California LLC $800 Tax: First Year, Unused LLCs, and Cancelling

Most people who ask about this tax formed an LLC, did little or nothing with it, and then got a notice from the Franchise Tax Board (FTB). The rules are short, but the timing traps aren’t obvious. This page walks through who owes it, when, how to stop it, and what happens if you don’t.

Do I have to pay the $800 California LLC tax the first year?

If your LLC’s first taxable year begins in 2024 through 2026, yes. The first-year exemption in Rev. & Tax. Code § 17941(g) applied only to LLCs that organized or registered with the Secretary of State on or after January 1, 2021 and before January 1, 2024. The FTB’s LLC page confirms it: for tax years beginning on or after January 1, 2021 and before January 1, 2024, a new LLC’s first tax year was free of the $800.

When the LLC was formed or registered	First-year annual tax
Before 2021	$800
2021, 2022, or 2023	$0 for the first taxable year, $800 after
2024, 2025, or 2026	$800
First taxable year begins in 2027, 2028, or 2029	$400 under § 17941(g)(2), then $800
Any year, canceled on the short form within 12 months with no business done	No $800 for the first taxable year

The $800 doesn’t depend on income, profit, or activity. Under § 17941(b), an LLC whose articles have been accepted by the Secretary of State owes the tax for each taxable year, or part of a year, until a certificate of cancellation is filed. An LLC with zero revenue owes the same $800 as one with $200,000 in sales.

When is the first $800 payment due?

The tax is due on or before the 15th day of the 4th month of the LLC’s taxable year, per § 17941(c). A new LLC’s first taxable year begins the day it files articles of organization with the Secretary of State, and the FTB’s own example: an LLC that registers June 18 owes its first tax by September 15.

Count the month of formation as month one. Two LLCs show how that works, using the 15th-day rule and the rule that a weekend or holiday deadline moves to the next business day:

• Formed September 14, 2026. The first payment is due December 15, 2026. The LLC’s second taxable year is calendar 2027, so another $800 is due April 15, 2027.
• Formed March 2, 2027. On the statute’s text, this LLC’s first taxable year begins in 2027, so the first payment is $400, due June 15, 2027. The second year is $800.

You pay with Form FTB 3522 by mail, or online through the FTB’s Web Pay, in which case you skip the form. Write the Secretary of State file number and the federal employer identification number on the check.

Does it matter when in the year I file the articles?

It can. An LLC formed in mid-December 2026 has a first taxable year that runs only a few weeks, owes $800 for it, and then owes another $800 for 2027, both within about a month of each other in early 2027. Under § 17941(g)(2), an LLC whose first taxable year begins in January 2027 instead pays $400 once for that year. That’s my reading of the statute, and I would still weigh it against the real reason for the formation date, which usually matters more than the $400.

What’s new in 2026: the $400 first-year tax?

Senate Bill 180, effective July 13, 2026, added § 17941(g)(2). For taxable years beginning on or after January 1, 2027 and before January 1, 2030, an LLC required to file a return under § 18633.5 pays $400 instead of $800 for its first taxable year. It doesn’t change 2026, and it doesn’t touch the $800 for later years.

The FTB’s LLC page, last updated March 5, 2026, still describes only the older rules, and I couldn’t find FTB guidance on the new $400 yet. Until it appears, the statute is the source.

I formed an LLC and never used it. Do I still owe the tax?

Yes, until you cancel it. The FTB says the yearly tax is due even if you aren’t conducting business, until the LLC is canceled. The way out depends on how long ago you formed it. Work through these in order:

1. Formed within the last 12 months, no business done, no debts. File the Short Form Certificate of Cancellation (Secretary of State form LLC-4/8) under Corp. Code § 17707.02. Per the FTB, the LLC then owes no $800 for its first tax year.
2. Formed more than 12 months ago. The short form is no longer available. File a final Form 568, stop doing business, and file a certificate of cancellation with the Secretary of State within 12 months of the final return. You’ll owe the $800 for each year through the final year.
3. Behind on the tax, or already suspended. The Secretary of State can’t accept cancellation papers for a suspended LLC until you pay the balance, file the delinquent returns, and file a revivor application (Form FTB 3557 LLC). The FTB also runs a voluntary administrative cancelation program that can abate unpaid tax, penalties, and interest for a domestic LLC registered more than 12 months that has no assets and has stopped doing business or never did any.

