California Form 568 Instructions: Annual Tax, LLC Fee, and Filing

The California Form 568 instructions require every LLC organized in California, registered with the Secretary of State, or doing business in the state to file an annual Limited Liability Company Return of Income, pay the $800 franchise tax using Form FTB 3522, estimate the tiered LLC fee on Form FTB 3536 when California income will reach $250,000, and reconcile the full liability on Form 568 by the deadline tied to the LLC’s classification.1Franchise Tax Board. Limited Liability Company The filing applies even to LLCs with no revenue.

Who Has to File and By When

Any LLC organized in California, registered with the California Secretary of State, or doing business in the state must file Form 568, whether it is treated as a partnership or a disregarded entity for federal purposes.1Franchise Tax Board. Limited Liability Company “Doing business” is broad. An LLC organized elsewhere still has to file if its California sales, property, or payroll crosses the FTB’s annually adjusted thresholds. For 2025, those figures were $757,070 in sales or $75,707 in property or payroll.2Franchise Tax Board. Doing Business in California

The due date depends on how the LLC is classified and who owns it:3Franchise Tax Board. Due Dates for Businesses

  • Multi-member LLCs (taxed as partnerships): the 15th day of the third month after year-end. For calendar-year filers, March 15.
  • Single-member LLCs owned by an individual: the 15th day of the fourth month. April 15 for calendar-year filers.
  • SMLLCs owned by a pass-through entity like a partnership: March 15.
  • SMLLCs owned by an S corporation: March 15.

An automatic extension moves the filing deadline to October 15 for calendar-year LLCs, with one exception: an SMLLC owned by an S corporation only gets an extension to September 15.3Franchise Tax Board. Due Dates for Businesses The extension covers only the return. Every tax and fee the LLC owes is still due by its original date.

The $800 Annual Tax and Form FTB 3522

Every California LLC owes a flat $800 annual tax under Revenue and Taxation Code Section 17941, regardless of whether the LLC earned anything.4California Legislative Information. California Revenue and Taxation Code RTC – Chapter 10.6 It is due by the 15th day of the fourth month of the taxable year, which is April 15 for calendar-year LLCs.5Franchise Tax Board. 2025 Instructions for Form FTB 3522 LLC Tax Voucher

You pay with Form FTB 3522, a standalone voucher not attached to Form 568. If you pay electronically through Web Pay or by credit card, you don’t need to mail the voucher at all.5Franchise Tax Board. 2025 Instructions for Form FTB 3522 LLC Tax Voucher

New LLCs are not exempt. California offered a first-year exemption for LLCs organized between January 1, 2021, and January 1, 2024, but that window has closed, and LLCs formed in 2024 or later owe the full $800 in year one.1Franchise Tax Board. Limited Liability Company One narrow carve-out remains: if the LLC’s first taxable year is 15 days or fewer and it conducted no business during that period, the $800 tax does not apply for that short year.

The Tiered LLC Fee and Form FTB 3536

On top of the $800 tax, an LLC with total California income of $250,000 or more owes an additional fee under Revenue and Taxation Code Section 17942:6California Legislative Information. California Revenue and Taxation Code RTC 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

The figure that drives the fee is not net profit. “Total income” for this purpose means gross income plus cost of goods sold, derived from or attributable to California sources.7Franchise Tax Board. FTB Pub. 3556 – Limited Liability Company Filing Information An LLC with $1.2 million in California gross receipts and only $50,000 in profit still owes $6,000. You calculate the figure on Schedule IW, the LLC Income Worksheet on Side 7 of Form 568.8Franchise Tax Board. California Form 568 – Limited Liability Company Return of Income

You estimate and pay the fee by the 15th day of the sixth month of the current taxable year (June 15 for calendar-year filers) using Form FTB 3536.9Franchise Tax Board. 2025 Instructions for Form FTB 3536 If total California income will stay under $250,000, you don’t file FTB 3536. Underestimating triggers a 10 percent penalty on the underpaid amount, but you avoid the penalty if your estimated payment for the current year equals or exceeds the total fee you owed for the prior year.7Franchise Tax Board. FTB Pub. 3556 – Limited Liability Company Filing Information

What Goes on the Return

Before you start Form 568, pull together total gross receipts, cost of goods sold, deductible expenses, and guaranteed payments to members. Figures from the federal return need adjustment for California-specific rules; the most common adjustment is adding back any state income tax deduction taken federally. You also need each member’s full legal name, address, and federal identification number.

