What the California LLC Franchise Tax Actually Is
Every California LLC owes the Franchise Tax Board (FTB) a minimum annual franchise tax of $800. This obligation exists regardless of revenue, profitability, or business activity. A California LLC that files articles of organization and never opens a bank account still owes $800 the first year it is registered.
The franchise tax is California's price of access to its market and legal protections. Unlike most states' modest annual report fees, California treats LLC status as a privilege that carries an automatic annual cost. That makes California one of the most expensive states in which to keep a small LLC alive. Wyoming charges $60 a year, Florida $139, and Texas charges no franchise tax at all below a no-tax-due threshold of $2,650,000 in annualized total revenue for the 2026 report year. Every fee in that sentence is read from the fee record at api/state-fees.json except the Texas threshold, which comes from the Comptroller's published rate table.
Who owes the $800 minimum
Three categories of entities pay California's $800 minimum franchise tax: (1) LLCs formed in California, (2) LLCs formed in other states that register to do business in California through foreign qualification, and (3) LLCs treated as corporations for federal tax purposes (which technically pay the corporation franchise tax under a parallel structure). Single-member LLCs pay the same $800 minimum as multi-member LLCs.
The first-year exemption, and why it no longer applies
California eliminated the first-year $800 franchise tax for LLCs and corporations formed between January 1, 2021 and December 31, 2023. This exemption was a temporary measure to encourage business formation during and after the pandemic. For LLCs formed in 2024 and later, the $800 franchise tax applies in the first year of formation, with payment due by the 15th day of the fourth month after formation.
The April 15 Deadline and How Payment Works
California LLC Fee Schedule (in addition to $800 minimum)
| California-source income | LLC fee | Total (fee + $800 min) |
|---|---|---|
| $0, $249,999 | $0 | $800 |
| $250,000, $499,999 | $900 | $1,700 |
| $500,000, $999,999 | $2,500 | $3,300 |
| $1,000,000, $4,999,999 | $6,000 | $6,800 |
| $5,000,000+ | $11,790 | $12,590 |
For continuing LLCs (those past their first year), the $800 annual franchise tax is due by April 15 of each year. The payment is made through the FTB online portal at the state filing system, using Form 3522 (the LLC Tax Voucher). Most LLCs file electronically because California's portal provides instant confirmation of payment.
What you file
Form 3522 is a one-page voucher that includes: the LLC's legal name, the California Secretary of State entity number, the LLC's federal EIN, the taxable year, and the $800 payment. Form 3522 is technically a payment voucher only; the actual annual income tax return (Form 568) is filed separately, due the 15th day of the 4th month after the close of the LLC's taxable year (April 15 for calendar-year LLCs).
The penalty structure
Missing the payment triggers the FTB late payment penalty, which is 5 percent of the unpaid tax plus 0.5 percent of the unpaid tax for each month or part of a month it stays unpaid, for up to 40 months. That caps the penalty at 25 percent. Interest runs on top at the FTB adjusted rate, which is 7 percent for the period running through the end of 2026. Work an $800 payment six months late all the way through: 5 percent is $40, six months at 0.5 percent is $24, and six months of interest at 7 percent is $28. The $800 becomes $892. Left alone for three years the same $800 grows to roughly $1,152, and the FTB eventually suspends the LLC's right to do business in California. Repeated non-payment results in FTB suspending the LLC's right to do business in California.
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If you would rather not do this yourself, we pull your record from the state, prefill every field, and track the deadline for next year. Or keep reading and file it on your own. This guide covers everything you need either way.
The $800 and the Statement of Information Are Two Different Obligations
California is the state where more owners get caught by paperwork they did not know existed, and the reason is structural. Two separate agencies bill a California LLC for two unrelated things, on two unrelated calendars, and paying one does nothing for the other.
| Obligation | Agency | Amount | Frequency |
|---|---|---|---|
| Annual franchise tax, Form 3522 | Franchise Tax Board | $800 | Every year |
| LLC fee, Form 3536 | Franchise Tax Board | $900 to $11,790 | Every year above $250,000 of California income |
| Statement of Information, Form LLC-12 | Secretary of State | $20 | Every two years |
| Return, Form 568 | Franchise Tax Board | No fee, carries the fee calculation | Every year |
| $800 franchise tax plus the Statement of Information ($20 LLC biennial, $25 corporation annual). The tax and the fee are separate obligations to separate agencies. | |||
That is why the fee record File.Business maintains carries California at $820 rather than $800: the headline number for an LLC is the $800 tax plus the $20 Statement of Information, and a corporation sits at $825 because its statement is $25 and annual rather than biennial. Quoting $800 alone understates the cost and, worse, hides an obligation with its own penalty. See how that compares nationally in franchise tax by state and annual report deadlines by state.
The Statement of Information is filed with the Secretary of State, but the penalty for not filing it is assessed by the Franchise Tax Board, and it is $250. On a $20 filing that is a 12.5 times multiple for missing a form that takes about four minutes. A delinquent statement also puts the entity into a status that blocks a California certificate of good standing, which is the document a lender or landlord will ask for at the worst possible moment. The mechanics of the statement itself are in the California annual report guide.
