By Jake Lawson, LLC Formation Strategist
Here’s the brutal truth about California LLCs: they’re expensive to maintain. While other states let you slide with minimal annual fees, California hits every LLC owner with an $800 annual franchise tax—whether you made a million dollars or haven’t earned a dime.
I’ve guided over 1,200 entrepreneurs through U.S. business formation, and California’s tax structure consistently surprises new LLC owners. Let me break down everything you need to know about California’s LLC tax requirements so you can plan accordingly (and avoid some costly mistakes).
The Non-Negotiable $800: California’s Annual Franchise Tax
Every single LLC registered in California must pay an $800 annual franchise tax. This isn’t based on income, profit, or business activity—it’s what California calls a “privilege tax” for the honor of doing business in the Golden State.
Key points about the $800 fee:
- Due every year, no exceptions
- Required even if your LLC never makes money
- Must be paid regardless of business activity
- Can’t be avoided by claiming zero income
From 2021 to 2023, California offered a first-year exemption through Assembly Bill 85, but that expired in 2024. Now every new LLC pays from day one.
Form 3522: Your $800 Payment Voucher
The $800 annual franchise tax is paid using
Form 3522: Limited Liability Company Tax Voucher. Think of it as your annual “California LLC membership dues” slip.
How to get Form 3522:
- Visit the California FTB Forms page
- Click “Online” and select your tax year
- Choose “Limited Liability Companies”
- Click “Get Forms” and download Form 3522
The Timing Trap: When Your $800 is Due
Here’s where it gets tricky. Your first $800 payment is due on the “15th day of the 4th month” after your LLC gets approved. That sounds like 4.5 months, but it’s actually 3.5 months.
Example timeline:
- LLC approved in November 2024
- November counts as “month 1”
- Payment due: February 15, 2025 (for 2024 tax year)
- Next payment due: April 15, 2025 (for 2025 tax year)
See the problem? You’re paying $1,600 within three months if you form your LLC late in the year.
Avoiding the Back-to-Back Payment Nightmare
I’ve seen too many entrepreneurs get blindsided by back-to-back $800 payments totaling $1,600. Here’s how to avoid this cash flow killer:
Strategy 1: Future File Date File your Articles of Organization with a future effective date of January 1st. You can submit your paperwork now but have the LLC officially start in January, avoiding the double payment.
Strategy 2: Strategic Timing If you’re forming your LLC in October, November, or December, consider waiting until the last week of December or early January to submit your paperwork.
Important note: Future file dates can’t be more than 90 days ahead, so plan accordingly.
After those initial payments, you’ll owe $800 every April 15th going forward—much more manageable than the startup double-hit.
Form 3536: The High-Earner’s Additional Tax
If your LLC expects to earn more than $250,000 in annual gross receipts (total revenue, not profit), you’ll also need to file
Form 3536: Estimated Fee for LLCs.
This “estimated fee” is exactly what it sounds like—you’ll need to project your LLC’s annual revenue and pay additional taxes based on that estimate.
Form 3536 timeline:
- First due: 15th day of the 6th month after LLC approval (actually 5.5 months)
- Future filings: June 15th each year
Most small business owners won’t hit the $250,000 threshold, so you can likely skip this form entirely.
Form 568: Your Annual Tax Return
Every California LLC must file an annual tax return with the California Franchise Tax Board (FTB). For most LLCs, this means
Form 568: Limited Liability Company Return of Income.
Who files Form 568:
- LLCs taxed as sole proprietorships
- LLCs taxed as partnerships
- LLCs in qualified joint ventures
Exception: LLCs electing corporate taxation file different forms:
- C-Corp election: Form 100
- S-Corp election: Form 100S
Due dates vary by tax classification:
- Sole proprietorship LLCs: April 15th
- Partnership LLCs: March 15th
- Corporate elections: March 15th or April 15th
The FTB offers automatic extensions of 6-7 months to file, but remember—extensions are for filing, not paying. Your tax payment is still due by the original deadline.
Why You Need a California Tax Professional
Unlike most states where annual reports are simple “update your address” forms filed with the Secretary of State, California treats your LLC’s annual obligations as full tax filings with the Franchise Tax Board.
I strongly recommend working with a California-experienced accountant or tax attorney. They’ll help you:
- Navigate the complex filing requirements
- Determine if S-Corp election makes sense for your situation
- Handle compliance for multi-member LLCs
- Plan tax strategies to minimize your overall burden
The annual $800 is just the beginning—proper tax planning can save you thousands more.
California Franchise Tax Board Contact Information
When (not if) you need to contact the FTB:
Phone: 800-852-5711
Hours: 8:00 AM – 5:00 PM, Monday-Friday (Pacific Time)
Pro tip: Call right at 8:00 AM to minimize wait times
Live Chat: Available on the FTB website
Main Site: CA.gov Franchise Tax Board
The Bottom Line on California LLC Taxes
California LLCs come with serious annual tax obligations that catch many entrepreneurs off guard. Here’s your action plan:
Before forming your LLC:
- Plan your formation timing to avoid back-to-back payments
- Budget for the $800 annual franchise tax
- Consider whether the LLC structure makes sense given California’s costs
After forming your LLC:
- Set up quarterly savings for your annual tax bill
- Find a qualified California tax professional
- Mark your calendar for all filing deadlines
Red flags to watch for:
- Formation services that don’t explain the $800 annual tax
- Anyone promising you can avoid California taxes by forming out-of-state
- DIY tax preparation for anything beyond simple single-member LLCs
Ready to Form Your California LLC the Right Way?
The $800 annual franchise tax is the price of doing business in California, but you don’t have to navigate it alone. Understanding these requirements upfront helps you make informed decisions about your business structure.
Need personalized guidance? Our team has helped hundreds of entrepreneurs successfully launch California LLCs while minimizing tax surprises. We’ll walk you through the entire process, from formation timing to ongoing compliance requirements.
[Get started with professional California LLC formation →]
Remember: forming an LLC is easy, but managing one properly requires ongoing attention. Don’t let California’s complex tax requirements derail your business dreams—plan ahead and get professional help when you need it.
Jake Lawson is an LLC Formation Strategist with over 15 years of experience helping entrepreneurs navigate U.S. business formation. He’s personally guided over 1,200 business launches and specializes in helping both U.S. and international founders understand the real costs and requirements of American business ownership. Learn more about Jake and the llciyo.com team [here].