CA LLC Fee Schedule: Everything You Need to Know
The CA LLC fee schedule outlines the fees and taxes that must be paid by California limited liability companies.4 min read
California LLC Annual Fees
California LLCs must pay annual fees to work and make transactions in the state. These fees include several items:
- Statement of Information filing fee (every other year)
- Estimated Fee for LLCs
- LLC Franchise Tax
- LLC Return of Income
Statement of Information Filing Fee
The state of California requires a Statement of Information to make sure that the LLC's contact information is up to date. You'll need to file your company's Statement of Information within 90 days LLC's formation date. After the first year, a new Statement of Information must be filed every other year and has a $20 filing fee that must be paid to the California Secretary of State with a money order or check. The due date will always be before your approval date, the time when the state stamped and approved your LLC's Articles of Organization.
Before it's due, look at the California Statement of Information form, and then print it and fill it out. You'll need to include the following information:
- LLC name
- 12-digit Secretary of State file number
- the business's physical address
- the business's mailing address
- name of at least one manager or board member
- California agent's name
- type of business
- name of the elected or appointed CEO, if applicable
Mail the form and the fee to:
Secretary of State Statement of Information Unit
P.O. Box 944230
Sacramento, CA 94244-2300.
Annual LLC Franchise Tax
The minimum annual LLC franchise tax in California applies to almost all LLCs inside and outside of the state that are registered to do business there. Payment is due each fiscal year, even if your LLC doesn't do business or operates at a loss. Partial years aren't prorated, so the entire $800 is due even if your company hasn't yet operated for a full year. In addition, your first payment will be due on March 30th in the year after you incorporate and your second-year payment is due just weeks later on April 15th.
You can avoid being double-billed by starting your California LLC late in the year. Businesses formed during the last two weeks of December will not be charged the March 30th fee and will pay their first-year fee on April 15th.
Because these costs are higher than those in other states, some California business owners choose to form an LLC elsewhere. However, you'll have to register in California if you still plan to conduct business there, and will be responsible for the franchise tax.
The tax is based on your company's total income or total revenues in California. Of course, the Revenue and Taxation Code is complex, and many businesses are eligible for credits or deductions.
Before 2007, the Franchise Tax Board or FTB taxed all of the income of LLCs in California. Then, in 2008, the courts ruled against the FTB in Northwest Energetic Services, LLC v. California Franchise Tax Board and Ventas Finance I, LLC v. California Franchise Tax Board. As a result, the state can only ask LLCs to pay fees based on revenues in California. Companies that overpaid on their taxes prior to this ruling should file a claim for a refund with the FTB.
Use Form 3522, the LLC Tax Voucher, to file the Annual LLC Franchise Tax. This is a tax for doing business in California. All California LLCs must pay this tax, regardless of how much they earn, and it accrues every year, even for an inactive LLC, until the LLC is dissolved. You can pay a prorated Annual LLC Franchise Tax if there are certain times during a calendar year when there's no business activity. Some types of LLCs can pay a prorated tax as well. These types of businesses include:
- Nonprofits with a tax exemption.
- LLCs that are solely owned by deployed members of the U.S. Armed Forces.
- LLCs that choose S corporation taxation.
You can also avoid the franchise tax fee if you form your LLC in another state and you don't do business in California or have any other connections there.
The franchise tax applies to:
- C corporations.
- S corporations.
- Limited partnerships formed in California.
- Out-of-state companies that do business in California.
When Are LLC and Corporation Fees Due?
Your first franchise tax fee is due on the 15th of the fourth month after your business was formed. After your first year, the annual due date is April 15th. However, the fees for the first and second years could be due near the same time if your LLC formed close to the end of the year. Even if your business was formed near the end of the year, the entire $800 fee is owed.
Estimated Fee for LLCs
LLCs that earn at least $250,000 during a tax year are subject to the estimated fee. This is an income-based fee and is filed using IRS Form 3536. Fees are as follows:
- $900 for income from $250K to $499K
- $2,500 for income from $500K to $999K
- $6,000 for income from $1 million to $4,999,999
- $11,790 for income exceeding $5 million
If your business earns more than $250,000 a year, you must file Form 3536 by the 15th day of the sixth month after your LLC is established. In subsequent years, it is due on June 15th.
LLC Return of Income
Your California LLC must file LLC Return of Income Form 568 to summarize all your financial activity for the tax year in question. This may include:
- Estimated fees
- $800 annual franchise tax
- Other taxes paid
- Gains and losses
- Penalties and deficits
- Tax information for LLC members who reside out of state
The first Form 3522 filing is due on the 15th day of the fourth month after your LLC is established. Subsequent filings are due on April 15th of each year.
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