California LLC Annual Fee and Associated Costs

Every California LLC must file the Annual Franchise Tax every year.

Form 3522: "Limited Liability Company Tax Voucher"

Form 3522 is used to pay the $800 Annual Franchise Tax each year.

To download Form 3522, follow these steps:

1. Go to the FTB Forms page.
2. Click on "Online" and select the relevant tax year.
3. Choose "Limited Liability Companies."
4. Click "Get Forms."
5. Locate Form 3522 and click the download link.

All LLCs in California are required to file Form 3522 and pay the $800 Annual Franchise Tax each year, regardless of their revenue or activity. In other words, this fee is unavoidable.

When Is the California Annual Franchise Tax Due?

The initial $800 payment is due on the "15th day of the 4th month" following your LLCs approval. Although this sounds like 4.5 months after approval, it is actually due 3.5 months later.

For example, if your California LLC is approved in November, November counts as "month 1." Therefore, four "months" later would be February, with the due date being February 15th.

For instance, if your LLC is approved in November 2023, your first $800 payment will be due by February 15, 2024. This payment covers the 2023 tax year, as the LLC was active from November through December. Two months later, you will need to make another $800 payment, which is due by April 15, 2024. This second $800 payment covers the 2024 tax year, starting from the beginning of that year.

Form 3536: "Estimated Fee for LLCs"

Form 3536 is used to pay an Estimated Fee if your California LLC anticipates exceeding $250,000 in annual gross receipts (total revenue). If your LLC's annual gross receipts are expected to be less than this amount, filing Form 3536 is not required.

This fee is termed “estimated” because it requires reviewing your LLC’s current finances to determine the revenue earned so far this year. You then need to project and estimate your LLC’s anticipated annual gross receipts (total revenue).

To obtain Form 3536, take the following actions:

• Visit the website for FTB Forms.
• Select "Online."
• Select the appropriate tax year.
• Select "Limited Liability Companies."
• Click "Get Forms."
• Locate Form 3536 and click the download link.

This fee is first due on the "15th day of the 6th month" following your LLC’s approval. While this may seem like 6.5 months after approval, it is actually 5.5 months after your LLC is approved. For example, if your California LLC is approved in May 2024, May counts as “month 1.” Therefore, 6.5 months later would be October, with the due date being October 15, 2024.

After the initial due date, all future Estimated Fees must be paid and filed by June 15 each year.

Form 568: "Limited Liability Company Return of Income"

Filing Form 568, often known as the "Limited Liability Company Return of Income," is mandatory for all California LLCs.

Form 568 is the state-level tax return for your LLC. Just as your federal tax return with the IRS includes "attachments" such as forms and schedules, your LLCs Form 568 will also likely include California-specific schedules and forms.

To download Form 568, Go to the FTB Forms page.

1. Click "Online."
2. Choose the relevant tax year.
3. Select "Limited Liability Companies."
4. Click "Get Forms."
5. Find Form 568 and click the download link.
6. Also, download the "Booklet" for instructions and any applicable 568 schedules.

Depending on your LLC tax classification with the IRS, Form 568 is generally due by either March 15 or April 15 each year.

Finding a California Accountant

We strongly suggest engaging with an accountant and/or a tax attorney once your LLC is established in California. Additionally, consider meeting with several accountants before finalizing the formation of your LLC.

Unlike most states where an LLC’s annual report is filed with the Secretary of State, California requires that "annual reports" be submitted as tax filings to the Franchise Tax Board. In other words, they involve more complexity.

An accountant not only assists with filing your federal, state, and local returns correctly but can also guide tax strategies. This includes advice on whether and when it might be advantageous for your LLC to be taxed as an S-Corp, among other considerations.

California Franchise Tax Board Contact Info

Hours:
Monday through Friday, 8:00 a.m. to 5:00 p.m. (Pacific Time)

Contact:
800-852-5711

Wait Times:
If you call during busy hours, there may be a long wait. Try making your call as early as possible, around 7:00 a.m., to reduce wait times.