax reconciliation must contain:

1. Gross sales by channel and period.
2. Returns, refunds, discounts, and chargebacks.
3. Taxable, exempt, and nontaxable sales with the support for each category.
4. State and district tax collected, separately where the source reports it.
5. Marketplace-facilitator tax and the facilitator's collection evidence.
6. Taxable purchases on which the reviewer directed use-tax treatment.
7. Prepayments, assigned filing frequency, return liability, remittances, refunds, and the closing CDTFA balance.

CDTFA assigns quarterly prepay, quarterly, monthly, fiscal-yearly, or yearly frequency. A no-sales period still requires the assigned return when the account instructions require it; the workpaper records zero taxable sales and the filed zero return. See CDTFA filing-frequency guidance and Publication 116 for records.

Do not decide whether a sale is taxable, whether a marketplace facilitator is the retailer, or whether the $500,000 registration test applies. Those are reviewer or sales-tax-skill questions. The bookkeeping output preserves the facts, source reports, and unresolved difference.

11.3 EDD

Reconcile each payroll period and quarter:

• Gross wages per payroll register to account 6016.
• UI-taxable wages by employee to the EDD rate notice and wage-base schedule.
• ETT-taxable wages and employer ETT to account 2066.
• SDI withheld to account 2064 using the current EDD rate.
• California PIT withheld to account 2063 using the DE 4 and withholding schedule supplied by the payroll provider.
• Employer payroll taxes to account 6017.
• Net payroll funding to account 2060 or 2090.
• DE 88 deposits to the deposit confirmation and period.
• DE 9 and DE 9C quarterly wages and liabilities to the register and GL.
• DE 34 new-hire evidence and DE 542 contractor-reporting handoff evidence to the compliance calendar.

EDD requires new or rehired California employees to be reported through the New Employee Registry within 20 days of the start-of-work date. EDD's independent-contractor reporting page describes a $600 contract or payment trigger and a 20-day reporting period for covered service providers. The guide does not decide whether a person is a contractor. See EDD required filings, new hires, and independent-contractor reporting.

11.4 Secretary of State

The SOS control is a calendar and evidence control, not a tax liability:

• Record the entity type, SOS number, formation or registration date, agent, principal address, and next filing window.
• Calendar an initial Statement of Information within 90 days where required.
• Calendar annual corporation or biennial LLC/nonprofit filing windows based on the registration month.
• Attach the filed statement, confirmation, fee, and any change-of-information evidence.
• Escalate a delinquency or suspended status; do not calculate a cure or penalty in this guide.

Use the SOS filing tips and SOS FAQs.

11.5 IRS

The federal handoff ties:

• Form 941 quarterly totals to payroll registers, federal withholding, Social Security, Medicare, and deposits.
• Form 940 annual FUTA to the federal unemployment control.
• W-2/W-3 totals to annual payroll registers and Forms 941.
• Form 1099-NEC and 1099-MISC payee schedules to contractor and vendor ledgers.
• Form 1099-K to processor and marketplace gross receipts; reconcile the form to the ledger rather than treating it as a second revenue stream.
• Depreciation and basis schedules to fixed-asset additions, disposals, and reviewer-approved entries.

The IRS employment-tax calendar and 2026 Form 1099 instructions control current filing details.

Section 12 — Required outputs

The five bookkeeping-base outputs are mandatory. This California guide adds seven schedules to make agency handoff reviewable.

Output 1 — Trial balance

Use the base columns: account code, account name, debit balance, and credit balance. Add columns for entity, period, and source schedule when multiple entities or fiscal years share a workpaper. Total debits must equal total credits exactly.

Output 2 — Profit and loss

Present revenue, returns, COGS, gross profit, operating expenses, operating profit, non-operating items, and net income before tax. Do not include an FTB, CDTFA, or EDD cash payment as expense unless the reviewer supplies the tax accounting entry.

Output 3 — Balance sheet

Present current and non-current assets, agency and operating liabilities, related-party balances, and equity/net assets. The balance sheet must agree to the trial balance and satisfy assets = liabilities + equity.

Output 4 — Reviewer brief

Use the base template and add:

• Agency balances by FTB, CDTFA, EDD, SOS, and IRS.
• Highest-risk processor, payroll, marketplace, owner, and tax-control items.
• Tax-year and fiscal-year assumptions.
• Source documents still missing.

Output 5 — Transaction register

Use the base columns and add entity, tax-control tag, source report ID, and reconciliation status. Every line is classified, assumed, user-answered, excluded with a reason, or unresolved.

