The California LLC $800 tax for Los Angeles owners

Short answer: Every LLC organized, registered or doing business in California owes the Franchise Tax Board an $800 annual tax, due by the 15th day of the 4th month of its tax year, until the LLC is cancelled. LLCs with $250,000 or more of total California income also owe a separate LLC fee. An LLC operating in the City of Los Angeles also deals with the city business tax, which is based on gross receipts.

Three charges, three different numbers

Owners of a Los Angeles LLC often see the state and city charges as one tax bill. They are not. Each one has its own agency, its own form and its own base.

Santa Monica, Burbank, Glendale and other cities in the county have their own business tax rules. The city part of this page is about the City of Los Angeles.

The $800 annual tax

FTB says every LLC that is doing business in California, or that has its articles of organization or registration on file with the Secretary of State, must pay an $800 annual tax. It is due even when the LLC does no business, until the LLC is cancelled.

The tax is due by the 15th day of the 4th month of the LLC's tax year. For a calendar-year LLC, that is April 15. In the first year, the clock starts on the date the LLC files with the Secretary of State. The payment goes with Form FTB 3522, the LLC Tax Voucher, or online through FTB's Web Pay.

Is there a first-year break?

There was, and there will be again. LLCs that formed in tax years beginning in 2021, 2022 or 2023 did not owe the $800 for their first year. That exemption has ended. An LLC whose first tax year begins in 2024, 2025 or 2026 owes the full $800 for that year.

FTB lists a new rule from the 2026 budget bill, SB 122. For tax years beginning on or after January 1, 2027, and before January 1, 2030, the first-year annual tax drops from $800 to $400. Years after the first year stay at $800. If you are deciding when to form, that is a question for your CPA.

The LLC fee, a separate charge

The LLC fee is in addition to the $800. It is based on total California income, and FTB defines that as gross income plus cost of goods sold. It is not profit. A Los Angeles LLC that sells $600,000 of goods to California buyers on thin margins still lands in the $500,000 tier.

You estimate the fee and pay it with Form FTB 3536 by the 15th day of the 6th month of the tax year, which is June 15 for a calendar year. FTB adds a 10 percent penalty on an underpayment, unless the estimate paid on time is at least the prior year's fee.

The yearly return

The LLC reports the year on Form 568. For an LLC taxed as a partnership, it is due by the 15th day of the 3rd month after the tax year ends. For most single-member LLCs owned by a person, the due date follows the owner's return, the 15th day of the 4th month. Your CPA files it. Your books supply the numbers.

What your books should track

1. Record sales at the gross amount The LLC fee and the city tax both start from gross figures. Book sales in full, and record refunds and processor fees on their own lines.
2. Keep cost of goods sold clean FTB's total income adds cost of goods sold back in, so it must sit in its own accounts, not mixed with overhead.
3. Tag where the income comes from The state fee counts California income. The city tax counts receipts from work in the City of Los Angeles. If you sell outside either, track it by class or location.
4. Give each payment its own account Post the $800, the LLC fee and the city business tax to separate accounts, so your CPA sees each one at year end.
5. Watch the $250,000 line in spring Run a year-to-date total by May, so the June estimate starts from real numbers.

Closing an LLC you no longer use

The $800 keeps coming each year until the LLC is cancelled with the Secretary of State. FTB's steps are to file a timely final Form 568, pay the $800 for that final year, and file Form LLC-4/7, Certificate of Cancellation. A California LLC also files Form LLC-3, Certificate of Dissolution.

If the cancellation is filed after the tax year ends, FTB says another year's return and another $800 can be due. The city account is separate, so closing the LLC with the state does not close it with the Office of Finance.

Questions