Every limited liability company formed, registered, or doing business in California owes the state an $800 annual franchise tax, and LLCs with California-source income of $250,000 or more owe an additional graduated fee on top of that, ranging from $900 to $11,790. The California LLC franchise tax is flat, mandatory, and owed whether your business made money or not. It keeps accruing every year until you formally cancel the LLC with the Secretary of State.
The Flat $800 Annual Tax
California Revenue and Taxation Code Section 17941 charges every LLC organized in the state, registered with the Secretary of State, or doing business in California an $800 tax each year.1State of California Franchise Tax Board. Limited Liability Company It applies whether the LLC is taxed federally as a partnership or a disregarded entity, and it applies with zero revenue.2California Franchise Tax Board. FTB Pub. 3556 – Limited Liability Company Filing Information This is not an income tax. It is a flat charge for existing as a California LLC.
“Doing business” is the phrase that catches owners who assumed they were safe. If your out-of-state LLC has employees, customers, or property in California, the Franchise Tax Board can treat it as doing business in the state and bill the $800, even without any registration.
For calendar-year LLCs, the $800 is due on April 15, paid with LLC Tax Voucher Form FTB 3522.3State of California Franchise Tax Board. Due Dates Businesses A newly formed LLC owes its first $800 by the 15th day of the fourth month after filing with the Secretary of State.
The Graduated Fee If You Earn $250,000 or More
California adds a separate income-based fee under Revenue and Taxation Code Section 17942 once your LLC’s total income from California sources hits $250,000 in a taxable year.4California Legislative Information. California Code RTC 17942 – Tax and Fees on Limited Liability Companies The tiers are:
- $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 fee stacks on top of the $800 tax. An LLC earning $5 million or more in California income pays a combined $12,590 before any income tax enters the picture.4California Legislative Information. California Code RTC 17942 – Tax and Fees on Limited Liability Companies
What Counts as “Total Income”
This definition surprises people. Under California regulations, total income for the LLC fee means gross income plus cost of goods sold.5New York Codes, Rules and Regulations. California Code of Regulations 17942 – LLC Fees In practical terms, that lands near your gross receipts, because COGS gets added back. A business with $600,000 in sales and $200,000 in cost of goods sold has $400,000 in gross income but $600,000 in “total income” for the fee, enough to push it from the $900 tier into the $2,500 tier. The fee is not based on profit.
Paying the Fee Up Front
If you expect to hit the $250,000 threshold, you must estimate and prepay the fee by June 15 for calendar-year filers, using Form FTB 3536.1State of California Franchise Tax Board. Limited Liability Company You can base the estimate on last year’s LLC Income Worksheet (Schedule IW) from Form 568.6Franchise Tax Board. 2025 Instructions for Form FTB 3536 Estimated Fee for LLCs The final number is reconciled on Form 568 at year end; any shortfall is paid then.
Key Deadlines in One Place
For a calendar-year LLC:
- March 15: Form 568 (LLC Return of Income) for LLCs taxed as partnerships. Single-member LLCs owned by an individual file by April 15.3State of California Franchise Tax Board. Due Dates Businesses
- April 15: The $800 annual tax (Form FTB 3522).3State of California Franchise Tax Board. Due Dates Businesses
- June 15: Estimated LLC fee if total income will reach $250,000 (Form FTB 3536).1State of California Franchise Tax Board. Limited Liability Company
If a due date lands on a weekend or holiday, you have until the next business day. An extension on Form 568 pushes the filing deadline to October 15 but does not extend the payment deadlines. The $800 and the estimated fee are still due on their original dates.
Filing Form 568
Every California LLC also files Form 568, the Limited Liability Company Return of Income, each year. It reports income, deductions, and each member’s share, and it’s where the final LLC fee is calculated.7Franchise Tax Board. 2025 Instructions for Form 568, Limited Liability Company Return of Income If your June estimate on Form 3536 came in low, you make up the difference with the return.