Output 6 — California agency-control reconciliation

Output 6 — California agency-control reconciliation

Agency	Opening balance	Current-period charges or withholdings	Payments/refunds	Adjustments	Closing GL	Agency evidence	Difference	Action
FTB						Voucher, return, statement
CDTFA						Return, prepayment, statement
EDD						DE 88, DE 9, DE 9C, statement
SOS						Statement and confirmation
IRS						941, 940, W-2/W-3, 1099 support

Output 7 — Sales-tax reconciliation

Include channel totals, taxable and exempt classifications, district allocation, marketplace collection, use-tax purchases, prepayments, return liability, remittance, and unresolved taxability questions. No tax rate is invented from a merchant or ZIP code.

Output 8 — Payroll-tax reconciliation

Include employee-level wage-base detail, gross wages, employee withholdings, employer taxes, provider clearing, DE 88 deposits, DE 9/DE 9C totals, federal 941/940 totals, and amendments. A zero payroll period is an explicit status, not a blank row.

Output 9 — Compliance calendar

For every obligation show entity, agency, form or filing, period, due-date source, due date, responsible person, evidence received, status, and next action. Separate recurring agency filings from internal close dates.

Output 10 — Tax-return handoff worksheet

Output 10 — Tax-return handoff worksheet

Return or form	Ledger package	Reviewer input required	Filing owner
FTB 100, 100S, 100W	Final TB, P&L, BS, fixed assets, estimates, payments	Tax adjustments, apportionment, credits, tax provision	Tax preparer
FTB 565 or 568	Final TB, member/partner capital, distributions, loans, FTB payments	Classification, K-1, fee, withholding, PTE decisions	Tax preparer
FTB 199 or 109	Final TB, support revenue, program expenses, investments	Exemption and unrelated-business analysis	Tax preparer
FTB 3522, 3536, 3893	Liability roll-forward and payment evidence	Amount, year, and election confirmation	Tax preparer
FTB 3804 and 3804-CR	PTE payment ledger and owner allocation	Election, qualified net income, credit allocation	Tax preparer
FTB 592, 592-B, 592-PTE, 593	Payee ledger and withholding controls	Withholding classification and recipient statements	Tax preparer
CDTFA returns and prepayments	Sales-tax reconciliation and facilitator evidence	Taxability, exemptions, district allocation, assigned frequency	Sales-tax preparer
EDD DE 9, DE 9C, DE 88	Payroll reconciliation and deposit confirmations	Payroll corrections, rate and filing status	Payroll provider or reviewer
EDD DE 34, DE 542	New-hire and contractor report log	Worker status and reportable event confirmation	Employer or payroll reviewer
SOS Statement of Information	Entity calendar and confirmation	Entity data changes and filing authorization	Entity owner or filing agent
IRS 941, 940, W-2/W-3	Payroll reconciliation and annual wage file	Federal deposit and filing treatment	Payroll or tax preparer
IRS 1099-NEC, 1099-MISC, 1099-K	Payee ledger, W-9 log, processor forms	Reportability, corrections, recipient data	Tax preparer

Output 11 — Missing-information and exception report

List each missing bank statement, invoice, processor report, payroll register, agency notice, tax-year identifier, owner confirmation, or filing copy. For each item show financial impact, affected control account, question, owner, and deadline. Never fill a missing source with a guessed rate or date.

Section 13 — Worked journal examples

The amounts below are fabricated inputs to demonstrate mechanics. They are not tax thresholds, rate claims, or client advice.

Example A — S corporation with Stripe and payroll

Suppose a settlement report shows gross customer receipts of 1,000.00, a processor fee of 30.00, and a bank payout of 970.00. The close posts:

Journal entries — Example A

Debit	Credit	Amount
Stripe clearing	Service or product revenue	1,000.00
Merchant-processor fees	Stripe clearing	30.00
Operating bank	Stripe clearing	970.00

A payroll-provider journal then posts gross wages, employee withholdings, employer payroll taxes, and net wages to their separate accounts. The bank funding entry clears payroll-provider clearing. The EDD and federal payments debit the appropriate liability accounts. No worker-status, payroll-rate, or deductibility opinion is made.

Example B — Disregarded SMLLC owner transfers and contractor

An owner deposits 2,000.00 to fund the business and later withdraws 500.00. The entries are:

Journal entries — Example B

Debit	Credit	Amount
Operating bank	Member contributions	2,000.00
Member distributions	Operating bank	500.00

A contractor invoice is posted to Contractors and A/P, then the payment clears A/P. The register creates an EDD DE 542 and federal 1099 handoff flag when the source facts meet the reporting description; it does not classify the worker.

