Key Takeaways

  • California LLCs must budget for recurring state fees including the $800 annual franchise tax, Statement of Information filing fee, and in some cases, an income-based LLC fee.
  • The Statement of Information must be filed every two years after formation, with a $20 filing fee.
  • The annual franchise tax of $800 is mandatory for most LLCs, even if the company has no income or is inactive.
  • An additional estimated LLC fee applies when gross income exceeds $250,000, ranging from $900 to nearly $12,000.
  • LLCs must file Form 568 (Return of Income) to report financial activity, deductions, and member details.
  • Penalties apply for late or missed payments, including possible suspension of business rights by the California Franchise Tax Board.
  • First-year businesses may qualify for a waiver of the $800 franchise tax, but obligations begin the following year.

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

One-Time Formation Costs

Beyond ongoing annual fees, California LLC owners should also budget for one-time startup costs. Filing the Articles of Organization (Form LLC-1) with the Secretary of State requires a $70 fee. If you choose to file online, an additional $5 convenience fee applies. Expedited service requests may add $350–$750 depending on the processing speed requested.

Some LLCs also choose to reserve their business name in advance for a $10 fee, although this step is optional. While not technically part of the recurring CA LLC fee schedule, these initial costs are essential for accurate business planning.

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.

Late Filing Penalties

If a California LLC fails to file its Statement of Information on time, the state imposes penalties. The Secretary of State charges a $250 late penalty for missing this filing deadline. Additionally, the Franchise Tax Board may assess further penalties if an LLC fails to pay the required fees tied to this filing. To avoid disruptions in good standing status, LLCs should mark filing deadlines carefully.

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.
  • LLCs.

First-Year Franchise Tax Waiver

California has enacted a temporary incentive for new LLCs. For taxable years starting 2021 through 2023, newly formed or registered LLCs are exempt from paying the $800 annual franchise tax in their first taxable year. However, this waiver applies only to the initial year of formation. In the second year and beyond, the $800 fee becomes mandatory, regardless of whether the LLC is active, inactive, or unprofitable.

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.

Consequences of Nonpayment

Failure to pay the required LLC fees can lead to serious consequences. The California Franchise Tax Board (FTB) has the authority to suspend or forfeit an LLC’s rights, powers, and privileges. This means the LLC cannot legally conduct business, enforce contracts, or defend itself in court until all outstanding fees and penalties are paid.

In addition, interest begins to accrue on unpaid amounts, and members may be personally liable for business activities conducted while the LLC is suspended.

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
  • Income
  • Deductions
  • 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.

Tax Classification and LLC Fee Interaction

Most California LLCs are taxed as pass-through entities, meaning profits and losses are reported on members’ personal tax returns. However, LLCs may elect to be taxed as an S Corporation or C Corporation. This election does not eliminate the $800 annual franchise tax or the potential income-based LLC fee, but it can affect how members report earnings on their individual returns.

Understanding how your LLC’s tax classification interacts with the CA LLC fee schedule is essential for strategic tax planning.

Frequently Asked Questions

  1. Do new LLCs in California have to pay the $800 franchise tax in the first year?
    No, California waives the $800 annual franchise tax for the first taxable year if the LLC was formed between 2021 and 2023. The obligation begins in year two.
  2. What happens if I don’t pay my California LLC fees?
    Your LLC may be suspended by the Franchise Tax Board, preventing you from legally doing business, enforcing contracts, or accessing courts until all fees and penalties are resolved.
  3. How much is the California LLC estimated fee?
    It ranges from $900 to $11,790 depending on income, starting when annual gross income exceeds $250,000.
  4. Can I avoid the California LLC franchise tax by forming in another state?
    Not if you plan to conduct business in California. Even out-of-state LLCs must register and pay California fees if they operate in the state.
  5. What is the penalty for filing the Statement of Information late?
    The Secretary of State charges a $250 late fee for missing the filing deadline. Additional penalties may apply from the Franchise Tax Board.

If you need help with the ca llc fee schedule, you can post your legal need or post your job in UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.