Separate from anything the Franchise Tax Board collects, LLCs also owe the Secretary of State a Statement of Information (Form LLC-12) every two years with a $20 fee.8California Secretary of State. Statements of Information Filing Tips That filing is not part of the franchise tax, but missing it can trigger FTB penalties and eventual suspension of your LLC.
How to Pay
The fastest method is FTB Web Pay. Log in on the FTB site, choose the business payment option, enter your entity ID and bank account, and authorize the payment.9Franchise Tax Board. Pay by Bank Account (Web Pay) Transactions clear in a few business days, and the confirmation number is worth saving.
One common snag: the entity ID for an LLC is the 9-digit or 12-digit number from the Secretary of State, not the 7-digit number used by corporations.10Franchise Tax Board. Entity ID Number to Use for Electronic Payment Methods If your LLC isn’t registered with the Secretary of State, use the FTB-issued ID instead.11Franchise Tax Board. Business Entity ID Number Help
If you mail a check, send it with Form FTB 3522 (annual tax) or Form FTB 3536 (estimated fee) to: Franchise Tax Board, PO Box 942857, Sacramento, CA 94257-0531.12Franchise Tax Board. 2025 Instructions for Form FTB 3522 LLC Tax Voucher Write the entity ID on the memo line. Paper processing can take several weeks. Don’t mail a voucher for a payment you already made through Web Pay.13California Franchise Tax Board. Web Pay Login for Business
Penalties and Interest for Late Payment
A late tax or fee payment triggers an immediate 5% penalty on the unpaid balance, plus 0.5% for each additional month unpaid, up to 40 months.14Franchise Tax Board. Common Penalties and Fees Interest also accrues on the unpaid amount. For the period from July 2025 through June 2026, the underpayment interest rate is 7%.15Franchise Tax Board. Interest and Estimate Penalty Rates
Partnership-classified LLCs face a separate late-filing penalty on Form 568: $18 per member per month, for up to 12 months.14Franchise Tax Board. Common Penalties and Fees A five-member LLC that files six months late owes $540 in filing penalties alone, on top of late-payment penalties and interest on the underlying tax.
What a Suspension Costs You
Leave the tax unpaid long enough and the FTB will suspend the LLC. Under Revenue and Taxation Code Section 23301, the agency can suspend a domestic LLC’s powers and privileges if the tax remains unpaid more than a year after the close of the taxable year.16California Legislative Information. California Code Revenue and Taxation Code RTC 23301
A suspended LLC cannot legally do business in California, cannot sue or defend a lawsuit, cannot sell or transfer real property, and cannot dissolve until it clears the delinquency. Any contract the LLC signs while suspended is voidable by the other party, meaning a customer, vendor, or landlord can walk away and leave the LLC with no legal recourse. The FTB can also assess a $2,000 penalty per tax year if you fail to file missing returns within 60 days of a written demand.17Franchise Tax Board. My Business Is Suspended
Reviving the LLC requires filing all delinquent returns, paying all back taxes, penalties, and interest, and formally requesting revivor. A simultaneous Secretary of State suspension can add a $250 penalty.
How to Stop the Tax: Cancel the LLC
The $800 keeps accruing every year the LLC exists on the Secretary of State’s records, active or not. The only way to shut it off is to formally cancel.1State of California Franchise Tax Board. Limited Liability Company
File a Certificate of Cancellation (Form LLC-4/7) with the Secretary of State. The form includes a tax liability statement confirming that final returns have been or will be filed with the FTB.18California Secretary of State. Certificate of Dissolution / Certificate of Cancellation / Short Form Cancellation Certificate There is no filing fee. If all members voted to dissolve, a separate Certificate of Dissolution (Form LLC-3) isn’t needed, as long as you note the unanimous vote on the cancellation form.
On the FTB side, file a final Form 568, check the “Final Return” box, and pay anything owed for that final year. The $800 is still owed for the year of cancellation. An inactive LLC left on the books for three extra years quietly runs up $2,400 in franchise tax for doing nothing.