If you have a California LLC, you owe California $800 a year. Every year. Whether the LLC made money, lost money, or did nothing at all.

That fact surprises a lot of California small business owners. It surprises them at formation, when they realize the $800 is not a one-time fee. It surprises them in their second year, when the bill arrives without warning. And it especially surprises them in 2024 and later, because online articles still describe a “first-year exemption” that no longer exists.

This is plain-English orientation, not legal or tax advice. For specific questions about your situation, talk to your CPA — tax filings are CPA work; this article is just the structure.

What the $800 LLC tax actually is

California imposes a minimum annual franchise tax of $800 on every limited liability company organized or registered in California. The authority for this is California Revenue and Taxation Code §17941, which sets the annual minimum tax at $800 regardless of an LLC’s income, expenses, or activity level.

The Franchise Tax Board collects the tax. The Secretary of State does not see it — the FTB and the Secretary of State are different agencies. Forming the LLC with the Secretary of State does not pay the tax. Filing Articles of Organization is one transaction; paying the $800 is a separate one.

The $800 is sometimes called the “minimum franchise tax,” sometimes “the annual LLC tax,” and sometimes “the first-year tax.” All refer to the same line item on California FTB Form 3522.

Who has to pay it

Every LLC that is either:

  • Organized in California (filed Articles of Organization with the California Secretary of State), or
  • Doing business in California (regardless of where the LLC was formed)

owes the $800 minimum annual tax.

A few specific scenarios, all of which still owe:

  • A California LLC with no income. Owes $800.
  • A California LLC with no activity for the year. Owes $800.
  • A California LLC that lost money. Owes $800.
  • A California LLC that was formed but never started operating. Owes $800.
  • A Delaware LLC operating in California. Has to register as a foreign LLC in California, then owes $800.
  • A Nevada or Wyoming LLC operating in California. Same — registers as a foreign LLC, owes $800.

The “form the LLC somewhere else” workaround is one of the most common questions California small business owners ask, and one of the most common workarounds that does not actually work. If the LLC does business in California (which the FTB defines broadly under California Revenue and Taxation Code §23101), California’s $800 minimum tax applies. The LLC pays the tax in California and pays any tax obligations in the home state, often resulting in a higher total tax burden than forming in California in the first place would have produced.

When the $800 is due

Two due dates to keep straight: the first-year payment, and the annual recurring payment.

First year. The first $800 payment is due the 15th day of the 4th month after the LLC’s taxable year begins. For most new LLCs, the taxable year begins on the date the Secretary of State files the Articles of Organization. So an LLC formed on May 1 has its first $800 due August 15 of that year. An LLC formed on October 1 has its first payment due January 15 of the following year.

Every year after that. The $800 is due by April 15. April 15 is also federal income tax day, which makes the deadline easy to remember and easy to forget at the same time — most owners have so much going on at tax time that the LLC tax is one more line item among many.

The $800 is paid using FTB Form 3522. The form can be completed and paid online through the FTB’s website.

If your LLC’s taxable year is on a fiscal-year basis instead of a calendar year, the date shifts accordingly. Most LLCs are on a calendar year. Your CPA confirms which applies to you.

The “first-year exemption” — why it tripped people up, and why it does not apply now

From 2021 through 2023, California waived the $800 first-year minimum tax for LLCs that registered during those years. This was a temporary relief measure (AB 85, signed in 2020) intended to encourage business formation during a difficult economic period.

The exemption expired on December 31, 2023.

LLCs that register with the California Secretary of State on or after January 1, 2024 owe the full $800 in their first year, due by the 15th day of the 4th month after formation.

This catches a lot of people now because online articles, blog posts, and some attorneys’ marketing copy still describe the first-year exemption as if it were current. If you read an article suggesting you “do not have to pay the $800 in your first year,” check the publication date. If it is from 2021, 2022, or 2023, it was accurate at the time and is no longer accurate.

The simplest test: did the California Secretary of State file your Articles of Organization in 2024 or later? If yes, you owe the full $800 in your first year. No exemption.

On top of the $800: California’s income-based LLC fee

The $800 minimum is not the only state-level cost LLCs face. California also imposes an additional, income-based LLC fee for LLCs with total California-source income above $250,000.

