Key Takeaways

  • California LLCs must pay an annual $800 franchise tax to the Franchise Tax Board (FTB) regardless of income.
  • LLCs with income over $250,000 must also file Form 568 and pay an LLC fee based on total income.
  • Multi-member LLCs are taxed as partnerships by default and must file Form 568 and distribute Schedule K-1s.
  • Single-member LLCs are disregarded entities and report income on Schedule C, E, or F with their personal tax return.
  • LLCs electing corporate or S corp taxation must file Form 100 or Form 100S, respectively, and pay the state’s corporate tax rate.
  • The first-year $800 tax exemption applies to new LLCs formed after January 1, 2021, but all subsequent years require payment.
  • All LLCs must file a Statement of Information (Form LLC-12) within 90 days of formation and every two years thereafter.

A California LLC tax form must be filed every year. In order to do your business taxes as an LLC, you will need to make sure your business is first set up correctly to operate in the state of California. 

How to Form an LLC in California

Limited liability companies (LLCs) are business entities that protect personal assets, such as a house or vehicle, from being affected if the business is sued. LLCs are also taxed differently than other companies, preventing the "double taxation" that may happen with an S or C corp.

Your initial step for forming an LLC is to check if your desired company name is available via an online search. The name should be unique from other LLC names in the state. It should also end with a designator. This could be LLC, L.L.C., Limited Liability Co, or a reasonable variation thereof. 

Choose a Registered Agent

There are some things to keep in mind when you choose a registered agent within the state of California. 

  • This person is allowed to legally receive mail on behalf of your business. 
  • PO boxes are not accepted for registered agent mailing addresses. 
  • All registered mailing addresses should be street addresses within California. 
  • A few people can become your registered agent. You can do it yourself, or a friend or family member can agree to accept mail on your behalf. You can also pay for a commercial registered agent service. 

Articles of Organization are another part of your filing in California. These can be done in person or by mail; online filing is not possible yet. You can mail your Articles of Organization to the Secretary of State, Business Entities section. Their PO Box number is 944228. The office is located in Sacramento, CA 94244-2280. The process takes 10 to 15 days. The Secretary of State will send you a welcome letter, along with your stamped Articles of Organization. 

Your operating agreement is a requirement for starting an LLC, but it does not need to be shared with any state agency. The operating agreement lists the owners along with their percentages of ownership. It tells how the profits and losses of the business will be split between members. The document should also include the plan for payment of business taxes and the management terms for the business.

Obtaining an EIN

An EIN, or Federal Tax ID Number, can be issued to you by the IRS. The EIN is your business' social security number of sorts. With it, you can open a bank account, file your business taxes, or conduct payroll activities. 

You can get it by mail (use form SS-4), apply for it on the IRS website, or send a fax to 855-641-6935 requesting your EIN. Foreign nationals cannot apply for the EIN online, but they can use the mail or fax methods. LLCs that are owned by other LLCs or companies also must use the mail or fax methods. 

Filing Information

It is important to file your first Statement of Information within 90 days of forming your LLC. This statement tells the state about your business' updated contact details. It costs $20 to file, and you can pay by check or money order made out to the Secretary of State. 

A $250 penalty applies if you do not file the statement of information by the deadline. If the statement of information is not filed after a lengthy amount of time past the due date, your LLC can be shut down. A new statement of information is due every 2 years on the anniversary of your LLC's registration. If you need to be reminded of this date, check your Articles of Organization for an approval stamp. 

Filers who have no changes to report can use this form. If you need to change your contact information, file Form LLC-12 instead. 

Every LLC in California must pay $800 as a Franchise Tax fee each year. This payment should go to the California Franchise Tax Board. Use Form 3522 to pay this tax. The tax form is due four months after you register your LLC, on the 15th of that month. The franchise tax is due regardless of how much money your business made that year. 

Additional California Tax Considerations for LLCs

In addition to state-level taxes, California LLCs must also comply with other business-related taxes depending on their operations:

  • Employment Taxes:
    If your LLC has employees, you must register with the Employment Development Department (EDD) and withhold state payroll taxes.
  • Sales and Use Tax:
    LLCs selling tangible goods must register with the California Department of Tax and Fee Administration (CDTFA) and collect sales tax.
  • Local Taxes and Business Licenses:
    Cities and counties may impose additional business license fees or local taxes. For example, Los Angeles requires an annual business tax registration.

It’s advisable to track both state and local obligations carefully to remain compliant. Keeping proper accounting records and consulting a qualified CPA or tax attorney can prevent costly mistakes.

