Every California LLC faces two separate charges from the state: a flat $800 annual franchise tax and a tiered gross-receipts fee that starts at $900 once your California income hits $250,000. Both are mandatory, both have their own forms and deadlines, and missing either one triggers penalties that compound quickly. Here is what you need to know right now.
The core obligations at a glance:
- an annual franchise tax — owed by virtually every LLC organized in California or doing business here, paid via FTB Form 3522 by the 15th day of the 4th month of the tax year
- LLC gross-receipts fee — a separate, tiered charge based on total California income; paid via FTB Form 3536 by the 15th day of the 6th month
- Form 568 (Limited Liability Company Return of Income) — the annual LLC tax return where you reconcile both charges
- Form 3537 — used when you need to pay with an automatic extension request
The California Franchise Tax Board (FTB) administers both the $800 tax and the gross-receipts fee. The California Secretary of State (SOS) handles formation filings and the biennial Statement of Information. If you are unsure how either charge applies to your specific situation, Tolliver Bookkeeping and Tax works with LLC owners across Kern County to sort exactly this out.
Key Takeaways
California LLCs owe both a flat $800 annual franchise tax and a separate tiered gross-receipts fee starting at $900 when California income reaches $250,000, with two different payment deadlines and forms.
| Point | Details |
|---|---|
| Two separate charges | The $800 annual tax and the gross-receipts fee are distinct; both apply when income clears $250,000. |
| Fee tiers by income | Fees run from $900 (at $250k) to $11,790 (at $5M+), based on California-source income, not net profit. |
| Two key deadlines | FTB 3522 is due April 15; FTB 3536 estimated fee is due June 15 for calendar-year LLCs. |
| SOS filings matter | Missing the $20 biennial Statement of Information triggers a $250 SOS penalty and risks suspension. |
| Tolliver Bookkeeping and Tax | Handles Form 568 prep, estimated fee planning, and SOS monitoring for LLC owners in Kern County. |
Table of Contents
- Which LLCs must pay the California LLC fee?
- How the $800 annual tax and the gross-receipts fee are different
- How California calculates your total California income
- Due dates, forms, and how to pay
- What does it cost to form and maintain a California LLC?
- Penalties and the mistakes that trigger them
- Exceptions, first-year rules, and special cases
- When should you bring in a tax professional?
- What California LLC owners actually get wrong
- Tolliver Bookkeeping and Tax handles this for Kern County LLC owners
- Sources
- FAQ
Which LLCs must pay the California LLC fee?
The short answer: most of them. Whether your LLC was formed in California or registered here as a foreign entity, the state’s “doing business” standard is what triggers your tax obligations, and it casts a wide net.
Under California’s regulatory definition, an entity is doing business in California if it is actively engaging in any transaction for financial gain or profit. The FTB expands on this with specific threshold tests.
The FTB’s doing-business guidance makes clear that even out-of-state owners can trigger California obligations. Two scenarios that catch people off guard:
| Scenario | LLC Formation State | CA Obligation? |
|---|---|---|
| Owner lives in Nevada; LLC formed in California | California | Yes — organized in CA |
| Owner lives in California; LLC formed in Delaware with CA customers | Delaware | Likely yes — CA sales threshold |
| LLC formed in California; zero revenue, no activity | California | Yes — $800 tax still owed |
| Foreign LLC registered with SOS; active CA operations | Out-of-state | Yes — registered to do business |
The most common misunderstanding is that low revenue or a loss year gets you off the hook. It does not. The $800 minimum franchise tax is based on the fact of doing business in California, not on whether you turned a profit.
How the $800 annual tax and the gross-receipts fee are different
These are two separate charges that stack on top of each other. Confusing them is one of the most common LLC compliance mistakes in California.
The annual franchise tax is a flat minimum. Every LLC subject to California tax owes it, regardless of income. You pay it using FTB Form 3522 (Limited Liability Company Tax Voucher). For a calendar-year LLC, that due date is April 15. The tax is not prorated for most LLCs formed late in the year — you generally owe the full amount for the taxable year.
