California is the biggest market in America — 39 million people, $4 trillion GDP. But forming an LLC here comes with the highest recurring cost of any state: an $800 minimum annual franchise tax, due even if your business earns $0. Here's everything you need to know before you file.

The $800 reality check: California charges every LLC an $800 minimum franchise tax every year, due by the 15th day of the 4th month after formation. This is not optional, not waived for new businesses (with one exception below), and not based on income — it's a flat fee for the privilege of existing as a California LLC. Many first-time founders don't discover this until they get the bill.

The One Exception: First-Year Exemption

LLCs formed on or after January 1, 2024 are exempt from the $800 franchise tax for their first taxable year. Starting in year two, the full $800 kicks in. This means your true first-year cost is just the $70 filing fee. But budget $800/yr from year two forward.

California LLC Cost Breakdown

Articles of Organization filing fee$70

Annual franchise tax (year 2+)$800/yr

Statement of Information (biennial)$20 every 2 years

Registered agent (if using service)$50–$300/yr

Income tax on net income over $250K$800+ fee + 1.5% of net income

5-year total (basic LLC, no agent)$3,270

Compare that to Wyoming ($400 for 5 years) or New Mexico ($50 total, ever). California is the most expensive state to maintain an LLC by a significant margin.

Should you form elsewhere? If you live in California or do business here, you owe California taxes regardless of where your LLC is formed. Forming in Wyoming or Delaware just adds a foreign registration fee ($70 in CA) on top of the $800 franchise tax. If you're physically in California, file in California — forming out of state just costs more, not less.

Step-by-Step Filing Process

Step 1

Choose Your LLC Name

Search availability at the California Secretary of State business search. Must include "LLC" or "Limited Liability Company." Cannot include "bank," "trust," "insurer," or "corporation." California also prohibits names that imply government affiliation.

Step 2

Designate a Registered Agent

Called an "Agent for Service of Process" in California. Must be a California resident or a registered corporate agent. You can be your own agent if you have a California address. Services: Northwest Registered Agent ($125/yr), or LegalZoom ($299/yr). See our Registered Agent guide.

Step 3

File Articles of Organization (Form LLC-1)

File online at bizfileonline.sos.ca.gov. You'll need: LLC name, business address, agent for service of process info, management structure (member-managed or manager-managed), and organizer info. Filing fee: $70. Processing: 5–7 business days standard, same-day available for additional $350, or 24-hour for $750.

Step 4

File Statement of Information (Form LLC-12)

Due within 90 days of formation, then every 2 years. Filed online at bizfileonline.sos.ca.gov. Fee: $20. This lists your managers/members, agent, and business address. It's public record.

Don't miss the 90-day deadline. Failing to file the initial Statement of Information within 90 days can lead to penalties and eventually suspension of your LLC. Set a reminder immediately after formation.

Step 5

Get Your EIN

Free at IRS.gov — see our EIN guide. Apply online, receive immediately.

Step 6

Pay the Franchise Tax

File Form 3522 (LLC Tax Voucher) and pay $800 to the California Franchise Tax Board. Due by the 15th day of the 4th month after your LLC's formation date. In subsequent years, due by April 15. Pay online at ftb.ca.gov.

Step 7

Draft Operating Agreement and Open Bank Account

California law specifically states that an LLC "shall" adopt an operating agreement — it's not optional here. See our Operating Agreement guide and Banking guide.

Annual Requirements

Requirement	Due Date	Cost
Franchise Tax (Form 3522)	April 15 each year	$800 minimum
Annual LLC Return (Form 568)	March 15 (or by extended deadline)	$0 filing fee
Statement of Information	Every 2 years (anniversary month)	$20
LLC Fee (revenue over $250K)	June 15 (estimated) + Form 568	$900–$11,790 based on revenue tier

The LLC Fee: California's Extra Tax on Revenue

If your California LLC earns over $250,000 in total revenue (not profit — revenue), you owe an additional LLC fee on top of the $800 franchise tax:

Total Revenue	Additional LLC Fee
$250,000 – $499,999	$900
$500,000 – $999,999	$2,500
$1,000,000 – $4,999,999	$6,000
$5,000,000+	$11,790

This is based on gross revenue, not net income. A business with $600K in revenue and $50K in profit still owes $2,500 + $800 = $3,300 in California LLC taxes. This is one of the reasons California is the most expensive state for LLCs.

California State Income Tax

California has the highest state income tax rate in the country: up to 13.3% on personal income. Since single-member LLCs are pass-through entities, your business income flows to your personal California return. There's no escaping this by forming your LLC in another state — if you're a California resident, California taxes your worldwide income.

Compare Other Filing States

California is expensive. Here's what other states cost.

Wyoming ($100) → New Mexico ($50) → Texas ($300) → Compare All 50 States →

Disclaimer: This guide is for informational purposes only and is not legal or tax advice. California tax law is complex and changes frequently. Consult a qualified CPA or attorney for your specific situation.

How to File an LLC in California: The $800 Franchise Tax Explained