What does the short form require?

All of this must be true, and the certificate states each item under § 17707.02(a):

• The certificate is filed within 12 months of the date the articles of organization were filed.
• The LLC hasn’t conducted any business since the articles were filed.
• It has no debts or other liabilities, apart from a final franchise tax return to be filed with the FTB.
• Any known assets have been distributed, or it never had any, and investor payments were returned.
• Members or managers holding 50 percent or more of the voting interests voted to dissolve it.

The 12-month window is short and easy to miss. The tax rule for the short form sits in § 17941(e), which treats the LLC like a corporation for one limited purpose: the first-year minimum tax exemption in Rev. & Tax. Code § 23153(f)(1). It doesn’t refund anything you’ve already paid.

Does the short form skip the final return?

No. The certificate itself states that a final franchise tax return has been or will be filed with the FTB. Even a dormant LLC files a return. Check the “final return” box on the first page of Form 568.

How do I stop owing the $800 for an LLC I did use?

You stop it by closing the LLC in the right order. Under Rev. & Tax. Code § 17947, an LLC isn’t subject to the tax for a year if it does all three of these:

1. Files a timely final annual tax return for the preceding taxable year.
2. Does no business in California after the end of that year.
3. Files a certificate of dissolution or cancellation with the Secretary of State within 12 months of filing the final return.

The FTB’s Publication 1038 lays out the same steps: file all delinquent returns and pay balances, file the final return with the final-return box checked, stop doing business in California after the final taxable year, and file the termination documents within 12 months of the final return.

Do I pay the $800 in the year I close the LLC?

Yes, if the LLC existed or did business during that year. The tax is for the year of operation, and the statute relieves you of the following year. Take a calendar-year LLC that stopped operating December 31, 2026. It files its final 2026 Form 568, pays the 2026 $800, and files the certificate of cancellation by, say, February 2027. It owes nothing for 2027 because it filed the final return, did no business after the year ended, and canceled within the 12-month window.

Filing the cancellation without the final return, or doing business after the final year, leaves the tax running. The Franchise Tax Board notifies an LLC that files a final return that the annual tax continues until the certificate is filed with the Secretary of State (§ 17941(b)(2)).

Should I dissolve the LLC or leave it inactive?

Dissolve it if you’re done with it. Leaving it inactive costs $800 a year plus a Statement of Information every two years, and a missed tax payment starts penalties and interest. The FTB says the tax is due until you cancel, so only a cancellation on file with the Secretary of State stops the meter.

What about the LLC fee on gross receipts of $250,000 or more?

That’s a separate charge, in addition to the $800. Under Rev. & Tax. Code § 17942, the fee rises with the LLC’s total income from California sources:

Total California income	LLC fee
$250,000 to $499,999	$900
$500,000 to $999,999	$2,500
$1,000,000 to $4,999,999	$6,000
$5,000,000 or more	$11,790

“Total income” under the statute means gross income plus the cost of goods sold, so a business that sells product can cross $250,000 with thin profit. The LLC estimates the fee and pays it by the 15th day of the 6th month of the taxable year, which is June 15 for a calendar-year LLC, using Form FTB 3536. An estimate that comes in under the actual fee draws a penalty. The fee is reconciled on Form 568.

What forms does a California LLC file?

Form	What it does
FTB 3522	Pays the annual tax by mail
FTB 3536	Pays the estimated LLC fee
Form 568	The annual LLC return of income, and also the final return when the box is checked
SOS LLC-4/8	Short form cancellation within 12 months, no business done
SOS LLC-3 and LLC-4/7	Certificate of dissolution and certificate of cancellation for an LLC that operated
FTB 3557 LLC	Revivor application for a suspended LLC

What happens if I stop paying?