The LLC gross-receipts fee is an additional, graduated charge based on your total California income. It only applies when that income reaches a specified threshold or more. The fee tiers, sourced directly from the FTB, are structured in ranges starting above the minimum income threshold, increasing with income.
The gross-receipts fee is based on California-source income, not net profit. An LLC that grosses $600,000 in California revenue but runs at a loss still owes $2,500. That distinction matters for cashflow planning.
Pro Tip: Estimate your California income at the midpoint of the year, not just at year-end. If you are trending toward a fee tier, you need to remit an estimated payment via Form 3536 by the 15th day of the 6th month — waiting until you file Form 568 can trigger an underpayment penalty.
How California calculates your total California income
The fee tier you land in depends on “total California income,” which the FTB defines as gross receipts from California sources, adjusted for cost of goods sold. The figure is rounded to the nearest whole dollar.
A few things that trip people up:
- Multi-state LLCs must apportion income using California’s apportionment rules — only the California-source portion counts toward the fee base
- Pass-through allocations from partnerships or other LLCs flow through to the member’s California income calculation
- Cost of goods sold is added back to gross receipts for the fee calculation, not deducted — the base is closer to gross receipts than to net income
Worked example:
- Your LLC sells $750,000 in products. Of that, $480,000 comes from California customers.
- Cost of goods sold attributable to California: $120,000.
- Total California income for fee purposes: $480,000 + $120,000 = $600,000 (rounded to nearest dollar).
- Fee tier: $500,000 to $999,999 = $2,500 LLC fee, plus the flat $800 annual tax.
- Total California LLC obligation for the year: $3,300 before any other taxes.
Common items that distort the calculation if you miss them: sales to California customers fulfilled from out-of-state inventory, member distributions incorrectly treated as income, and prior-year overpayments not properly credited on Form 568.
Due dates, forms, and how to pay
Getting the calendar right is half the battle. Here are the key forms and what each one does:
- FTB Form 3522 — pays the $800 annual franchise tax; due the 15th day of the 4th month of the tax year (April 15 for calendar-year LLCs)
- FTB Form 3536 — remits the estimated LLC gross-receipts fee; due the 15th day of the 6th month (June 15 for calendar-year LLCs); the Form 3536 instructions explain how to estimate and reconcile
- Form 568 — the annual LLC Return of Income; reconciles the estimated fee paid on Form 3536 against the actual fee owed; due the 15th day of the 4th month of the following year (April 15 for calendar-year LLCs)
- FTB Form 3537 — used to make a payment when filing under an automatic extension; does not extend the time to pay, only to file
How to pay:
- Online through the FTB’s Web Pay system at ftb.ca.gov — the fastest option and the one that generates a confirmation number
- By mail using the payment voucher attached to the applicable form (3522, 3536, or 3537); mail to the address printed on the voucher
- Electronic funds withdrawal when e-filing Form 568 through tax software
Reconciling on Form 568: The estimated fee you paid on Form 3536 during the year gets credited against the actual fee calculated on Form 568. If you overpaid, the excess applies to the following year or can be refunded. If you underpaid, you owe the difference plus potential interest.
For SOS filings (Articles of Organization, Statement of Information), use the bizfile online portal or submit paper forms by mail to the SOS office in Sacramento.
What does it cost to form and maintain a California LLC?
The FTB fees are not the only costs. The California Secretary of State charges its own filing fees, and missing the recurring ones carries stiff penalties.
Formation and recurring SOS fees:
| Filing | Form | Fee |
|---|---|---|
| Articles of Organization | Form LLC-1 | $70 |
| Statement of Information (initial, within 90 days) | Form LLC-12 | $20 |
| Statement of Information (biennial renewal) | Form LLC-12 | $20 |
The Articles of Organization fee is a one-time cost to form the LLC. The Statement of Information fee is due within 90 days of formation, then every two years after that. Both fees are set by California Government Code §12190.
