California LLC costs: $70 to form, $800 from the very first year

For many founders in tech, media and design, California is where the clients are. Forming an LLC there is simple and, at a $70 fee, cheap. The expense comes afterwards: California charges every LLC an annual tax of $800, in the first year and every year after, plus a second levy once revenue passes a certain level. This page works through the full cost of a California LLC, explains the first-year rules and shows why going through Delaware changes nothing when the business actually happens in California. We offer the formation itself on our page Form an LLC in California.

1Three costs every California LLC pays

Formation goes through the Secretary of State. The Articles of Organization on Form LLC-1 cost $70. Filed online via bizfile Online, the Secretary of State quotes processing of five days or less; paper and PDF forms take ten days or more. Every LLC needs an Agent for Service of Process: a person with a California street address (no PO box) or an agent company registered there. The agent is named in the Articles. Our guide to forming a US LLC walks you through forming a US LLC step by step without living in the USA.

Within 90 days of formation comes the Statement of Information on Form LLC-12, with a $20 fee. After that the LLC files it every two years, each time within a six-month window that ends with the month it was formed. Since August 1, 2026, the Secretary of State requires a registered user account for online filing.

The third cost is the big one. The Franchise Tax Board, the state's tax agency, charges every LLC that is formed in California, registered there or doing business there the annual tax of $800. It's commonly called the franchise tax. It depends on neither profit nor revenue. An LLC without a single client pays it just like one turning over millions.

2The $800 and the first year

The tax is paid in advance, for the right to do business in California. For the first year, the Franchise Tax Board says payment is due by day 15 of the fourth month after filing with the Secretary of State. The agency's example: formed on June 18, payment due by September 15. A California LLC's first tax year begins when its Articles are filed. After that the tax is due on day 15 of the fourth month of each tax year, which for a calendar year means April 15. Payment is made with Form FTB 3522.

2.1No proration, no exemption

The tax isn't reduced by month. Form your LLC in December and you pay the full $800 for that short first tax year, then the next $800 the following April. A first-year exemption only applied to LLCs formed or registered between January 1, 2021 and December 31, 2023. It does not apply to formations from 2024 onward. The 2026 Instructions for FTB 3522 list only two special exceptions: certain tax-exempt title-holding companies and the small business of a deployed service member.

2.2Half the tax for first tax years from 2027

A new law changes the math for later formations. According to the Franchise Tax Board's overview, the first-year annual tax for LLCs, LPs and LLPs drops from $800 to $400 if that first tax year begins on or after January 1, 2027 and before January 1, 2030. From the second year it's $800 again. For planning, that means: an LLC formed in December 2026 pays $800 for its short first year. An LLC formed in January 2027 pays $400 for its first year. If you were planning to start in the new year anyway, the later date saves you twice.

2.3Cancelling within twelve months

There's a way out if a project doesn't get off the ground. Cancel the LLC with the Secretary of State within one year of formation using the short form LLC-4/8, and no annual tax is owed for the first tax year. Without cancellation the tax keeps running, year after year, until a Certificate of Cancellation is filed. Our article Dissolving a US LLC explains how to do it properly.

3The LLC fee: a second levy based on income

Once the LLC reaches California income of $250,000 or more, the LLC fee is added on top of the annual tax. It's based on total California income, meaning income from California sources, not the LLC's worldwide income. If the LLC has income both inside and outside California, it apportions it on Schedule R. The tiers are in the table; the top tier is $11,790 from $5 million.

The fee is estimated during the year and paid by day 15 of the sixth month of the tax year with Form FTB 3536. If the estimate isn't paid by the original due date of the return, penalties and interest follow. For a growing business, the LLC fee belongs in cash-flow planning before the threshold is reached.

4Form 568 and members outside California

Every LLC doing business in California or registered there files Form 568 with the Franchise Tax Board each year. The deadline depends on classification. An LLC treated as a partnership files by day 15 of the third month after its tax year ends. So does a single-member LLC owned by a partnership or another LLC. All other single-member LLCs file by day 15 of the fourth month after the end of their owner's tax year. The $800 isn't paid with Form 568 but separately with FTB 3522.

