California LLC Taxes and the $800 Franchise Tax

A California LLC that hasn't earned a single dollar still owes the state $800 a year. The Franchise Tax Board (FTB), the state tax agency, charges it from the LLC's first year. The bill keeps coming every year until the LLC is formally cancelled. Missed payments lead to penalties and can end in suspension.

That $800 is only one of the charges. A California LLC deals with four:

• the $800 annual tax to the FTB, paid every year whether or not the LLC makes money
• an LLC fee of $900 to $11,790 once California income reaches $250,000
• income tax on the profit, usually paid by the owners on their personal returns
• a $20 Statement of Information filed with the Secretary of State (SOS) every two years

The charges go to different offices, use different forms and fall due on different dates. So new owners often mix them up or miss one. The table puts them side by side.

"Every California LLC" here means every LLC organized, registered or doing business in the state. In the first year, the $800 is due on the 15th day of the 4th month after filing. Forming the LLC itself is covered in Starting an LLC in California: Costs, State Office, Taxes and Timeline.

The first bill: California's $800 LLC franchise tax

The $800 is the charge you meet first. Owners and guides call it by different names: the franchise tax, the annual tax or the $800 LLC fee. On FTB forms it's the annual LLC tax. You pay it with voucher FTB 3522.

Why your quiet LLC still owes it

According to the FTB, these LLCs must pay the $800:

1. any LLC doing business in California
2. any LLC organized in California
3. any LLC whose Articles the Secretary of State accepted
4. any LLC whose certificate of registration the SOS issued

Your LLC owes it even if it does no business at all. The FTB says entities registered with the SOS owe at least $800 from registration through the current year, with or without activity. The tax goes on every year until a certificate of cancellation is filed with the SOS.

If you're the only owner, you pay it too. Federal tax rules disregard a single-member LLC for income tax. But California doesn't disregard it for the annual tax, the LLC fee or the Form 568 filing.

The date that isn't April 15

For a calendar-year LLC, the $800 is due on the 15th day of the 4th month of the tax year. For the 2026 tax year, that was April 15, 2026. A due date on a weekend or holiday moves to the next business day.

Your first year follows a different rule. Your first tax year begins on the day you file the Articles of Organization with the SOS. The first $800 is due by the 15th day of the 4th month after that date. The FTB gives its own example. An LLC registered on June 18, 2020 had its first payment due on September 15, 2020.

Say you form your LLC late in the year. You make your first payment the following spring. Then you pay the next year's $800 by April 15. So your first two payments can come close together.

The free first year in older guides

Some older guides still promise a tax-free first year. That advice is out of date. A 2020 law (AB 85) did exempt LLCs from the $800 for their first tax year. But it only covered tax years beginning on or after January 1, 2021 and before January 1, 2024.

The 2025 and 2026 FTB 3522 instructions no longer mention a first-year exemption. We found no extension of the law. So an LLC formed in 2024 or later owes the $800 for its first year.

The few ways out

The exceptions are narrow. These LLCs avoid the tax:

• An LLC that files the SOS short-form cancellation (Form LLC-4/8) within 12 months of organizing and meets the conditions. It avoids the first-year tax.
• Certain tax-exempt title-holding LLCs under IRC 501(c)(2) or 501(c)(25) and RTC 23701h or 23701x.
• An LLC solely owned by a deployed member of the U.S. Armed Forces, for a year when the owner is deployed and the LLC runs at a loss or stops operating. This applies to tax years from 2020 through years beginning before January 1, 2030.

A quiet year with little business doesn't qualify.

Filing the California LLC tax return and paying tax on profit

By your first spring, money is coming in, and you find out how the profit is taxed. The $800 and the LLC fee are charges on the LLC itself. Tax on the profit works differently, and it depends on how the LLC is classified.

Pass-through by default

By default, the IRS treats an LLC with two or more members as a partnership. A single-member LLC is disregarded, which means its income goes on the owner's return. Either type can elect corporate tax treatment with IRS Form 8832. California follows the federal classification.

For a pass-through LLC, the owners pay tax on the profit on their personal returns. The LLC itself files Form 568 with the FTB. Every LLC not taxed as a corporation must file it if any of these apply:

• it's organized in California
• it's registered with the SOS
• it's doing business in California
• it has California-source income

The due date depends on how the LLC is classified:

• Partnership-classified LLC: by the 15th day of the 3rd month after year-end (March 15 for a calendar year).
• Single-member LLC owned by a pass-through entity: the same date.
• Other single-member LLCs: by the 15th day of the 4th month after the owner's year ends (April 15 for an individual owner).

You may see guides that disagree about "March 15 or April 15". They're usually describing different kinds of LLC.