The two calendars do not line up either. The $800 is due on the 15th day of the fourth month of the taxable year, which is April 15 for a calendar-year LLC. The Statement of Information is due in the anniversary month of formation, in the six-month window ending on the last day of that month, every second year. A California LLC formed in September therefore has an April money date and a September paperwork date, and neither reminds you of the other. Owners running more than one entity usually end up putting both on compliance monitoring rather than tracking them by hand. If the LLC was formed elsewhere and later crossed into California, start with California foreign qualification and what creates nexus.
The LLC Fee for Revenue Above $250,000
Pre-filing Checklist
- Confirm current officer/manager information matches state records
- Verify registered agent address matches the agent's current record
- Check filing fee amount against the state's current fee schedule
- Confirm prior-year obligations are clear (no outstanding reports)
- Verify entity status is active (not administratively dissolved)
- Set a calendar reminder for next year's deadline
In addition to the $800 minimum franchise tax, California charges an LLC fee for entities with total California-source income above $250,000. This fee operates as a gross-receipts tax and stacks on top of the $800 minimum.
The fee schedule for 2026
The LLC fee bracket structure for taxable income from California sources: $0 - $249,999: no fee. $250,000 - $499,999: $900 fee. $500,000 - $999,999: $2,500 fee. $1,000,000 - $4,999,999: $6,000 fee. $5,000,000 and above: $11,790 fee. These amounts are flat fees within each bracket, not marginal rates. An LLC with $250,001 in California-source income owes $900 in fees plus the $800 franchise tax, for a total of $1,700.
The estimated fee payment
LLCs that expect to owe the LLC fee must make an estimated fee payment by the 15th day of the 6th month of the taxable year (June 15 for calendar-year LLCs). Underpayment of the estimated fee triggers a 10% penalty on the underpayment amount. This means LLCs that grow quickly within a single year often need to project their California-source income mid-year and submit an estimated payment to avoid the underpayment penalty.
Common California LLC Filing Mistakes
California's combination of $800 minimum tax, LLC fee, and Form 568 requirements creates multiple opportunities for errors. The most expensive mistakes share a common pattern: assuming that California works like other states.
Mistake 1: Treating the $800 as a one-time fee
New California LLC owners often interpret the $800 as a formation fee rather than an annual recurring tax. The first year's payment is followed by another payment every April 15 indefinitely until the LLC is formally dissolved. Plan for this as an annual line item, not a one-time cost.
Mistake 2: Forgetting to file Form 568
Form 3522 (the $800 voucher) is separate from Form 568 (the LLC return). Many LLCs pay the $800 on time but miss the Form 568 filing requirement. Form 568 includes the LLC fee calculation, member information, and a reconciliation of partnership income. Missing Form 568 triggers a separate penalty of $18 per member per month, with a maximum of 12 months.
Mistake 3: Foreign LLCs that miss California registration
Out-of-state LLCs that conduct business in California must register as foreign LLCs and begin paying the $800 minimum tax from the date business activity in California began. The FTB has retroactively assessed back-tax obligations on out-of-state LLCs that operated in California for years without registering. The standard for "doing business" in California is broad: having an employee in California, owning California property, or generating sales above thresholds all trigger registration.
Mistake 4: Paying the $800 and skipping the Statement of Information
The $800 goes to the Franchise Tax Board and the Statement of Information goes to the Secretary of State. Owners who diligently pay the tax often assume the state now has everything it needs. It does not. The $250 penalty for the missed statement arrives from the FTB, which is confusing enough that many owners assume it is a tax error and ignore it. Check the entity's filing window on the Secretary of State record in the month the LLC was formed, not in April.
Mistake 5: Closing the business without dissolving the LLC
Stopping work, closing the bank account and cancelling the website does nothing to the entity. The $800 keeps accruing every year until articles of cancellation reach the Secretary of State and the final Form 568 is filed with the box for a final return ticked. A California LLC that sat idle for three years owes $2,400 in tax before penalties. Close it properly through California dissolution, and if the entity is already suspended, work through California reinstatement first.
How to Plan for the Annual $800 (and the LLC Fee if Applicable)
For a California LLC, the $800 minimum tax is a non-negotiable annual cost. Three planning practices help avoid penalties and reduce surprise:
Practice 1: Set the April 15 deadline as a recurring calendar event
Schedule the $800 franchise tax payment 4-6 weeks before April 15 every year. Treat it as a fixed business expense, not a tax-time decision. Pair the payment date with a Form 568 preparation date so both obligations are handled in one workflow.
Practice 2: Track California-source income quarterly if growing
If your LLC is approaching $250,000 in California revenue, run a quarterly check on year-to-date California-source income. By mid-year (June 15) you should have a defensible projection. This avoids the 10% underpayment penalty on the LLC fee and provides early warning of cash-flow timing for the upcoming tax obligation.