A complete first-year budget for a new California LLC typically includes: $70 (formation), $20 (initial Statement of Information), $800 (annual franchise tax), and potentially $900 or more in gross-receipts fees if California income clears $250,000. That is a minimum of $890 in the first year before you count professional fees or any local business license costs.
Penalties and the mistakes that trigger them
The FTB and SOS both assess penalties, and they add up faster than most owners expect.
Common compliance failures and their consequences:
- Late $800 tax payment — the FTB charges a 5% penalty on the unpaid amount, plus interest that accrues from the original due date
- Underpayment of the estimated LLC fee — if your Form 3536 payment falls short of the actual fee, you owe the difference plus an underpayment penalty
- Late or missing Statement of Information — the SOS assesses a $250 penalty for failure to file; repeated failures can lead to SOS suspension
- FTB suspension — a suspended LLC cannot legally conduct business in California, cannot sue or be sued in its own name, and must pay all back taxes, penalties, and fees to revive
The FTB’s guidance on penalties and interest is clear: the clock starts on the original due date, not the date you discover the mistake.
The three mistakes that generate the most penalty notices:
- Assuming a low-revenue year means no $800 tax is owed
- Missing the June 15 estimated fee deadline because owners conflate it with the April 15 annual tax deadline
- Letting the biennial Statement of Information lapse because the $20 fee feels trivial
Pro Tip: Set two calendar reminders each year: April 15 for FTB 3522 and June 15 for FTB 3536. Add a third for your Statement of Information due date, which you can look up in your SOS account. A $20 filing fee that slips past you becomes a $250 penalty.
Exceptions, first-year rules, and special cases
Not every LLC situation follows the standard playbook. A few cases worth knowing:
First-year rule (post-AB 85): California previously waived the $800 tax for an LLC’s first year under Assembly Bill 85. That waiver expired. LLCs formed or registered on or after January 1, 2024, generally owe the $800 annual franchise tax for their first taxable year. If you formed your LLC recently expecting a first-year pass, verify your specific year with the FTB.
Special cases that change the calculation:
- Foreign LLCs registered to do business in California owe the $800 tax from the date of registration, not just from the date they start generating revenue
- Dormant LLCs with no California income still owe the $800 if they remain organized in California or registered with the SOS
- Short-form cancellation — an LLC that has never conducted business and has no known liabilities can file a short-form cancellation (Form LLC-4/8) with the SOS; this may limit tax exposure, but FTB requirements still apply for the period the LLC existed
- Suspended LLCs cannot file a valid return or make valid payments until reinstated; the process requires paying all back amounts and filing a revivor request with both the FTB and SOS
Steps if your LLC is suspended:
- Request a Statement of Information from the SOS to identify the filing gap
- File all missing Statements of Information and pay the $20 fee plus any $250 penalties
- File all missing FTB returns and pay outstanding taxes, fees, and penalties
- Submit a revivor request to the FTB (and SOS if applicable)
- Receive a Certificate of Revivor before resuming business operations
When should you bring in a tax professional?
The $800 tax is straightforward. The gross-receipts fee calculation, multi-state apportionment, and Form 568 reconciliation are where errors get expensive. A tax professional earns their fee at exactly these points.
Concrete services a firm provides for LLC fee compliance:
- Estimating total California income midyear so the Form 3536 payment is accurate
- Preparing and filing Form 568, including reconciling the estimated fee and any prior-year credits
- Reviewing California apportionment for multi-state LLCs to confirm the correct fee tier
- Monitoring SOS biennial filing deadlines so the $250 penalty never happens
- Representing the LLC if the FTB sends a notice or initiates an audit
- Bookkeeping cleanup to ensure the records actually support the California income figures on the return
Questions worth asking any tax professional before engaging them:
- How will you estimate my California income for the Form 3536 payment?
- Do you track my SOS biennial filing dates, or is that my responsibility?
- How do you handle multi-state apportionment if I have customers in other states?
- What records do you need from me to prepare Form 568 accurately?
