California LLC Tax: $800 Fee, Income Tiers, and Deadlines

A California LLC owes the state an $800 annual franchise tax no matter what it earns, plus a tiered income-based fee once California-source revenue reaches $250,000, and then income tax on the profits themselves in whatever form matches the LLC’s federal classification. That is the shape of California LLC tax, and the rest is deadlines, forms, and the handful of traps that catch owners who assume one payment covers everything.

The $800 Annual Franchise Tax

Every LLC organized in California or doing business in the state owes $800 a year for the privilege of operating here. Profit, loss, or dormancy makes no difference. The tax applies to every taxable year the LLC exists on the Secretary of State’s books.¹

For calendar-year LLCs the payment is due April 15, submitted on FTB Form 3522 (LLC Tax Voucher).² It is a standalone payment, not part of your annual return, and it comes due months before the return itself.

The first-year exemption that briefly waived this charge for new LLCs ran from 2021 through 2023 and has expired. LLCs formed in 2024 or later owe the $800 in their first taxable year.³

The Income-Based LLC Fee

Separate from the $800 tax, California charges an additional fee once an LLC’s “total income from all sources derived from or attributable to this state” reaches $250,000. The brackets are:⁴

$900 on California income from $250,000 to $499,999
$2,500 on California income from $500,000 to $999,999
$6,000 on California income from $1,000,000 to $4,999,999
$11,790 on California income of $5,000,000 or more

Watch the definition. “Total income” here means gross receipts plus cost of goods sold, not profit. Owners routinely assume they can subtract expenses before checking the threshold and discover the fee applies to them anyway.⁴

Calendar-year LLCs must estimate and pay the fee by June 15 using FTB Form 3536, then reconcile it on Form 568 with the annual return.³ Underestimating triggers a 10% penalty on the shortfall.⁵

How Profits Are Taxed by LLC Classification

California does not have a dedicated LLC income tax. How profits get taxed depends entirely on how the IRS classifies the entity.

Single-Member LLCs

With one owner, the IRS treats the LLC as a disregarded entity. Business income flows onto your personal Form 540 as if the LLC were not a separate taxpayer.⁶ “Disregarded” applies only to income tax, though. California still requires the LLC to file Form 568 and pay the $800 tax and any applicable fee.⁷

Multi-Member LLCs

Two or more members, and the LLC is taxed as a partnership by default. The entity itself owes no income tax but files Form 568 as an informational return. Each member gets a Schedule K-1 (568) showing their share of income and reports it on Form 540.⁸ The $800 tax and the income-based fee are still owed at the LLC level.

LLCs Taxed as a C-Corporation

Electing C-corporation treatment subjects the LLC’s net income to California’s 8.84% corporate rate. The LLC files Form 100 and pays at the entity level, and member distributions get taxed again on personal returns.⁹

LLCs Taxed as an S-Corporation

An S-election avoids the double hit — income passes through to members — but California still charges a 1.5% tax on the entity’s net income, filed on Form 100S, with the same $800 minimum.¹⁰ To take the election, you must file IRS Form 2553 no later than two months and 15 days after the start of the tax year, which is March 15 for calendar-year businesses. Miss that date and you wait a year unless the IRS grants late-election relief.

Filing Deadlines and Forms

Return due dates track the LLC’s classification:¹¹

Multi-member LLCs (partnership): Form 568, due March 15, extendable to October 15.
Single-member LLCs: Form 568, due April 15, extendable to October 15.
LLCs taxed as C-corporations: Form 100, due April 15.
LLCs taxed as S-corporations: Form 100S, due March 15.

The $800 annual tax on Form 3522 is a separate April 15 payment, and the estimated LLC fee on Form 3536 is due June 15, regardless of which return you file.²

Estimated Tax Payments

If you expect to owe $500 or more in California personal income tax after withholding and credits, you need to make estimated payments through the year. California’s four installments are not equal, and the schedule differs from the federal one:¹²

April 15: 30% of estimated annual tax
June 15: 40% of estimated annual tax
September 15: nothing due
January 15 of the following year: 30% of estimated annual tax

The zero in September is not a typo. California front-loads the year, pulling 70% of your estimated tax in by mid-June. If you are used to the federal rhythm where September carries 25%, plan your cash flow accordingly.

LLCs taxed as C-corporations use the corporate schedule instead, with payments due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year.⁹

Penalties for Missing a Deadline

California penalties compound quickly, and the FTB does not send many warning shots before an assessment lands:⁵

Late payment of the $800 tax or the LLC fee: a 5% penalty on the unpaid amount plus 0.5% per month, up to 40 months.
Late filing of Form 568 by a partnership-taxed LLC: $18 per member per month, up to 12 months.
Underpayment of the estimated LLC fee: 10% of the shortfall.

Other California Taxes an LLC May Owe

The FTB is not always the only agency with a claim. Selling or leasing tangible goods in the state requires a free seller’s permit from the CDTFA and obligates you to collect and remit sales tax; the base rate is 7.25%, and local district taxes push the combined rate higher in most areas. Use tax applies to purchases from out-of-state sellers who did not collect California tax.¹³

Hiring employees opens a separate track with the EDD. You must register for a payroll tax account within 15 days of paying more than $100 in wages in a calendar quarter, then withhold State Disability Insurance (1.3% of wages, no cap) and Personal Income Tax from employees, and pay Unemployment Insurance and Employment Training Tax out of LLC funds.¹⁴¹⁵

Many California cities and counties also assess their own business license fees or gross receipts taxes, which are entirely separate from state obligations. Some charge flat annual fees; others take a percentage of revenue earned in the jurisdiction. If your LLC operates in multiple cities, check with the finance or tax office in each one.

Closing the LLC to Stop the $800

Walking away from the business is not the same as closing the LLC, and the difference is expensive. If you stop operating but never formally dissolve and cancel the entity with the Secretary of State, California keeps assessing the $800 tax every year, and penalties and interest pile on top.

To end the obligation, file a Certificate of Dissolution (LLC-3) and a Certificate of Cancellation (LLC-4/7) with the Secretary of State. You will still owe the $800 for the final taxable year and must file a final Form 568. Once those steps are complete, the annual bill ends.³

1
California Legislative Information. California Code RTC 17941
2
California Franchise Tax Board. Instructions for Form FTB 3522 LLC Tax Voucher
3
Franchise Tax Board. Limited Liability Company
4
California Legislative Information. California Code RTC 17942
5
Franchise Tax Board. Common Penalties and Fees
6
State of California Franchise Tax Board. Self-Employed
7
California Franchise Tax Board. Single Member LLC
8
California Franchise Tax Board. California Franchise Tax Board Form 568
9
Franchise Tax Board. Instructions for Form 100-ES Corporation Estimated Tax
10
State of California Franchise Tax Board. S Corporations
11
Franchise Tax Board. Due Dates: Businesses
12
Franchise Tax Board. Estimated Tax Payments
13
California Department of Tax and Fee Administration. Obtaining a Sellers Permit
14
Employment Development Department. Employers: Payroll Tax Account Registration
15
Employment Development Department. Contribution Rates, Withholding Schedules, and Meals and Lodging Values