The schedules built into Form 568 do the following work:8Franchise Tax Board. California Form 568 – Limited Liability Company Return of Income

  • Schedule IW calculates total California income and sets the tier for the LLC fee.
  • Schedule B computes the LLC’s overall income or loss.
  • Schedule K-1 (568) reports each member’s share of income, deductions, and credits. Multi-member LLCs attach a California K-1 for every member, and members use those to prepare their own state returns.
  • Schedule T handles tax on nonconsenting nonresident members.

When the form is complete, it reconciles everything the LLC owes (the tiered fee from Schedule IW, any Schedule T tax) against what it has already paid (the $800 via FTB 3522 and any estimate via FTB 3536). The result is either a balance due with the return or an overpayment you can refund or apply to next year. A balance due is payable by the original filing deadline even if you file on extension, and interest runs from that original date.

Nonresident Members and Schedule T

If any member is a nonresident who has not signed a consent to California’s tax jurisdiction, the LLC itself owes tax on that member’s share of California-source income. The rate is the member’s highest marginal rate, reduced by any nonresident withholding already paid on that member’s behalf, and you report it on Schedule T of Form 568.7Franchise Tax Board. FTB Pub. 3556 – Limited Liability Company Filing Information This tax is due by the original return deadline, not the extended one. Get consent forms signed early in the year or budget for the LLC-level tax.

Penalties

Late filing of Form 568 costs $18 per member for each month or partial month the return is late, up to 12 months.10Franchise Tax Board. FTB 1024 – Penalty Reference Chart A five-member LLC filing six months late owes $540. The penalty applies even if no tax is due, though you can request a waiver for reasonable cause.

Late payment of the $800 tax or the estimated LLC fee adds interest and penalties on top of that. The 10 percent underpayment penalty on the LLC fee applies when you miss or underpay the June 15 estimate.7Franchise Tax Board. FTB Pub. 3556 – Limited Liability Company Filing Information Filing a California extension costs nothing and buys months, so skipping the extension is rarely worth the exposure.

How to Submit Form 568

California requires any business entity that prepares its return with tax software to e-file, which covers almost every LLC working with an accountant or using commercial software.11Franchise Tax Board. e-file for Business You can request a waiver if you have a qualifying reason.12Franchise Tax Board. Business Entity e-file Waiver Request E-filing lets you pay any balance due electronically at the time of filing. If you e-file but can’t pay electronically, mail a payment separately with Form FTB 3588.13Franchise Tax Board. Instructions for Form FTB 3588 Payment Voucher for LLC e-filed Returns

If you paper-file, the address depends on whether you owe money:14Franchise Tax Board. Mailing Addresses

  • With payment: Franchise Tax Board, PO Box 942857, Sacramento, CA 94257-0501
  • Without payment: Franchise Tax Board, PO Box 942857, Sacramento, CA 94257-0500

Make checks payable to the Franchise Tax Board and write your California Secretary of State file number and federal EIN on the check.

Closing the LLC: The Final Return

If you are dissolving, the final Form 568 still carries the $800 annual tax for the taxable year of that final return. Getting the timing right matters because missteps can trigger another full year of tax. To properly cancel:15Franchise Tax Board. 2025 Instructions for Form 568 – Limited Liability Company Return of Income

  • File Form 568 marked as the final return and pay the $800 for that year.
  • File Form LLC-4/7 (Certificate of Cancellation) with the California Secretary of State. Domestic LLCs also file Form LLC-3 (Certificate of Dissolution).

To avoid another $800 charge, the LLC must file a timely final return (including extensions), stop doing business in California after the final taxable year, and file the cancellation paperwork with the Secretary of State within 12 months of that timely final return.15Franchise Tax Board. 2025 Instructions for Form 568 – Limited Liability Company Return of Income Domestic LLCs that never actually conducted business may qualify for short-form cancellation on Form LLC-4/8, provided the filing is made within 12 months of the original Articles of Organization, the LLC has no debts other than tax liability, and no assets remain to distribute.

Form 568 covers California only. A multi-member LLC also files federal Form 1065 and issues federal K-1s to members, which is a separate obligation on its own schedule.