California LLC $800 Annual Tax and LLC Fee Explained

Every LLC organized in, registered in or doing business in California owes an $800 annual tax to the Franchise Tax Board, even if it earned nothing. On top of that, LLCs with $250,000 or more of California income pay an LLC fee that ranges from $900 to $11,790. The first payment is due by the 15th day of the 4th month after formation, and the tax keeps coming every year until the LLC is formally cancelled.

This guide explains how the California LLC tax and fee work in 2026, the forms and deadlines, a worked example, how S corporation status changes things, and how to stop the tax when you close. It is general information, not tax advice; the Franchise Tax Board's LLC page and a California CPA are the final word.

The $800 annual tax: who pays and when

The annual tax applies to every LLC that is:

• organized as an LLC in California;
• a foreign (out-of-state) LLC registered with the California Secretary of State; or
• doing business in California, whether or not registered, for example through California sales, property or payroll above the state's thresholds, or by being managed from California.

That last point catches many owners who form a Delaware or Wyoming LLC while living and working in California. Forming in Wyoming or Delaware rarely avoids California tax if you live and work here; you simply add a second state's fees.

Item	Form	Due date (calendar-year LLC)
Annual tax ($800), first year	FTB 3522	15th day of the 4th month after formation or registration
Annual tax ($800), later years	FTB 3522	April 15 of the tax year
Estimated LLC fee	FTB 3536	June 15 of the tax year (15th day of the 6th month)
Annual return, final fee balance	Form 568	Depends on how the LLC is classified; generally March 15 or April 15 of the following year

First-year rules

California temporarily exempted new LLCs from the first-year $800 tax for taxable years 2021 through 2023. That exemption has ended, so an LLC formed in 2026 or 2027 pays $800 for its first year. The one exception: if the LLC's first taxable year is 15 days or less and it did no business in California during that period, no annual tax is due for that short year. Some owners form in the last two weeks of December for this reason.

Notice the timing quirk: an LLC formed on March 3, 2026 owes its first $800 by June 15, 2026, then the 2027 tax by April 15, 2027, barely ten months later.

The LLC fee: a tax on gross receipts

The LLC fee is based on total income from California sources, which means gross receipts plus certain other income, not profit. A low-margin business pays the same fee as a high-margin one at the same revenue level.

Total California income	LLC fee
Under $250,000	$0
$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 is a cliff: crossing $250,000 by one dollar adds the full $900. You estimate it and pay by the 15th day of the 6th month using Form 3536. If the estimate is too low, the FTB can charge a penalty of 10% of the underpayment, unless your estimate equaled or exceeded the prior year's fee.

Worked example: a growing design studio

Illustrative numbers. A two-member California LLC taxed as a partnership invoices $620,000 in 2026, all from California clients, with $480,000 of expenses and $140,000 of profit.

Charge	Amount	When paid
Annual tax	$800	April 15, 2026 (Form 3522)
LLC fee ($500,000-$999,999 tier)	$2,500	Estimate by June 15, 2026 (Form 3536)
Total LLC-level California cost	$3,300

The members also pay California personal income tax on their $140,000 share of profit. If the studio had invoiced $490,000 instead, its fee would be $900, saving $1,600. That is not a reason to turn work away, but it is a reason to watch invoiced totals near a tier boundary and estimate the fee carefully in June.

LLC vs S corporation in California

	LLC (default tax)	LLC or corporation taxed as S corp
Minimum tax	$800 annual tax	$800 minimum franchise tax
Revenue-based fee	$900 to $11,790 above $250,000	None
Entity-level income tax	None	1.5% of net income (if more than $800)
Return	Form 568	Form 100S

For high-revenue, low-margin LLCs, the S corporation route can cost less in California, but it brings payroll, reasonable salary rules and federal trade-offs. Our S corp vs LLC comparison and LLC tax rate guide cover the bigger picture. California partnerships and S corps may also benefit from the elective pass-through entity tax.

"Doing business" in California

An out-of-state LLC can owe the $800 even without registering with the Secretary of State. The Franchise Tax Board treats an entity as doing business in California if it actively engages in transactions for financial gain in the state, if it is commercially domiciled in California, or if its California sales, property or payroll exceed thresholds that are adjusted for inflation each year. An LLC can also be treated as doing business in California when its members or managers conduct its business there, which is why a Nevada LLC run by a Los Angeles resident usually owes California tax. Check the FTB's current thresholds before assuming you are outside the rules.

What suspension means

If the annual tax, fee or returns go unpaid, the FTB can suspend the LLC. A suspended LLC loses the right to use its name, cannot enforce contracts in California courts and can have contracts made during suspension voided at the other party's request. Reviving it requires filing all missing returns, paying back taxes, penalties and interest, and applying for relief from suspension. That is usually far more expensive than the $800 would have been.

Budgeting the $800 and fee

The simplest approach is to treat California's LLC charges as a fixed monthly overhead. Set aside about $67 a month for the $800 annual tax and, if you expect to cross $250,000 in revenue, add the fee tier you are likely to land in. A studio heading toward $600,000 should reserve roughly $275 a month for the combined $3,300. Review the estimate in May, using actual invoiced revenue to date, before the June 15 fee payment.

Step by step: staying compliant each year

1. Pay the $800 annual tax by April 15 with Form 3522 or FTB Web Pay.
2. Estimate total California income and pay any LLC fee by June 15 with Form 3536.
3. File the biennial California Statement of Information with the Secretary of State on time.
4. File Form 568 by its due date and pay any remaining fee.
5. Issue Schedule K-1 (568) to members.
6. Calendar all of it alongside your 2027 business tax deadlines.

Edge cases owners ask about

Two LLCs, two annual taxes

Each LLC pays its own $800, so a holding LLC plus an operating LLC costs at least $1,600 a year in California before any fee. Only form a second entity when the liability or ownership benefit clearly outweighs that cost.

LLC registered but never used

An LLC that was organized but never opened a bank account or invoiced anyone still owes the annual tax every year until cancelled. If you formed one "just in case," either use it or cancel it promptly.

Paying late

Late payment of the annual tax or fee brings penalties and interest from the FTB. Pay what you can by the deadline and file on time even if you cannot pay in full, since late-filing penalties are often larger than late-payment penalties.

How to stop the $800 tax

The tax continues until the LLC is cancelled with the Secretary of State and a final return is filed. To close cleanly:

1. Wind up the business: collect receivables, pay debts, close accounts.
2. File the final Form 568, checking the final return box, and pay what is due.
3. File the certificate of cancellation (or short-form cancellation if eligible) with the Secretary of State.
4. Do this before the 15th day of the 4th month of the next tax year to avoid another year's tax.

Our guide on how to dissolve an LLC covers the general steps.

Common mistakes

• Assuming the first-year exemption still applies. It ended after 2023.
• Abandoning an LLC instead of cancelling it. The tax, penalties and interest keep accruing, and the FTB can suspend the LLC.
• Underestimating the LLC fee and paying a 10% penalty.
• Forming out of state while operating in California, then paying fees in two states.
• Confusing the fee with income tax. The LLC fee applies to revenue even in a loss year.

Track gross receipts from day one

Because the LLC fee is based on revenue, your invoices are the single most important record for California compliance. Number every invoice, issue it in the LLC's legal name and reconcile invoiced totals to deposits monthly, so your June estimate is a lookup rather than a guess. You can create those invoices with our free invoice generator: there is no sign-up, and each invoice downloads as a PDF for your records.