Key Takeaways

  • Every LLC registered or operating in California must pay an annual minimum franchise tax of $800, even if the company earns no income.
  • LLCs with California-sourced gross receipts of $250,000 or more must pay an additional fee ranging from $900 to $11,790.
  • Payments are made using Form FTB 3522 (for the annual tax) and Form FTB 3536 (for estimated fee payments).
  • California allows LLC tax payments through the Franchise Tax Board’s Web Pay system, by credit card, or by mail.
  • Failure to pay on time results in penalties and accruing interest until payment is made.
  • New LLCs have a short grace period before the first annual tax is due, and inactive LLCs may sometimes qualify for temporary relief.

An LLC annual tax is a necessary tax in some states, but you should check your state LLC laws to find out if you would owe any annual dues. Many states require annual report filings, and you could face various penalties if you fail to file reports or pay yearly taxes.

With that, you may be able to avoid or delay paying annual or franchise taxes provided you meet the following conditions:

  • File your annual or franchise tax returns with an extension request
  • File essential documents with an SOS within one year of the date of the final tax return
  • Avoid conducting business in California after the last day of the previous tax year

Franchise taxes in California are usually due on January 1 of every year for LLCs registered in the state, even on ones not doing business.

California LLC Tax

All California LLCs are subject to an annual $800 tax. Moreover, new LLCs created in California have four months from the creation date to honor the annual tax, and the due date is usually on the 15th of the month. To avoid late fees, file Form 3522, which is a tax voucher needed to pay the $800 tax for the year.

Each LLC created in California must also submit Form 3522 with the Franchise Tax Board annually. You will have to submit Form 3522 in most cases if you own a California LLC. With that, you may also have to report fees on Form 568 if your business has gross receipts of $250,000 or more for that year, and you would pay this fee, including the $800 yearly tax.

However, the due date will be on the next business day if the date lands on a holiday or weekend.

The year you are taxed occurs when you file your articles of organization at the secretary of state office. For foreign LLCs, the taxable year occurs if you create an LLC outside of the state.

If the 15th day of the fourth month for foreign LLCs has already gone before the LLC begins in California, the annual tax must be paid after you start business.

For instance, a Delaware LLC that was created on June 1st, 2017 but registered in California on August 13, 2017, and does business the following day, must pay the annual tax by September 15th, 2017 because business activity for that year is considered a taxable year.

Another example is when an LLC’s short-window (from June 1, 2017, to December 31, 2017) tax return would be due by April 15th, 2018. In addition, an annual payment for a taxable year of 2018 would be completed via Form FTB 3522 would also be due on the same due date.

Understanding the California LLC Fee Structure

In addition to the $800 minimum franchise tax, California imposes an LLC fee based on the company’s annual gross receipts. This applies to both domestic and foreign LLCs that generate income from California sources. The fee is calculated as follows:

  • $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

LLCs must report their total income on Form FTB 568, and if applicable, include the additional LLC fee payment with Form FTB 3536.This layered structure means that your total California LLC tax liability depends not just on entity status, but also on the level of business activity within the state.

3522 Voucher Form

A 3522 Voucher Form should have the following:

  • Fiscal Term Year
  • LLC Name
  • DBA
  • Secretary of State Filing Number
  • Employer Identification Number (EIN)
  • Payment Amount
  • Address and Phone Number

How to Pay LLC Tax in California

To pay LLC tax in California, you can use several convenient methods provided by the Franchise Tax Board (FTB):

  1. Web Pay System – Log in to your FTB account and use the Web Pay option to pay directly from your checking or savings account.
  2. Credit Card Payment – Use the FTB’s authorized third-party processor (service fees apply).
  3. Mail Payment – Send a check or money order payable to “Franchise Tax Board,” along with the completed Form 3522 voucher, to:
    • Franchise Tax Board
      P.O. Box 942857
      Sacramento, CA 94257-0531

Payments should include your LLC’s name, Secretary of State number, and EIN for proper crediting.

Online payment is often the fastest and most reliable option, reducing the risk of penalties or processing delays. Remember that all LLCs must pay by the 15th day of the fourth month after formation or registration in California.

Paying Franchise Taxes

To pay the franchise tax, write a money order or check payable to the “Franchise Tax Board.” After, write down the Secretary of State filing number, including the EIN and “2011 FTB 3522” on the money order or check. From there, enclose the payment voucher with your payment and mail to the following address:

  • Franchise Tax Board, P.O. Box 942857, Sacramento California, CA 94257-0531

Note: You do not need to mail 3522 if you don’t owe a payment, or if you intend to pay online.

If you fail to make the payment on time, a late fee will be added to the balance, including interest. Interests and penalties begin to build from the due date.

Penalties and Interest for Late Payments

If an LLC fails to pay the California annual tax or fee on time, the Franchise Tax Board assesses penalties and interest on the unpaid balance. The late payment penalty is typically 5% of the unpaid tax plus 0.5% for each month the balance remains unpaid, up to a maximum of 25%.

Interest also accrues daily at the state’s statutory rate until the full balance is paid. Continued failure to pay may lead to suspension or forfeiture of the LLC’s rights, privileges, and powers by the Secretary of State.

To avoid these consequences, LLCs should:

  • Mark key tax deadlines in advance.
  • Verify electronic payments are confirmed by the FTB.
  • Maintain records of all filings and payments for at least four years.

If your LLC has been suspended, it must pay all outstanding amounts and file the necessary forms before reinstatement.

Automatic Paperless Extensions

With that, the Franchise Tax Board grants your filing extension depending on the type of business you’re in.

Corporate entities are allowed an automatic seven-month extension under the following circumstances:

  • If the corporation is in good standing with the board and the secretary of state
  • If the corporation files the return either before or on the extended due date

LLCs are permitted the same paperless extension at six months from the original due date. For LLCs that have not paid the fee or other taxes by the original due date, the LLC should use the “Payment Voucher for Limited Liability Companies,” which is FTB 3537.

Exemptions and Relief for New or Inactive LLCs

California provides temporary relief from the $800 minimum tax for new LLCs in their first taxable year. This exemption applies only to entities that organize, register, or begin doing business in California during that year.

Additionally, LLCs that are inactive or have ceased operations but have not yet formally dissolved may request relief from paying future annual taxes by filing a Short Form Cancellation (Form LLC-4/8) with the Secretary of State and the appropriate final return with the FTB.

Keep in mind that failing to cancel your LLC properly means you will continue to owe annual taxes and filing fees—even if your business is no longer operating.

Frequently Asked Questions

  1. How much is the California LLC annual tax?
    The annual tax is a flat $800, regardless of profit or business activity. Additional LLC fees apply based on California gross receipts.
  2. Do I need to pay the $800 LLC tax if my company made no money?
    Yes. The $800 minimum tax applies to all registered LLCs, even if the business did not operate or earn income.
  3. When do I have to pay the California LLC tax?
    Payment is due by the 15th day of the fourth month after the LLC is formed or registered.
  4. Can I pay my LLC tax online?
    Yes. You can use the Franchise Tax Board’s Web Pay system or pay by credit card through a third-party service.
  5. What happens if I don’t pay the California LLC tax?
    Unpaid taxes trigger penalties, accruing interest, and possible suspension by the Secretary of State until all obligations are met.

To learn more about LLC annual tax in your state, post your legal need to our UpCounsel marketplace. UpCounsel has a pool of top lawyers that will guide you in all matters pertaining to annual taxes and fees you would owe under your LLC. In addition, our lawyers will help you set up a viable tax system so you can find ways to save money when tax season arrives.