Do You Have to Pay the $800 California LLC Fee Every Year? California LLC Annual Taxes and Fees

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Franchise Tax and Estimated Fee

All LLCs in California must pay an Annual Franchise Tax of $800, which is due by the 15th day of the 4th month after the date the LLC was filed with the Secretary of State (SOS). For most LLCs, this means the tax is due by April 15th after the first year.

For LLCs with annual gross receipts over $250,000, an Estimated Fee is also required when filing the tax return. The amount of the fee is calculated based on the LLC’s gross receipts:

  • LLCs with gross receipts from $250,000 to $499,999 pay an Estimated Fee of $900.
  • LLCs with gross receipts from $500,000 to $999,999 pay an Estimated Fee of $2,500.

Payment and Filing Methods

Payments for the Franchise Tax must be made using Form 3522. Payments can be submitted online via Web Pay. If paying online, there is no need to file Form 3522.

LLCs can be treated as partnerships, corporations or disregarded entities for federal tax purposes. The appropriate federal tax form will need to be filed:

  • Single-member LLCs treated as disregarded entities: Form 1040
  • LLCs treated as partnerships: Form 1065
  • LLCs treated as corporations: Form 1120

Tax Exemptions and Penalties

In the first year, corporations are exempt from the $800 tax. However, all corporations and LLCs pay a minimum of $800 in franchise tax after the first year.

Some new LLCs, LPs (Limited Partnerships), and LLPs (Limited Liability Partnerships) may be exempt from the $800 tax for the tax years 2021 to 2023.

Failing to pay the $800 fee can result in penalties, and the California Franchise Tax Board (FTB) may suspend the LLC. Importantly, this $800 fee is not tax deductible.

Additional Information for Entities

LLCs must also meet the following requirements to pay fees in California:

  • Be at least 18 years or older.
  • Have a physical address in California.
  • Be available during normal business hours to accept service of process.

LLCs with employees are subject to state employer taxes. Additionally, LLCs may be responsible for sales and use taxes, filing an annual report, and registering in other states if they conduct business outside California.

FAQs:

  • Q: Do you have to pay the $800 California LLC fee the first year 2023?

  • A: Yes, all LLCs in California are required to pay the $800 tax, with some exemptions for new entities.

  • Q: How are LLC fees calculated in California?

  • A: The Estimated Fee for LLCs with $250,000 or more in gross receipts is calculated based on total revenue.

  • Q: Does a California LLC file a federal tax return?

  • A: Yes, LLCs file federal tax returns based on their designated tax status (e.g., Form 1040 for single-member LLCs, IRS Form 1065 for partnerships, or IRS Form 1120 for corporations).

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