What the Franchise Tax Board says
The California Franchise Tax Board (FTB) states that an LLC doing business in California, or organized or registered with the Secretary of State, owes an $800 annual tax, due by the 15th day of the 4th month after the beginning of the taxable year. For a new LLC, the first-year payment is due by the 15th day of the 4th month after the Secretary of State filing. The FTB's page also mentions a first-year exemption but lists it only for tax years beginning in 2021 through 2023, so do not assume it applies to a new LLC today; check the FTB for current rules.
The FTB adds that an LLC must file a Form 568 return and that cancelling an LLC that never did business may be possible through a short-form process within a year of filing. For anything specific to your situation, ask the FTB or a tax professional.
The LLC fee, by income
On top of the annual tax, the FTB lists an LLC fee that depends on total income from California sources. According to the FTB schedule, the fee is as follows.
| 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 |
The FTB says the fee is estimated and paid by the 15th day of the 6th month of the taxable year. For a calendar-year LLC, that works out to April 15 for the annual tax and June 15 for the fee. Always confirm the current amounts and dates on the FTB site.
A simple reserve, for illustration
The easiest way to handle a fixed annual bill is to save for it in small monthly pieces. For illustration only, the $800 annual tax divided by twelve is about $67 a month. Set it aside in a separate account each month and the April payment is already there.
A business whose income crosses a fee bracket should add the fee to the reserve. A revenue jump from $450,000 to $520,000, for example, moves an LLC from no fee to the $2,500 bracket in the table, and the extra bill arrives in June.
Why it matters for cash flow
- The bill is fixed. It does not shrink in a slow year.
- The due dates are early. April and June fall before the end of the year, when many businesses have not yet had their best months.
- A seasonal business is hit harder. If your revenue comes in the second half of the year, the early payment falls in the lean months.
Where funding fits
Tax bills are usually better handled with a reserve than with borrowing, but a timing gap does happen. Working capital from $25,000 to $5,000,000 is available, funded in as little as 24 hours, with FICO 500+ considered, about three months of bank statements and no tax returns required. The credit pull is soft and sole proprietors can apply. Funding is for business cash flow and not tax advice. The application takes about five minutes.