Jake Lawson here. In my 15+ years helping entrepreneurs with business formation and compliance, I’ve seen more California LLC owners get blindsided by Form 568 than any other state requirement. Here’s everything you need to know about this mandatory annual filing.
You formed your California LLC and paid the $800 annual tax. You think you’re done with California requirements? Think again. Every California LLC must also file an annual tax return—even if you made zero revenue.
The bottom line upfront: Form 568 is California’s LLC tax return, due every year regardless of your income. Miss it, and California will hit you with penalties that compound daily.
What Is California Form 568 (And Why Every LLC Owner Hates It)
Form 568 (LLC Return of Income) is California’s state-level tax return for LLCs. You file it with the California Franchise Tax Board (FTB), and it’s completely separate from your federal tax returns.
Here’s what catches people off guard: You must file Form 568 even if:
- Your LLC made no money
- Your LLC had no business activity
- You already paid the $800 annual tax
- You’re planning to dissolve your LLC
California doesn’t care about your circumstances. No income? File anyway. No business activity? File anyway. Forgot your LLC exists? File anyway or face penalties.
Who Must File Form 568 (Almost Everyone)
LLCs that must file Form 568:
- Single-member LLCs (taxed as sole proprietorships)
- Multi-member LLCs (taxed as partnerships)
- Qualified Joint Venture LLCs (married couples in California)
LLCs that file different forms:
- LLCs taxed as C-Corporations → File Form 100
- LLCs taxed as S-Corporations → File Form 100S
Key point: Your filing requirement is based on your tax election, not your LLC structure. Most LLCs stick with default taxation and file Form 568.
Form 568 Due Dates (They Vary by Tax Classification)
This is where California gets confusing: Due dates depend on how your LLC is taxed.
Standard Due Dates
LLCs taxed as partnerships: March 15
LLCs taxed as sole proprietorships: April 15
LLCs taxed as qualified joint ventures: April 15
Automatic Extensions (The One Good Thing)
California automatically grants filing extensions: 6-month extension: Sole proprietorships, qualified joint ventures 7-month extension: Partnerships
Critical distinction: The extension is for filing paperwork, not paying taxes. You still owe money by the original due date.
First-Year Filing
Your LLC’s first Form 568 is due the year after formation. If you formed your LLC in 2025, your first Form 568 is due in 2026.
What Goes on Form 568
Form 568 reports your LLC’s complete financial picture to California:
Income and Revenue:
- Business income
- Rental income
- Investment income
- Capital gains/losses
Deductions and Expenses:
- Business expenses
- Cost of goods sold
- Employee salaries
- Depreciation
California-Specific Items:
- $800 annual franchise tax
- LLC fee (if gross receipts exceed $250,000)
- Non-resident member taxes
The California LLC Fee Trap
Here’s something most LLC owners don’t know: If your LLC’s gross receipts exceed $250,000, you owe an additional LLC fee on top of the $800 annual tax.
LLC Fee Schedule:
- $250,000 – $499,999: $900
- $500,000 – $999,999: $2,500
- $1,000,000 – $4,999,999: $6,000
- $5,000,000+: $11,790
This fee is based on gross receipts, not profit. You could lose money and still owe thousands in California fees.
Non-Resident Member Complications
If you have LLC members who don’t live in California, Form 568 becomes more complex. California taxes non-resident members on their share of California-source income.
Additional filing requirements:
- Form 3832 for non-resident member withholding
- Possible estimated tax payments
- Individual non-resident returns for members
My advice: If you have out-of-state members, hire a California tax professional. The compliance requirements are extensive.
Penalties for Missing Form 568 (They’re Brutal)
California doesn’t mess around with LLC compliance. Miss your Form 568 filing, and the penalties add up fast.
Minimum penalty: $18 per month per LLC member
Maximum penalty: Up to 25% of unpaid taxes
Interest: Compounds daily on both taxes and penalties
Example penalty calculation:
- Single-member LLC, 6 months late
- Penalty: $18 × 6 months = $108
- Plus daily compounding interest
- Plus penalties on any unpaid taxes
The penalty gets worse with more members. A 3-member LLC pays $54 per month in late filing penalties.