If you need more time, filing extensions are automatic and need no written request. The lengths are:

• partnership-classified LLC in good standing: 7 months (it used to be 6)
• disregarded single-member LLC: 6 months
• single-member LLC owned by a partnership: 7 months
• suspended LLC: no automatic extension

What the state takes from your profit

California taxes personal income at rates from 1% to 12.3%. The 2025 schedule for a single filer (Schedule X) is:

Many owners ask how much California tax applies to $100,000 of income. We calculated it ourselves from the 2025 Schedule X for a single filer with $100,000 of taxable income:

1. tax on the first $72,724: $3,201.97
2. 9.3% of the remaining $27,276: $2,536.67
3. total: about $5,739 before credits

Taxable income is what's left after deductions. So it's lower than the LLC's revenue and usually lower than its profit.

The federal part on top

As the owner of a pass-through LLC, you also pay federal self-employment tax. The rate is 15.3% (12.4% for Social Security and 2.9% for Medicare). It's charged on 92.35% of net self-employment earnings, once those earnings reach $400. Half of it is deductible. The calculation is explained in Self-Employment Tax: How It Works and How to Calculate It.

When someone suggests an S corporation

Once the profit grows, someone will likely suggest electing corporate tax treatment. An LLC can elect to be taxed as a corporation. California's business tax rate is 1.5% for an S corporation and 8.84% for a C corporation. According to the FTB, corporations registered with the state also owe at least $800 a year. So the election doesn't remove the minimum tax. Whether it saves money depends on profit and salary, as discussed in LLC vs S Corp.

LLCs taxed as partnerships or S corporations can also elect California's pass-through entity (PTE) elective tax. The entity pays 9.3% of qualified net income, and the owners get a state credit. The main rules:

• It's available for tax years beginning on or after January 1, 2021 and before January 1, 2031.
• You make the election each year on a timely original return.
• The first payment is due June 15. It must be at least $1,000 or 50% of the prior year's PTE tax, whichever is greater.
• For 2026 through 2030, a missed or short June 15 payment cuts the owners' credit by 12.5% of the unpaid amount.

The forms are FTB 3804 and FTB 3893. Talk the election through with your tax preparer first.

The LLC fee once revenue passes $250,000

Now say the business does well. Once total California income reaches $250,000, a second charge appears on top of the $800: the LLC fee. It applies to an LLC that isn't classified as a corporation and is organized, doing business or registered in California.

Revenue, not profit

For the fee, total income means gross income plus cost of goods sold, from California sources only. That's close to revenue, and it has nothing to do with net profit. You calculate the fee on Schedule IW, part of Form 568. It applies to single-member LLCs as well.

We worked out a short example ourselves from the FTB table. Say your LLC has $300,000 of California revenue and keeps $50,000 as profit. It falls in the $250,000 to $499,999 band. So it owes the $900 fee on top of the $800 annual tax.

June 15 and the 10% penalty

You pay the estimated fee with Form FTB 3536 by the 15th day of the 6th month of the tax year. For a calendar-year LLC, that's June 15, 2026. The full fee is due by the return's due date.

If your estimate is too low, the FTB charges a 10% penalty on the underpaid amount. There's no penalty if your estimate was at least the total fee for the prior year. Form 3536 is only for the fee. The $800 is always paid with Form 3522.

If you live outside California or outside the US

You may run this LLC from another state or another country. All of these rules still apply. The $800 depends on where the LLC is organized, registered or doing business, not on where you live.

Doing business in California includes any of these:

• engaging in any transaction for financial gain in the state
• being organized or commercially domiciled there
• having California sales, property or payroll above set thresholds

For 2025 the thresholds were:

Owners of pass-through entities count their share of the entity's amounts.

LLCs with nonresident members have withholding duties. The LLC must withhold 7% of California-source distributions to domestic nonresident members. That doesn't apply if those distributions total $1,500 or less in the year. For foreign nonresident members, the rates are 8.84% for C corporations and 12.3% for individuals.

Nonresident members consent to California tax on Form FTB 3832. The owner of a single-member LLC consents on Form 568 instead. If a member doesn't consent, the LLC pays tax on that member's share at the member's highest rate.

An LLC formed in another state that does business in California without registering can face a $2,000 penalty. That's according to the 2024 Form 568 booklet. Foreign-owned US LLCs also have federal filing duties, described in Form 5472 for Foreign-Owned US LLCs: Who Must File, Due Date and Penalties.