4.1If you don't live in California

If the LLC has several members and one of them lives outside California, that member signs Form FTB 3832, agreeing that California may tax their share of the California income. If they don't sign, the LLC pays tax on that share for them at the highest rate. The signature doesn't replace a personal return: every nonresident member files their own California tax return. Members that are corporations, such as your company back home, are themselves treated as doing business in California and may have obligations of their own.

For founders from Europe, this means a California LLC with business on the ground comes with three layers: federal tax, California tax and the tax of your home country. Taxation of the US LLC explains how they fit together. We handle your LLC's returns with our tax returns for LLCs and LPs.

5Formed in Delaware, doing business in California

Many founders believe they can sidestep California by forming the LLC in Delaware, Wyoming or another state. That only works as long as the LLC isn't doing business in California. According to the Franchise Tax Board, a company is doing business there if it actively engages in a transaction for profit in California, if it is organized or commercially domiciled there, or if its California sales, property or payroll exceed the thresholds in the table. Any one of these is enough.

An out-of-state LLC doing business in California registers with the Secretary of State, using a Certificate of Good Standing from its home state. From then on it pays the $800 annual tax and, where applicable, the LLC fee, files Form 568 and the Statement of Information, plus everything its home state requires, such as Delaware's $400 annual tax. Under the Instructions for FTB 3522, an out-of-state LLC's first California tax year begins with its formation in its home state. If day 15 of the fourth month has already passed when it starts in California, it pays immediately.

That is why anyone running their business in California usually forms the company there and avoids a second registration. When another state of formation still makes sense is covered in Choosing the right state; how registration in a second state works is explained in Foreign Qualification.

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6The Statement of Information: public, with a penalty

California is no state for anonymity. The Statement of Information names the LLC's managers or, if it is member-managed, every member with their address. If the LLC has more than one manager or member, attachment LLC-12A is added. The register is public.

Miss the deadline and Form LLC-12 sets a penalty of $250, collected by the Franchise Tax Board. If obligations to the tax authority or the Secretary of State remain open, the LLC can be suspended or forfeit its rights. A suspended company must first resolve its status with the Franchise Tax Board before it can become active again.

7LLC or corporation in California

Every cost estimate for California should include a comparison. Every corporation formed, registered or doing business in California also pays the $800 minimum tax. According to the Franchise Tax Board, however, newly formed or newly registered corporations have been exempt from this minimum tax in their first taxable year since 2020. An LLC gets no such exemption. In return, the corporation pays corporate income tax on its profit and files its Statement of Information every year instead of every two years.

The right entity is not decided by the $800 but by your owners, investors, visa and how you are taxed at home. For investors and a startup with growth plans, the corporation is often the vehicle of choice; the package is under California C Corporation. For a business with few owners whose profit should flow straight to them, the LLC remains the standard choice. You'll find the entity comparison under What is the best US entity, and all costs by state under Annual costs of a US company.

And if what you really want is an LLC that does no business in the USA and therefore pays no US tax, California and this page are the wrong place. Our sister site zerotax.llc answers that question.

In short

• A California LLC costs $70 to form, plus $20 within 90 days for the Statement of Information, which then comes due every two years.
• The $800 annual tax is due for every taxable year, including the first, initially by the 15th day of the fourth month after filing; if the first taxable year begins in 2027 through 2029, it is $400 in the first year.
• From $250,000 in California income, the LLC fee is added, tiered up to $11,790.
• An LLC from Delaware or any other state also pays the annual tax as soon as it does business or is registered in California.
• The tax keeps running until the LLC is cancelled with the Secretary of State; cancel with the short form within twelve months of formation and you pay nothing for the first year.

How we help you

• Form an LLCThe US LLC with a permanent establishment, turnkey in six states.
• LLC and LP Tax ReturnForm 1065 and K-1 for your LLC or LP.
• Form a CorporationThe US corporation (Inc) for growth, investors and your visa.
• Company formation consultationEntity type, state and tax consequences, before you commit.