If you own a limited liability company organized in California or registered to do business there, the California LLC annual tax is $800, owed every year to the Franchise Tax Board whether the business made money, lost money, or did nothing at all. On top of that flat tax, LLCs with California-source income above $250,000 owe a separate graduated fee. Both obligations keep running until you formally cancel the LLC with the Secretary of State.
The $800 Franchise Tax
California’s Revenue and Taxation Code requires every LLC doing business in the state, organized in the state, or registered with the Secretary of State to pay an annual franchise tax of $800.1California Legislative Information. California Revenue and Taxation Code 17941 It applies to domestic California LLCs and to foreign LLCs that have registered here. The tax is owed every year, whether you are actively operating, sitting dormant, or losing money, and it keeps accruing until you file a certificate of cancellation.
For your first tax year, the $800 is due by the 15th day of the fourth month after you file your articles of organization. For every year after, it is due by the 15th day of the fourth month of the LLC’s taxable year. For a calendar-year LLC, that means April 15.2State of California Franchise Tax Board. Limited Liability Company
One boundary worth knowing: the $800 tax is not deductible as a business expense on your federal return. The separate gross receipts fee generally is.3California Tax Service Center. Limited Liability Companies
The Gross Receipts Fee on Top of the $800
If your LLC’s total income from California sources crosses $250,000, you owe an additional fee layered on top of the $800. The tiers are set by statute:4California Legislative Information. California Revenue and Taxation Code 17942
- $250,000 to $499,999: $900
- $500,000 to $999,999: $2,500
- $1,000,000 to $4,999,999: $6,000
- $5,000,000 or more: $11,790
These fees are added to the $800, not substituted for it. An LLC earning $600,000 from California sources owes $3,300 total: the $800 franchise tax plus the $2,500 fee.
How “Total Income” Is Calculated
The fee is based on “total income,” which California defines as gross income plus the cost of goods sold.5State of California Franchise Tax Board. FTB Pub. 3556 – Limited Liability Company Filing Information That add-back inflates the number well beyond what most owners think of as income. A business with $400,000 in revenue and $150,000 in cost of goods sold would calculate its total income as $550,000, landing in the $2,500 fee tier even though gross profit was only $250,000.
If your LLC is a member of another LLC, amounts already counted in calculating the other LLC’s fee are excluded, so the same income is not taxed twice.5State of California Franchise Tax Board. FTB Pub. 3556 – Limited Liability Company Filing Information
When the Fee Is Due
You estimate and pay the fee by the 15th day of the sixth month of your taxable year, which is June 15 for calendar-year LLCs, using Form FTB 3536. If the actual fee at year-end exceeds your estimate, the balance is paid with your Form 568 return.6State of California Franchise Tax Board. Due Dates – Businesses
Form 568: The Annual Return
Beyond the payments themselves, California requires every LLC not taxed as a corporation to file Form 568, the LLC Return of Income, each year. This is required even if the LLC has no California-source income and is not actively doing business, so long as it remains organized here or registered with the Secretary of State.7State of California Franchise Tax Board. Instructions for Form 568 Limited Liability Company Tax Booklet
Multi-member LLCs taxed as partnerships must file by the 15th day of the third month after the close of the taxable year, which is March 15 for calendar-year filers. Single-member LLCs owned by an individual have until the 15th day of the fourth month, or April 15. Any remaining balance on the gross receipts fee not covered by your June estimate is due with this return.6State of California Franchise Tax Board. Due Dates – Businesses
How to Pay
The Franchise Tax Board’s Web Pay system lets you pay directly from a checking or savings account at no charge. Select the payment type, enter your bank routing and account numbers, and keep the confirmation number.8State of California Franchise Tax Board. Pay by Bank Account (Web Pay)
You can also mail a check or money order payable to the Franchise Tax Board. Both the LLC Tax Voucher (Form 3522 for the $800 annual tax) and the Estimated Fee Voucher (Form 3536 for the gross receipts fee) go to Franchise Tax Board, PO Box 942857, Sacramento, CA 94257-0531.9State of California Franchise Tax Board. Mailing Addresses
Credit card payments are accepted online but carry a processing fee.10State of California Franchise Tax Board. Pay
What Happens If You Miss a Deadline
The costs stack up quickly, and they depend on what you missed.
Late Form 568
Filing Form 568 late, or filing it with required information missing, triggers a penalty of $18 per member for each month the return is unfiled, up to 12 months. For a two-member LLC, that reaches $432 over a full year. The FTB can waive the penalty for reasonable cause.11State of California Franchise Tax Board. FTB 1024 – Penalty Reference Chart
Underpaying the Gross Receipts Fee
If your June estimate falls short of the actual fee owed, the penalty is 10 percent of the underpaid amount. You can avoid it by paying at least 100 percent of the prior year’s fee as a safe harbor.11State of California Franchise Tax Board. FTB 1024 – Penalty Reference Chart
Interest
The FTB charges interest on unpaid tax, fees, and most penalties. The rate resets every six months. For the period from July 1, 2025 through June 30, 2026, it is 7 percent, compounded daily. Interest accrues on previously accumulated interest as well as the original balance.12State of California Franchise Tax Board. Interest and Estimate Penalty Rates
Suspension
If the balance goes unpaid long enough, the FTB suspends the LLC. A suspended LLC loses the right to do business in California, sell or transfer real property, use its business name, or file a lawsuit. Contracts you sign while suspended are voidable by the other party, which means a client or vendor can walk away from the deal with no legal recourse for your business.13State of California Franchise Tax Board. My Business Is Suspended
To revive a suspended LLC, you must file all past-due returns, pay all back taxes and penalties, and submit an Application for Certificate of Revivor (Form FTB 3557 LLC). To retroactively protect contracts entered during the suspension, you can apply for Relief from Contract Voidability at $100 per day, capped at the tax owed for the period.13State of California Franchise Tax Board. My Business Is Suspended
How to Stop the $800 Clock
The annual tax keeps accruing until you formally cancel the LLC with the Secretary of State. Stopping activity or letting the LLC go dormant does not end the obligation. Every year you delay costs another $800 plus any penalties and interest.
To cancel, file a Certificate of Cancellation (Form LLC-4/7) with the Secretary of State. If the decision to dissolve was not unanimous among all members, you must first file a Certificate of Dissolution (Form LLC-3), either before or at the same time. There is no filing fee for the cancellation itself.14California Secretary of State. Certificate of Cancellation – Form LLC-4/7
You also need to file all final tax returns with the Franchise Tax Board, including Form 568, and pay any outstanding tax or fees. The cancellation form includes a statement under penalty of perjury that final returns have been or will be filed. The fastest route is to file online through the Secretary of State’s bizfile portal.14California Secretary of State. Certificate of Cancellation – Form LLC-4/7
If the LLC has been in existence for less than a year, the Short Form Cancellation Certificate (Form LLC-4/8) is a simpler option and can eliminate the first-year $800 tax entirely.2State of California Franchise Tax Board. Limited Liability Company