Paying California LLC taxes to the FTB

When a due date comes, the money goes to the Franchise Tax Board. The Secretary of State doesn't collect it. The 2026 FTB 3522 instructions list four payment methods:

1. Web Pay on the FTB site (ftb.ca.gov/pay). You can schedule a payment up to a year ahead, and you don't file the paper Form 3522.
2. Credit card through officialpayments.com. ACI Payments charges a convenience fee, and again no Form 3522 is filed.
3. Electronic funds withdrawal through tax software.
4. Check or money order mailed with the Form 3522 voucher.

If you pay by check, write the SOS file number, the FEIN and "2026 FTB 3522" on it. The mailing address on the 2025 and 2026 FTB 3522 forms is Franchise Tax Board, PO Box 942857, Sacramento, CA 94257-0531. You pay the estimated LLC fee through the same channels with Form FTB 3536.

Late payment penalties and LLC suspension

Sooner or later, a busy month makes a date easy to miss. Paying late or skipping a filing brings penalties, and the main ones are below.

A few details sit behind that table. The late Form 568 penalty runs per month or part of a month, for up to 12 months. On top of it comes 5% of unpaid tax per month, up to 25%. The SOS imposes the $250 penalty, and the FTB collects it. The demand penalty applies when a return isn't filed within 60 days of a written demand.

Unpaid tax for a past year is paid with that year's voucher.

When the LLC gets suspended

If the slips continue, the FTB or the SOS can suspend your LLC. That happens when the LLC fails to do any of these:

• file returns
• pay tax, penalties, fees or interest
• file the Statement of Information

A suspended LLC loses the right to do business in California. It also faces these limits:

• it can't sell or transfer real property
• it can't close and dissolve
• it gets no automatic extensions or refunds
• it may lose its business name
• in some cases its owners can become personally liable

To revive a suspended LLC, you take three steps:

• file all past-due returns
• pay the balance
• file Form FTB 3557 LLC

In our work with clients, we regularly see companies dissolved because the owner missed state reports and taxes. Reinstatement is often impossible or comes with a large penalty. Some owners form a new company instead. And if the bank isn't told what happened, the business account can become a problem too.

If you can't pay everything at once, you can ask the FTB for a business payment plan. These are the conditions:

• the total due is $25,000 or less
• you pay it within 12 months
• all returns are filed
• the setup fee is $50

Online setup may not be available to every business.

Paying less, or cancelling the LLC to stop paying

Those penalties lead many owners to ask how to pay less. An LLC that exists in California owes the $800. But you can stop paying for an LLC you no longer use. To close one properly, you do four things:

• file a Certificate of Cancellation (Form LLC-4/7) with the SOS
• file a final Form 568 with the Final Return box checked
• pay the $800 for the final year
• stop doing business in California

An LLC left open on paper keeps owing $800 every year. If plans change soon after formation, a short-form cancellation (LLC-4/8) can help. Filed within 12 months of organizing, it avoids the first-year tax when the conditions are met.

If you don't do business in California, you don't need to register an LLC there. But California sales, property or payroll above the thresholds can count as doing business. The LLC fee depends on California-source total income. So it helps to know which income is California-source and to track it on Schedule IW. State costs are compared in Best State to Form an LLC: Fees, Taxes and When Your Home State Wins.

The slips we see most

With so many forms and dates, small slips are common. Most costly mistakes come from mixing up the rules above:

1. planning on a free first year
2. waiting until April for the first payment, though in year one it's due by the 15th day of the 4th month after filing
3. paying the $800 with Form 3536, which is for the LLC fee
4. treating a filing extension as extra time to pay
5. assuming California ignores a single-member LLC the way the IRS does
6. estimating the LLC fee on profit instead of gross income plus cost of goods sold

The forms are easy to confuse. Form 3522 is for the $800, Form 3536 is for the LLC fee, and Form 568 is the return. And a missed Statement of Information turns a $20 filing into a $250 penalty and possible suspension.

Your yearly calendar

Most of those slips are about dates, so it helps to have them in one place. For a calendar-year LLC, the regular dates are:

After the first filing, the Statement of Information is due every two years. The April 15 Form 568 date is for single-member LLCs with an individual owner. The June 15 fee estimate applies only with $250,000 or more of income.

In the first year, the $800 is due by the 15th day of the 4th month after the Articles of Organization are filed.

What to do this month

If you've just formed your LLC, work out your first $800 date now. It falls on the 15th day of the 4th month after filing, not on April 15. Don't count on a free first year, because that exemption ended with tax years starting in 2023.

Then watch your revenue. If your income is getting close to $250,000, add June 15 to your calendar too. If the LLC has members outside California or outside the US, have a tax professional check the withholding and consent forms. Forming a new LLC is covered in Starting an LLC in California: Costs, State Office, Taxes and Timeline.

Once the $800 date and the return are on your calendar, customers still need to find the company and see it's real. That's the side we handle for new owners: the Google profile, directory listings and a landing page.