A late payment penalty plus interest accrues from the due date, per the FTB’s Form 3522 instructions. Unpaid tax can get the LLC suspended by the FTB. The Secretary of State can’t accept termination papers for a suspended or forfeited entity until the FTB requirements are met, as Publication 1038 states.

The practical result is that an unused LLC you forgot about doesn’t disappear. It builds up $800 a year, plus penalties and interest, and a suspended LLC has to be revived before it can be closed. Filing sooner is cheaper. If the LLC has held property or signed contracts, or you’re not sure what it did, talk to a business lawyer before you decide how to close it.

Does the Statement of Information affect this?

Separately, yes. Every California LLC, and every foreign LLC registered here, must file a Statement of Information with the Secretary of State within 90 days after its articles are filed, then every two years (Corp. Code § 17702.09). The filing period each time is the calendar month the LLC was formed plus the five months before it.

If you miss it, the Secretary of State sends a delinquency notice. If the statement isn’t filed within 60 days after the notice, the LLC owes a $250 penalty under Corp. Code § 17713.07(b). The FTB collects that penalty for the Secretary of State.

Does the tax apply to an LLC formed in Wyoming, Delaware, or Nevada?

It can. An out-of-state LLC owes the $800 if it registers with the California Secretary of State or is doing business in California, per the FTB. “Doing business” under Rev. & Tax. Code § 23101 includes being organized or commercially domiciled here, or having California sales, property, or payroll above the thresholds in that section.

A Wyoming LLC managed from California may be commercially domiciled here under § 23101(b)(1). If a foreign LLC is a partnership for tax purposes and has California income but isn’t doing business here, the FTB says it files Form 565 instead. I explain why an out-of-state entity rarely helps a California owner in why out-of-state LLCs won’t save you in California.

What about an LLC that holds a rental?

A rental LLC owes the same $800, every year, whether the rent covers it or not, so it belongs in the budget from day one. My guide to the rental LLC covers when the entity is worth the cost, and LLCs for rental property in California covers the mechanics. For the federal beneficial ownership reporting question on LLCs and trusts, see the BOI report page.

Frequently asked questions

How can I avoid the $800 California LLC franchise tax?

Cancel the LLC in time, or don’t form one you don’t need. An LLC that hasn’t done business can use the short form within 12 months of filing and skip the first-year tax. An LLC that operated has to file a final return and cancel within 12 months to stop future years. Leaving an LLC on file and inactive never works.

Do you have to pay the $800 the final year?

Yes, if the LLC was in existence or did business during that year. The tax stops for the year after the final return, as long as the LLC does no business after the final year and cancels within 12 months of filing the return (§ 17947). The short-form exception for a no-business LLC is the one case with no payment for the first year.

Is the $800 tax due if the LLC lost money?

Yes. It’s a flat tax for the privilege of existing or doing business in California, not a tax on income. An LLC with a loss owes it in full. The LLC fee on income of $250,000 or more is a separate charge.

What if I never paid and got a notice?

Pay each unpaid year using the Form 3522 for that taxable year, and file any missing Form 568 returns. The FTB’s instructions say to use the form for the year owed so the payment lands on the right year. If the LLC is unused and more than 12 months old, ask the FTB about voluntary administrative cancelation, which can abate penalties and interest for a qualifying domestic LLC.

Does a single-member LLC pay the $800?

Yes. A single-member LLC is disregarded for federal income tax, but California still imposes the annual tax on it. The FTB describes the annual tax as applying to every LLC doing business or organized in California.

Can I cancel the LLC myself?

Often, yes, if it’s a short-form case. The forms are simple and the risk sits in the timing and the final return. If the LLC has a bank account, property, debts, or a suspended status, the order of steps matters, and I’m glad to look at it.