California's $800 tax: first-year rules and due dates

Who pays the $800 tax?

An LLC taxed as a partnership or disregarded entity generally owes the $800 annual tax when it does business in California or is registered with the Secretary of State. The Franchise Tax Board LLC page gives the rule and its exceptions.

A corporation generally pays tax measured by income, subject to an $800 minimum franchise tax. The ordinary C corporation rate is 8.84%, and the S corporation rate is 1.5%. Banks and financial corporations have different rates. The state sets out the ordinary rules on its C corporation and S corporation pages.

An LLC can elect corporate tax treatment. It then follows that tax framework rather than the annual-tax and fee rules for LLCs taxed as partnerships or disregarded entities. The FTB page on LLCs treated as corporations explains the difference. Its legal name can still end in LLC.

What happens in the first year?

An LLC starting in 2026 generally owes the $800 annual tax, subject to the state's other exceptions. The temporary first-year exemption covered taxable years beginning in 2021 through 2023.

A newly incorporated or newly qualified corporation has a first-year exemption from the $800 minimum franchise tax. Income-based tax can still be due. For an ordinary C corporation the rate is 8.84%; for an S corporation it is 1.5%. The C corporation and S corporation pages explain the first-year treatment.

When is the LLC annual tax due?

The first-year LLC annual tax payment is generally due by the 15th day of the fourth month from the date you file with the Secretary of State. The Franchise Tax Board gives that rule in its LLC payment explanation. Its example uses Articles filed June 18 and an $800 payment due September 15.

June counts as the first month in that example. July is the second, August the third and September the fourth. Counting four full months after June 18 would produce a different date from the one the agency gives.

Later annual tax payments are generally due on the 15th day of the fourth month of the taxable year. For a calendar-year LLC, that is generally April 15. The $800 payment uses FTB 3522. The Form 568 return and any estimated LLC fee payment have their own requirements.

The FTB business due-date tables separate return dates from payment dates. A weekend or holiday moves the deadline to the next business day. A filing extension gives more time for the return; payment remains due by its original deadline.

What is the separate LLC fee?

California total income of $250,000 or more can trigger a separate fee for an LLC under the partnership or disregarded-entity rules. The FTB's LLC tax booklet page defines total income and explains the California-income calculation. Net profit is a different measure.

Source: Franchise Tax Board LLC fee schedule. The fee is added to the annual tax.

The estimate is generally due on the 15th day of the sixth month of the taxable year, using FTB 3536. For a calendar-year LLC, that is generally June 15. The FTB LLC booklet gives the special payment rule for a short taxable year that ends before that date.

Expenses can leave an LLC with little profit while its California total income still reaches a fee threshold. The $800 annual tax and the total-income fee are calculated separately, and the return reports the business's tax information.

When is the business tax return due?

An LLC taxed as a partnership generally files its return by the 15th day of the third month after year-end. An individual-owned single-member LLC generally has a fourth-month deadline. Corporate return deadlines also differ by tax treatment.

Source: FTB business due dates. Other single-member LLC owner types have separate entries on that page.

These dates are stated from the end of the taxable year, so the table covers the general rule for a fiscal-year business as well as a calendar-year business. The return closes out that tax year.

The corporate minimum tax is generally due with the first estimated installment, on the 15th day of the fourth month of the taxable year. That payment falls during the year. The return deadline comes later, after the year has ended.

What happens if a payment or return is late?

Late payment can bring a 5% penalty on the unpaid tax plus 0.5% for each month or part of a month it stays unpaid, for up to 40 months. Interest is separate. The FTB penalty schedule lists the charges and their conditions.

An LLC taxed as a partnership can also owe $18 per member for each month or part of a month its return is late, up to 12 months. This is a filing penalty. It can apply even when the tax balance is zero.

An underpaid estimated LLC fee can carry a 10% penalty on the underpayment. The rule includes a prior-year-fee exception, so the calculation involves more than comparing the estimate with the final fee.

We see entities marked suspended on the Secretary of State record. Continued failure to meet tax duties can lead to an FTB suspension, which has its own revival requirements. The suspension and revival guide explains the returns, payments and agency approval involved in restoring the entity.

Does no income mean no annual tax?

An LLC can owe the $800 annual tax while it is inactive. A company that stopped taking customers can still be registered, with returns and payments outstanding.

The short-year exception requires a taxable year of 15 days or fewer and no California business during that year. Both conditions have to be met. The LLC booklet and corporation tax page explain their respective rules.

Formal closure includes a final return and state termination paperwork. The business closure guide explains the conditions for ending later minimum or annual taxes.