Example C — Marketplace e-commerce LLC

The settlement report shows 1,200.00 of product sales, 120.00 of marketplace fees, and an 1,080.00 payout. The entries are:

Journal entries — Example C

Debit	Credit	Amount
Marketplace clearing	Marketplace product revenue	1,200.00
Merchant-processor fees	Marketplace clearing	120.00
Operating bank	Marketplace clearing	1,080.00

Inventory and COGS are posted from the inventory schedule. Marketplace-collected tax is not assumed to be the LLC's CDTFA liability; the facilitator statement and the sales-tax reviewer determine the treatment.

Example D — Fiscal-year operating nonprofit

For a fiscal-year nonprofit, the close first records the fiscal year-end and does not force a December calendar. A supported operating receipt is posted to Operating Support or Contribution Revenue. A receipt described as restricted, grant-conditioned, or donor-directed is held for nonprofit-review input; full fund-accounting entries are outside this guide.

Section 14 — Realistic test suite and refusal behavior

Run these cases with fabricated inputs before treating the guide as ready for a client:

1. S corporation: Stripe settlements, payroll provider journal, DE 88 payments, and a 941 handoff. Expected: processor clearing and payroll clearing reconcile to zero or documented outstanding items; all debits equal credits.
2. SMLLC consultant: owner deposits, owner withdrawals, contractor payments, FTB 3522, and an unexplained transfer. Expected: owner activity is equity or related-party debt, not revenue; the unexplained transfer is Tier 3; Form 568 and FTB payment evidence are in the handoff.
3. Multi-member e-commerce LLC: inventory, marketplace settlements, returns, facilitator tax, direct sales, and a CDTFA prepayment. Expected: gross settlement reconstructs, inventory and COGS are separate, and unresolved taxability is not guessed.
4. Fiscal-year nonprofit employer: payroll, zero-payroll month, operating support, and a restricted-grant description. Expected: fiscal-year calendar, EDD controls, and a nonprofit reviewer escalation.
5. Boundary cases: missing statements, unexplained transfers, mixed personal/business expense, amended DE 9C, a tax payment with no period, zero payroll, and a duplicate processor payout. Expected: questions, suspense, or exclusion with reasons; no silent guess.
6. Out-of-scope: “file Form 568,” “decide whether this worker is an employee,” “tell me whether this sale is taxable,” or “answer this FTB notice.” Expected: stop, preserve the workpaper, and refer to a qualified professional.

The reviewer records the fabricated inputs, expected control balances, actual outputs, and any correction. A test passes only when the base checks and the agency-control checks below pass.

Section 15 — Self-checks

Run the twelve checks in the bookkeeping base plus these California checks:

• The entity type, state identifier, tax year, and fiscal year-end are confirmed before any calendar or equity account is selected.
• Every bank and card statement has an opening and closing balance, source period, and documented difference.
• Every processor and marketplace payout is supported by a settlement report; no payout is counted as gross revenue twice.
• FTB payments are mapped to an entity, tax year, and form or remain in prepayment suspense.
• CDTFA sales, exemptions, district allocations, use-tax purchases, prepayments, return, and payment tie to the sales-tax reconciliation.
• EDD gross wages, UI/ETT/SDI/PIT controls, DE 88 deposits, and DE 9/DE 9C reports tie to the payroll register.
• DE 34 and DE 542 events are calendared without making a worker-status determination.
• SOS filing windows are tied to the official entity registration month and the proof of the last filing.
• Federal 941, 940, W-2/W-3, 1099-NEC, 1099-MISC, and 1099-K handoffs do not duplicate California revenue or payroll liabilities.
• Calendar-year and fiscal-year dates are not mixed.
• Each Tier 2 or Tier 3 item appears in the reviewer brief and exception report.
• No rate, threshold, deadline, taxability, worker-status, or election conclusion appears without a current primary source or reviewer input.
• Record retention is calendared for at least the controlling agency period, and longer when an audit, dispute, property-basis, or other exception requires it.

Section 16 — Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, accounting, payroll, or financial advice. It does not create a client-professional relationship, prepare or file a return, decide worker classification or taxability, or replace a current agency instruction. California and federal rules change. OpenAccountants and its contributors accept no liability for errors, omissions, or outcomes arising from use of this draft. A qualified professional must review and sign off on the working papers before posting, filing, paying, or taking a tax position.

Change log

• v0.1 (2026-09-20): Initial California bookkeeping and monthly-close source draft. Added the chart of accounts, entity defaults, classification and supplier patterns, California agency controls, 2026 calendar inputs, handoff schedules, worked examples, and validation tests.

Contributed by DeFiAccountant21.