First-Year Exemption and Important Deadlines

LLCs formed on or after January 1, 2021, are exempt from paying the $800 franchise tax for their first taxable year. However, all subsequent years require timely payment of both the $800 franchise tax and, if applicable, the income-based LLC fee.

Key Filing Deadlines:

  • Form 568: Due by the 15th day of the 4th month after the end of your fiscal year (typically April 15 for calendar-year filers).
  • Form 3522 (Franchise Tax): Due four months after formation.
  • Form 3536 (LLC Fee): Due by the 15th day of the 6th month.
  • Form 568 Return Payment: Due by the 15th day of the 4th month after your tax year closes.

Missing these deadlines may result in late payment penalties and interest charges.

LLC Tax Classification Options in California

How you file LLC taxes in California depends on your federal tax classification:

  • Single-Member LLCs:
    Treated as disregarded entities, single-member LLCs do not file a separate business tax return. Instead, they report all profits and losses on their personal income tax return using Schedule C (business income), E (rental income), or F (farm income). They still must submit Form 568 to the FTB and pay the annual $800 tax.
  • Multi-Member LLCs:
    Default to partnership status. They must file Form 568 and distribute Schedule K-1s to each member, reporting their share of income, deductions, and credits.
  • LLCs Electing S Corporation Status:
    If your LLC elects to be taxed as an S corporation, it must file Form 100S (California S Corporation Franchise Tax Return) and pay a 1.5% franchise tax on net income, with a minimum payment of $800.
  • LLCs Electing C Corporation Status:
    These LLCs file Form 100 (California Corporation Franchise or Income Tax Return) and pay the 8.84% corporate income tax rate.

Choosing the right classification depends on your income level, ownership structure, and long-term tax strategy.

California LLC Franchise Tax and Annual Fee

California imposes two main charges on LLCs: the annual franchise tax and the gross receipts-based LLC fee.

  1. Annual Franchise Tax ($800 Minimum):
    Every California LLC must pay this tax each year, regardless of business income or loss. It applies even if your LLC is inactive or operates at a loss. The payment is due the 15th day of the 4th month of each taxable year.

  2. LLC Fee Based on Total Income: If your LLC’s total income from all sources derived from or attributable to California exceeds $250,000, an additional fee applies:

    • $900 for income between $250,000 and $499,999
    • $2,500 for income between $500,000 and $999,999
    • $6,000 for income between $1,000,000 and $4,999,999
    • $11,790 for income of $5,000,000 or more

    You must estimate and prepay this fee using Form 3536 by the 15th day of the 6th month of your tax year.

Understanding California LLC Tax Forms and Filing Requirements

In California, LLCs are taxed based on their structure and income. Every LLC doing business in the state must file Form 568 (Limited Liability Company Return of Income) with the California Franchise Tax Board (FTB) each year. This form reports your LLC’s income, deductions, and credits, as well as your members’ shares of income.

  • Form 568 must be filed by both single-member and multi-member LLCs.
  • If your LLC earns more than $250,000, you must also pay an additional LLC fee (ranging from $900 to $11,790) using Form 3536 (Estimated Fee for LLCs).
  • The Form 3522 (LLC Tax Voucher) is used to pay the $800 annual franchise tax, which is due on the 15th day of the 4th month after the start of your tax year.
  • The Form 3536 payment is due by the 15th day of the 6th month after your tax year begins.
  • LLCs must also file federal returns with the IRS—Form 1065 for multi-member LLCs or Schedule C for single-member LLCs.

Late filings or missed payments can result in penalties, including a 5% late fee plus 0.5% for each month the payment remains unpaid.

Frequently Asked Questions About Filing LLC Taxes in California

1. When is the California LLC franchise tax due? 

The $800 franchise tax is due on the 15th day of the 4th month after the start of your tax year, even if the LLC had no income.

2. What happens if I don’t file Form 568?

 Failure to file Form 568 or pay required taxes may result in penalties and suspension of your LLC’s status with the Secretary of State.

3. Do California LLCs pay federal taxes? 

Yes. LLCs must also file federal taxes according to their classification (single-member, partnership, or corporation) with the IRS.

4. Can an LLC avoid paying the $800 franchise tax?

 Only newly formed LLCs are exempt in their first taxable year. All existing LLCs must pay the annual franchise tax, even if inactive.

5. What forms do I need to file for my California LLC taxes? 

At minimum, Form 568 and Form 3522 are required. Depending on income and structure, you may also need Form 3536, Form 100, or Form 100S.                                                                                                               

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