Does a California LLC have to pay $800 even with no income?

Yes. California's $800 annual franchise tax is mandatory for every LLC organized or doing business in California, regardless of income, activity, or profit. Even an LLC with zero revenue owes $800 per year as long as it remains active.

Can I avoid California's $800 tax by forming in another state?

No. If you are doing business in California — meaning you have customers, employees, an office, or are managing the LLC from California — you are subject to California tax regardless of where the LLC was formed. You would also need to register as a foreign LLC in California, which triggers the same $800 tax.

What is the California LLC Fee (beyond the $800 franchise tax)?

LLCs with total annual income of $250,000 or more owe an additional LLC Fee on top of the $800 franchise tax. The fee ranges from $900 (for $250K–$499,999) to $11,790 (for $5 million or more). This fee is estimated and paid by the 15th day of the 6th month.

What is the Statement of Information for a California LLC?

The Statement of Information (Form LLC-12) must be filed within 90 days of formation and then every 2 years thereafter. The filing fee is $20. It updates the state on your registered agent, principal address, and management structure.

Does California require an operating agreement?

Yes — California is one of the few states that legally requires LLCs to have an operating agreement (Corporations Code §17701.10). The agreement does not need to be filed with the state, but it must exist and govern the LLC's operations.

Is there a California LLC first-year franchise tax exemption?

No. The first-year exemption that existed under AB 85 (2021–2023) expired on January 1, 2024. All California LLCs formed on or after January 1, 2024 must pay the $800 franchise tax starting in their first tax year.

How to Start a California LLC in 2026: $800 Franchise Tax, Fees & Requirements

Formation Fee	$70
Annual Franchise Tax	$800 minimum
Franchise Tax Due	15th day of 4th month
Statement of Information	$20 (every 2 years)
Registered Agent Required	Yes (CA address)
State Income Tax	1%–13.3% personal
LLC Fee (>$250K revenue)	$900–$11,790
First-Year Exemption	None (expired Jan 2024)
Official Filing Website	CA Secretary of State

1. California LLC Overview

California is the world's fifth-largest economy, with 40 million residents and a massive consumer market. If you live, work, or operate your business in California, forming your LLC there is typically the right choice. However, California has some of the highest LLC costs in the country:

$800/year mandatory franchise tax — owed regardless of revenue or profit
Additional LLC Fee — up to $11,790/year for high-revenue businesses
High state income tax — 1%–13.3% on LLC profits flowing to members
Operating agreement required by law — unlike most other states
Biennial Statement of Information — $20 every 2 years

Out-of-State Formation Won't Save You

Forming your LLC in Wyoming or Delaware does not avoid California tax. If you live in California or run your business from California, the state will require you to register as a foreign LLC and pay the same $800 annual franchise tax. You cannot escape California's reach by forming elsewhere.

2. California LLC Requirements

Name must contain "Limited Liability Company," "LLC," or "L.L.C."
Cannot contain "bank," "trust," "trustee," "insurance," or similar restricted words without approval
Appoint a registered agent with a California street address
File Articles of Organization (Form LLC-1) — $70
File Statement of Information (Form LLC-12) within 90 days — $20
Draft an Operating Agreement (legally required in California)
Pay $800 annual franchise tax to the Franchise Tax Board
File biennial Statement of Information every 2 years

3. California LLC Costs and Fees (2026)

Cost Item	Amount	Notes
Articles of Organization (LLC-1)	$70	One-time state filing fee
Statement of Information (LLC-12)	$20	Due within 90 days, then biennial
Annual Franchise Tax	$800 minimum	Due by 15th day of 4th month each year
LLC Fee (revenue $250K+)	$900–$11,790	Additional fee based on gross income
Registered Agent	$50–$250/year	Required CA street address
EIN	Free	Apply at IRS.gov
Operating Agreement	$0–$1,500	Required by CA law

4. How to Start a California LLC (Step by Step)

1 Reserve your LLC name (optional, $10) or go straight to filing
2 Appoint a registered agent with a California street address
3 File Articles of Organization (Form LLC-1) with the CA Secretary of State ($70)
4 File initial Statement of Information (Form LLC-12) within 90 days ($20)
5 Draft an Operating Agreement (required by California law)
6 Obtain an EIN from the IRS (free at IRS.gov)
7 Register with the California Franchise Tax Board (FTB) and pay $800 franchise tax by 15th day of 4th month
8 Open a business bank account and maintain separate finances
9 File biennial Statement of Information every 2 years ($20) and pay $800+ franchise tax annually

5. California Franchise Tax & LLC Fee

California has two separate tax obligations for LLCs beyond state income tax:

Annual Franchise Tax — $800 Minimum

Every California LLC pays a minimum of $800/year to the Franchise Tax Board
Due by the 15th day of the 4th month of your tax year (April 15 for calendar-year LLCs)
Owed even if the LLC has no income, is inactive, or operated at a loss
First-year exemption expired January 1, 2024 — all new LLCs pay in year one

LLC Fee — Additional for High Revenue

Total Annual Income	LLC Fee
Less than $250,000	$0
$250,000–$499,999	$900
$500,000–$999,999	$2,500
$1,000,000–$4,999,999	$6,000
$5,000,000 or more	$11,790

6. California LLC Taxes (2026)

$800 annual franchise tax — mandatory regardless of income
California personal income tax — 1%–13.3% on LLC profits (one of the highest rates in the US)
Federal income tax — pass-through to personal return
Self-employment tax — 15.3% on net earnings
California sales tax — 7.25% state base rate plus local additions (up to 10.75% combined in some areas)
LLC Fee — additional $900–$11,790 if gross income exceeds $250,000

California Has the Highest Income Tax in the US

California's top marginal income tax rate is 13.3% on income over $1 million. The 9.3% rate kicks in at around $66,000 for single filers. LLC profits flowing to members are taxed at these rates on top of the $800 franchise tax.

7. Best For / Not Best For

Best For

Entrepreneurs physically living and operating in California
Businesses targeting California's 40M+ consumer market
Tech startups based in Silicon Valley or LA that must be in CA
Companies that need to hire California employees
Real estate investors with California properties

Not Best For

Out-of-state owners: forming elsewhere doesn't avoid CA tax if you operate there
Cost-sensitive founders: $800/year minimum tax regardless of revenue or profit
Bootstrapped startups with thin margins — $800 owed even at a loss
Privacy-focused owners: CA is a public record state
Anyone assuming a Wyoming/Delaware LLC avoids California tax (it doesn't)

How to Start a California LLC in 2026: Costs, $800 Franchise Tax & Requirements

California LLC Quick Facts (2026)