Practice 3: Document the dissolution decision early
If you decide to close a California LLC, dissolution must be filed with the Secretary of State and the FTB must be notified. Until dissolution is complete, the $800 annual tax continues to accrue every year. Many founders learn this when filing personal tax returns and discovering that a "closed" LLC owes three years of back franchise tax plus penalties.
Three California LLCs, Three Bills
The $800 is the floor, not the bill. What separates a cheap California year from an expensive one is which of the three other obligations the owner noticed in time.
Example 1 - the growth year that outran the estimate
Sagehen Valley Olive Oil LLC finished the prior year at $190,000 of California-source income and paid $800. A wholesale account in the spring took the current year to $612,000. The LLC fee for the $500,000 to $999,999 bracket is $2,500, and it is a flat bracket amount, not a marginal rate. Because the estimated fee was due on June 15 and the account had only just closed, no estimate was paid. California charges 10 percent of the underpaid fee.
Outcome: The $250 was avoidable with a June projection that was allowed to be rough. Any LLC within sight of $250,000 should run a mid-year California-source income estimate and pay to the bracket above the one it expects.
Example 2 - the LLC that was closed everywhere except the register
Redwing Studio Rentals LLC wound down, closed its bank account and let the lease go. Nobody filed articles of cancellation. Three annual tax years accrued at $800 each. The FTB late payment penalty is 5 percent plus 0.5 percent a month, so the oldest year carried 23 percent and the newest 11 percent, for $408 across the three. Interest at 7 percent added roughly $336. The founder found out when the FTB matched the entity to a personal return.
Outcome: A California LLC exists until the paperwork says otherwise. The dissolution filing is the cheapest document in this article and the one most often skipped.
Example 3 - the four-minute form that cost $250
Casa Mira Physical Therapy LLC paid $800 by April 15 for four straight years and treated California as handled. The Statement of Information is biennial and falls in the anniversary month, which for this LLC was November. The second one was missed. The Secretary of State referred the delinquency and the Franchise Tax Board assessed $250. The underlying filing fee is $20 and the form asks for the manager, the street address and the agent for service of process.
Outcome: Two agencies, two calendars. Put the anniversary month in the calendar the day the LLC is formed, and read the California formation guide or the full California cost breakdown if you are still at the start of this.
How File.Business Handles California LLC Compliance
File.Business manages California LLC compliance end-to-end: annual Form 3522 franchise tax payment by April 15, Form 568 preparation and filing, LLC fee calculation and estimated payment by June 15 for high-revenue LLCs, and Statement of Information filings every 24 months. For LLCs being closed, we handle the FTB dissolution clearance and Secretary of State filing in a single workflow.
Frequently asked questions
When is the California $800 franchise tax due?
April 15 of each year for continuing LLCs. For LLCs in their first year (formed 2024 and later), payment is due by the 15th day of the fourth month after formation. The 2021-2023 first-year exemption has expired.
Do I have to pay the $800 if my California LLC has no revenue?
Yes. The $800 minimum applies regardless of revenue or business activity. A California LLC with zero revenue still owes the $800 every year until the LLC is formally dissolved with the Secretary of State and the FTB.
What is the California LLC fee?
An additional fee on top of the $800 minimum tax for LLCs with California-source income above $250,000. The brackets: $250K-$500K is $900, $500K-$1M is $2,500, $1M-$5M is $6,000, and $5M+ is $11,790. The fee is flat within each bracket.
What is Form 568 in California?
The California LLC return, separate from Form 3522 (the $800 tax voucher). Form 568 includes the LLC fee calculation, member information, and partnership-style reconciliation. It is due the 15th day of the 4th month after the close of the LLC's taxable year. Missing it triggers a separate penalty of $18 per member per month.
Do out-of-state LLCs doing business in California owe the $800?
Yes. Out-of-state LLCs must register as foreign LLCs in California and pay the $800 minimum starting when business activity in California began. The Franchise Tax Board has retroactively assessed back-tax obligations on out-of-state LLCs that operated in California for years without registering.
How do I close a California LLC to stop the $800?
File a Certificate of Cancellation (Form LLC-4/7) with the California Secretary of State, file final Form 568 with the FTB, and ensure all back taxes are paid. Until dissolution is complete, the $800 continues to accrue every year.
Can I deduct the $800 California franchise tax?
The $800 is generally deductible as a state and local tax on federal income tax returns, subject to the SALT cap rules. For pass-through entities, the $800 typically flows to members as a deduction. Confirm specific treatment with a tax advisor based on your entity type and state PTE election status.
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This guide is written from the official sources below. Fees, forms, and deadlines change; confirm the current requirement with the agency before you file.
Disclosure. File.Business is a private filing service, not a government agency and not a law firm. We prepare and submit filings at your direction, and nothing on this page is legal or tax advice. Filing fees, deadlines, and statutory references are current as of the last-updated date shown above and can change. Confirm current requirements with the relevant state agency before you file.