The fee is set by California Revenue and Taxation Code §17942, on a tiered scale:

  • $250,000 to $499,999 in total California income: $900 additional fee
  • $500,000 to $999,999: $2,500
  • $1,000,000 to $4,999,999: $6,000
  • $5,000,000 or more: $11,790

The income-based fee is paid using FTB Form 3536, separate from the $800 minimum tax. It applies in addition to the $800, not instead of it. A California LLC with $750,000 in California income owes $800 + $2,500 = $3,300 to California for the year.

For most new LLCs, the income-based fee will not apply for the first few years. It is important to know it exists, because a profitable LLC that crosses $250,000 for the first time can be surprised by the additional bill.

What happens if you miss the $800

The short answer: late penalties, interest, and eventually suspension.

  • Late payment. California adds a late-payment penalty plus interest at the FTB’s published rate. A payment that is a year late accumulates real money in penalties on top of the original $800.
  • Failure to file Form 568. If the LLC also fails to file its annual return on Form 568, additional penalties apply. The FTB takes filing seriously even when no income is reported.
  • Suspension. After extended non-compliance, the FTB or the Secretary of State can suspend the LLC’s powers. A suspended LLC cannot legally enter contracts, defend itself in court, sue, or transact business. For an active operating business, suspension is functionally a shutdown.
  • Reinstatement. Restoring a suspended LLC requires paying all back taxes, penalties, and interest, plus filing a Certificate of Revivor. The total cost of reinstatement is often several times the original $800.

The simplest way to avoid all of this is to put the April 15 deadline on a calendar — preferably one your CPA also sees — and pay on time.

Common workarounds, and why they do not work

“Can I dissolve the LLC and form a new one to avoid back taxes?” No. Forming a new LLC does not erase the prior LLC’s tax liability. The FTB pursues the original LLC and, in some cases, the responsible owners. Dissolving the LLC properly — filing a Certificate of Cancellation with the Secretary of State and paying any back taxes — stops the $800 meter going forward. Reforming a new LLC does not undo what was already owed.

“What if my LLC has no income or activity?” You still owe the $800. The minimum tax is just that — a minimum, not an income-based tax. Inactivity does not reduce it. The only way to stop owing the $800 going forward is to formally dissolve the LLC: file a Certificate of Cancellation with the Secretary of State and complete final tax filings with the FTB. Until that happens, the $800 keeps accruing every year regardless of whether the LLC does anything.

“Can I form my LLC in Nevada or Wyoming to avoid California’s tax?” If the LLC actually operates in California — has California customers, employees, a California business address, or otherwise meets the FTB’s “doing business” test — the LLC has to register as a foreign LLC in California and pay the $800 anyway. Plus pay any tax in the home state. Plus pay the registration fees in both states. The Nevada and Wyoming workarounds typically cost more than forming in California in the first place.

“What if I just stop filing?” The FTB will catch up. They have data-sharing agreements with the IRS and other state agencies. Unpaid LLC taxes accumulate with penalties and interest. Suspension follows. Reinstatement is expensive. “Just stop filing” is a worse outcome than paying the tax on time.

Common questions about the $800

Is the $800 an annual fee or a one-time fee? Annual. Every year, until the LLC is formally dissolved.

Does my CPA pay it for me? Most CPAs file FTB Form 3522 on behalf of their LLC clients as part of regular tax filing services. Confirm with your CPA whether they handle it or whether you are expected to file directly.

Is the $800 deductible on my federal return? Yes, it is a deductible business expense on the LLC’s federal return — Schedule C, Form 1065, or Form 1120-S, depending on how the LLC is taxed.

Does the $800 apply to single-member LLCs? Yes. Single-member LLCs in California owe the $800 minimum, even though they are treated as disregarded entities for federal income tax purposes.

Does the $800 apply to series LLCs? California does not recognize series LLCs as a distinct entity type the way some other states do; each “series” within a series LLC is generally treated as its own LLC for California tax purposes and owes its own $800. This area is unsettled and worth a specific conversation with a California CPA before relying on a series LLC structure for any meaningful purpose.

What if I am not sure whether my LLC owes the $800? If the LLC is registered in California or does any business in California, it owes the $800. There are not many gray areas here. Your CPA can confirm based on the specific facts of your situation.

  • California LLC Formation — how attorney-assisted formation handles the compliance checklist, including the $800 and the Statement of Information
  • Pricing — California state fees itemized separately from the firm’s flat fees
  • What Is RULLCA? — the California statute that governs how LLCs operate, including the legal framework that ties into the annual tax obligation