Does California have a minimum franchise tax?
Yes. California LLCs must pay an $800 annual minimum franchise tax under Cal. Rev. & Tax. Code § 17941, effective immediately upon formation. This minimum applies regardless of income or business activity. The first-year exemption expired December 31, 2023, so all LLCs—including newly formed entities—owe the full $800 in their first tax year.
Who Pays the $800 Minimum
Every California LLC pays the $800 franchise tax annually, with no exceptions. Single-member and multi-member LLCs are treated identically. There are no exemptions for startups, inactive entities, or LLCs operating at a loss. The tax is mandatory and separate from California income tax.
Additional Gross Receipts Fees
LLCs with California-source gross receipts exceeding $250,000 pay the $800 minimum plus a tiered additional fee under Cal. Rev. & Tax. Code § 17942:
- $250K–$500K: $900
- $500K–$1M: $2,500
- $1M–$5M: $6,000
- $5M+: $11,790
These tiered fees are cumulative with the base $800 tax.
Payment Deadline & Compliance
The franchise tax is due April 15 each year. File and pay with the California Franchise Tax Board at ftb.ca.gov. Failure to pay results in penalties, interest, and potential suspension or forfeiture of your LLC by the Secretary of State.
Key Takeaways
- $800 minimum applies to all LLCs, regardless of profitability
- First-year exemption expired December 31, 2023
- Additional tiered fees apply if gross receipts exceed $250K
- Due April 15 annually to the California Franchise Tax Board
- No exemptions for inactive or non-operating LLCs
This is general information, not legal advice. Consult a tax professional or attorney for your specific situation.