Pro Tip: If your California gross receipts are approaching $250,000, get a midyear projection done before June 15. Crossing that threshold unexpectedly means a $900 fee you did not budget for, plus a potential underpayment penalty if you missed the estimated payment deadline.
Tolliver Bookkeeping and Tax handles Form 568 preparation, estimated fee planning, and ongoing compliance monitoring for LLC owners in Kern County. The firm’s bookkeeping and tax services run under one roof, which means the income figures on your books and the figures on your return stay consistent.
What California LLC owners actually get wrong
The $800 annual franchise tax feels like a nuisance. The gross-receipts fee feels like a surprise. In practice, the bigger problem is that owners treat these as year-end items when they are actually midyear obligations.
The FTB’s fee structure is designed around estimated payments. The $800 is due in April. The gross-receipts fee estimate is due in June. Form 568 is due the following April. That means you are making payments in three different calendar windows for a single tax year, and each window has its own form. Owners who think of this as “one annual filing” miss the June deadline almost every time.
The gross-receipts fee being based on income rather than profit is the other persistent blind spot. An LLC that grosses $1.2 million in California revenue but spends heavily on cost of goods sold and overhead still owes $6,000 in LLC fees. That is not a penalty. That is the fee. Planning for it as a fixed cost of doing business in California, rather than treating it as a variable that might not apply, is the more honest way to run your books.
Pet businesses and laundromats, two industries Tolliver Bookkeeping and Tax specializes in, often have high gross revenue relative to net profit. A grooming salon doing $400,000 in California revenue owes $900 in LLC fees regardless of what the owner takes home. Knowing that number in January, not April, changes how you manage cashflow.
Tolliver Bookkeeping and Tax handles this for Kern County LLC owners
California LLC compliance is not complicated once you know the rules, but the rules have enough moving parts that small errors compound into real penalties. Tolliver Bookkeeping and Tax keeps bookkeeping and tax under one roof for small and medium-sized businesses across Kern County, which means your California income figures are consistent from your books to your FTB filings.
Services relevant to LLC owners include monthly bookkeeping in Xero, Form 568 preparation, estimated LLC fee planning, SOS filing reminders, and proactive tax planning to keep you out of penalty territory. For pet businesses and laundromat owners, the firm’s Bark Ave and LaundryList specializations mean the bookkeeping is built around your industry’s revenue patterns from day one.
To get started, visit the pricing page or schedule a consultation directly. The office is at 5401 Business Park S., Suite 126, Bakersfield.
Sources
- Ftb
- Business entities forms | California Secretary of State
- Cal. Gov. Code §12190 — LLC filing fees (leginfo)
- Cal. Code Regs. Tit. 18, § 23101 – ‘Doing Business’-Defined | LII / Cornell Law
FAQ
Do you have to pay the $800 California LLC fee every year?
Yes. Every LLC organized in California or doing business here owes the $800 annual franchise tax each year it remains active, regardless of revenue or profit. The only exceptions are narrow legislative carve-outs that must be confirmed with the FTB for your specific situation.
What is the California LLC gross-receipts fee for 2026?
The fee tiers remain $900 (income $250,000 to $499,999), $2,500 ($500,000 to $999,999), $6,000 ($1M to $4,999,999), and $11,790 ($5M or more). These are in addition to the flat $800 annual franchise tax.
Why is the California LLC fee so high compared to other states?
California imposes both a minimum franchise tax and a separate gross-receipts fee, which most states do not. The gross-receipts fee is calculated on California-source income rather than profit, so a high-revenue, low-margin business pays the same fee as a high-margin one at the same income level.
Is forming an LLC worth it in California given the fees?
For most small businesses, yes. The liability protection an LLC provides typically outweighs the $800 annual cost, and the gross-receipts fee only applies once income clears $250,000. The real question is whether your bookkeeping is accurate enough to calculate the fee correctly and pay it on time.
This article provides general information about California LLC tax obligations and is not a substitute for professional tax or legal advice. Confirm current rules and thresholds with the California Franchise Tax Board or a qualified tax professional.