California LLCs: Tax & Compliance Guide
What is a Limited Liability Company (LLC)?
An LLC combines partnership flexibility with corporate liability protection — members aren’t personally liable for most business debts.
Single-Member LLC (1 owner, disregarded entity) vs. Multi-Member LLC (2+ owners, partnership taxation). Both offer strong protection.
LLC Tax Classifications (Federal & California Match)
- Single-Member LLC → Disregarded entity (reported on owner’s personal return).
- Multi-Member LLC → Partnership (files Form 1065 federally; CA Form 568).
- LLC electing Corporation → C corp or S corp taxation.
California requires the same classification as federal.
How to Form an LLC in California
- File Articles of Organization with the California Secretary of State (SOS) via bizfileOnline.
- Get an EIN from the IRS (if needed).
- Create an Operating Agreement (recommended).
Official SOS site: bizfileOnline.sos.ca.gov
Key California LLC Taxes & Fees
Annual Tax: $800 minimum franchise tax — due every year, even if inactive, until canceled.
- Due: 15th day of the 4th month after tax year starts (e.g., April 15 for calendar year).
- First year: No general exemption (temporary one ended after 2023).
- Pay with FTB 3522 (LLC Tax Voucher).
Additional LLC Fee (if CA income ≥ $250,000):
| Total California Income (Rounded) | Fee Amount |
|---|---|
|
$250,000 – $499,999 |
$900 |
|
$500,000 – $999,999 |
$2,500 |
|
$1,000,000 – $4,999,999 |
$6,000 |
|
$5,000,000+ |
$11,790 |
Estimate/pay by 15th day of 6th month with FTB 3536.
Underpayment → penalties + interest.
Filing Requirements
If doing business in CA or registered with SOS:
- Pay $800 annual tax (FTB 3522).
- Pay LLC fee if applicable (FTB 3536).
- File Form 568 (Limited Liability Company Return of Income) — even single-member LLCs must file.
Use Schedule R for apportionment if income is sourced inside/outside CA.
Full details: FTB Limited Liability Company page
Keeping Your LLC Active & In Good Standing
- File Statement of Information with SOS (biennial; $250 late penalty, collected by FTB).
- File/pay all taxes and fees on time.
Canceling Your LLC
- File final Form 568 (check “Final Return”).
- File cancellation with SOS (if registered).
- Stop all California business activity.
May still have CA-source income from sales/services/intangibles in the state.
Pro Tip: Consult a tax professional for your specific setup — rules can vary by year and situation. This is general info based on current FTB guidelines (as of 2026).