California LLC Franchise Tax — The $800 You Owe Every Year (2026 Guide)
Every California LLC owes an $800 minimum franchise tax — even with zero revenue. Here's when it's due, how the annual LLC fee works on top of it, and what happens if you skip it.
If you form an LLC in California, you owe the state $800 every year — even if your business makes $0. It's called the annual franchise tax, and it's the single most expensive recurring cost of running a California LLC. Most first-time founders learn about it the hard way.
Here's everything you need to know: what the franchise tax is, when it's due, the separate annual LLC fee that applies once you cross $250K in income, and what happens if you miss a payment.
What Is the California Franchise Tax?
The California franchise tax is an annual minimum tax of $800 imposed on every LLC, LP, LLP, and corporation that is registered or doing business in California. It is administered by the California Franchise Tax Board (FTB) and is owed regardless of profit, revenue, or activity level. A California LLC with zero revenue still owes $800.
The franchise tax is paid using Form 3522 (LLC Tax Voucher). It applies for every taxable year your LLC exists — including any short year at the start or end of operations.
When Is the $800 Due?
The annual $800 franchise tax is due by the 15th day of the 4th month of your LLC's taxable year. For a calendar-year LLC (the default), that's April 15. For an LLC's first year, the same deadline applies — the tax is due roughly 3.5 months after formation, regardless of how much business you've actually done.
The Other Tax: The Annual LLC Fee
On top of the $800 franchise tax, California imposes a separate annual LLC fee tied to your total California source income. This fee is paid using Form 3536 and only kicks in once your California-source income crosses $250,000 in a year.
| California source income | Annual LLC fee |
|---|---|
| Under $250,000 | $0 |
| $250,000 – $499,999 | $900 |
| $500,000 – $999,999 | $2,500 |
| $1,000,000 – $4,999,999 | $6,000 |
| $5,000,000 and above | $11,790 |
The annual LLC fee is in addition to the $800 franchise tax — not instead of it. An LLC with $600,000 in California revenue owes $800 (franchise tax) plus $2,500 (annual LLC fee) for a total of $3,300 to the FTB.
When Is the Annual LLC Fee Due?
The estimated annual LLC fee is due by the 15th day of the 6th month of your taxable year (June 15 for calendar-year LLCs). The actual fee is reconciled when you file Form 568, your LLC's annual return, due by the 15th day of the 3rd month after year-end (March 15 for calendar-year LLCs).
The Annual LLC Return — Form 568
Every California LLC must file Form 568 each year. This is your annual LLC return. It reports your income, the franchise tax paid, the annual LLC fee (if any), and any other state-level adjustments. It's due March 15 for calendar-year LLCs — earlier than your federal income tax deadline.
Even a single-member LLC with no California-source income must file Form 568 to report the $800 franchise tax payment and confirm no annual fee is owed.
What If You're an Out-of-State LLC?
California's "doing business" rules are broad. An LLC formed in another state (Delaware, Nevada, Wyoming, etc.) can still owe the $800 franchise tax if it has California-source income, a California-based member or manager, or otherwise transacts business in California. Many founders who form in Delaware to "avoid" California taxes end up paying both — Delaware's franchise tax and California's.
What Happens If You Don't Pay?
Skipping the franchise tax is one of the most expensive mistakes a California LLC can make. The FTB assesses penalties, interest, and ultimately suspends the LLC's powers, rights, and privileges in California.
- Late-payment penalty: 5% of the unpaid tax, plus 0.5% per month it remains unpaid (capped)
- Interest accrues on the unpaid balance at the FTB's adjusted rate
- Failure to file Form 568 triggers an additional penalty (per-month, per-member)
- A suspended LLC cannot legally do business in California, cannot sue in California courts, and contracts entered into during suspension may be voidable
- Reviving a suspended LLC requires paying all back taxes, penalties, interest, plus a revivor fee
How to Pay the Franchise Tax
- Sign in to the FTB's online portal at ftb.ca.gov (Web Pay for Businesses)
- Select "LLC" as the entity type and enter your Secretary of State file number
- Select "Form 3522 — Annual LLC Tax" and the applicable tax year
- Pay $800 via bank transfer (free) or credit card (with a processing fee)
- Save the confirmation number for your records
You can also mail a check with a paper Form 3522, though electronic payment is faster and provides immediate confirmation.
How to Cancel a California LLC (and Stop Owing $800)
Forming an LLC you don't use is expensive. To stop the $800 clock, you must formally dissolve and cancel the LLC with the California Secretary of State, then file a final Form 568 marked "Final Return" with the FTB. Simply abandoning an LLC does not stop the franchise tax from accruing — the FTB will continue to assess it every year until cancellation is on file.
Forming a California LLC? We'll walk you through the franchise tax timeline.
The Midnight Founder forms your California LLC the same evening you sign up — and gives you a clear roadmap of when the $800 franchise tax and Form 568 are due so you don't get hit with penalties.
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