Payment Extensions vs. Filing Extensions
Here’s a critical distinction most people miss:
Filing extension: Automatic 6-7 months to file paperwork
Payment extension: Not automatic—you must pay by the original due date
If you owe taxes and use the filing extension:
- File Form 3537 or 3539 with your payment by the original due date
- File your actual Form 568 by the extension deadline
If you don’t owe taxes:
- You can simply file Form 568 by the extension deadline
- No additional forms required
Complex Ownership Structures
LLCs Owned by Other LLCs
If you have parent/subsidiary LLC structures, both LLCs must file Form 568.
Additional complications:
- Non-California parent LLCs are considered “doing business” in California
- Parent LLCs must register as foreign LLCs in California
- Both entities face California tax obligations
Penalties for non-compliance:
- $2,000 penalty from the Franchise Tax Board
- Up to $10,000 penalty from the Secretary of State ($20/day)
Out-of-State LLC Owners
If your non-California LLC owns any interest in a California LLC, the out-of-state LLC is subject to California taxes and filing requirements.
This catches many entrepreneurs off guard when they set up holding company structures.
Quarterly Estimated Tax Payments
Individual LLC members who will owe $500+ in California taxes must make quarterly estimated payments using Form 540-ES.
LLCs taxed as corporations must also make quarterly payments using Form 100-ES.
Due dates for quarterly payments:
- Q1: April 15
- Q2: June 15
- Q3: September 15
- Q4: January 15
Common Form 568 Mistakes
Mistake 1: Thinking the $800 Fee Is Enough
The annual fee doesn’t replace the tax return requirement. You must file Form 568 separately.
Mistake 2: Using the Wrong Form
Partnerships file Form 568, not Form 565. This confusion is common.
Mistake 3: Missing Extension Payments
Using the automatic extension but forgetting to pay estimated taxes by the original due date.
Mistake 4: Ignoring Out-of-State Implications
Not realizing that California reaches out-of-state LLCs with California business interests.
When to Hire Professional Help
DIY if:
- Single-member LLC with simple income
- No out-of-state members
- Gross receipts under $250,000
- Comfortable with tax forms
Hire a professional if:
- Multi-member LLC with complex ownership
- Non-resident members
- Gross receipts over $250,000
- Elected corporate taxation
- Parent/subsidiary structures
California-specific considerations: The state’s tax laws are complex and change frequently. A California tax professional who specializes in LLCs is often worth the cost.
California FTB Contact Information
Phone: 800-852-5711 (Monday-Friday, 7 AM – 5 PM Pacific)
Features:
- Callback option to hold your place in line
- Live chat available on their website
- Check current hold times online
Pro tip: Call early in the morning or late in the afternoon for shorter wait times.
The Bottom Line on California Form 568
California’s Form 568 requirement catches many LLC owners off guard because it’s mandatory regardless of business activity or income. The state’s aggressive penalty structure makes compliance critical.
My systematic approach:
- Determine your tax classification and due date
- Set calendar reminders for both original and extension deadlines
- Track gross receipts to calculate any additional LLC fees
- Make quarterly estimated payments if required
- File even if you had no business activity
Time investment: 2-4 hours for simple returns, 8+ hours for complex structures
Professional cost: $500-$2,000 depending on complexity
Penalty cost if you miss it: Hundreds to thousands of dollars plus daily interest
The strategic view: California’s aggressive tax compliance requirements are one reason many businesses leave the state. If you’re committed to operating in California, proper planning and professional help often save money in the long run.
Ready to tackle California LLC compliance? Check out our comprehensive California LLC guide. We break down all the ongoing requirements, fees, and deadlines that keep your California LLC in good standing—because in California, compliance isn’t optional, it’s survival.
Questions about California LLC tax requirements or ongoing compliance? I’ve helped over 1,000 entrepreneurs navigate California’s complex business tax environment. Contact me—I’m here to help you understand what California actually requires versus what they want you to think you need.