California Form 568: Who Files, the $800 LLC Tax, and the LLC Fee Schedule

Form 568, Limited Liability Company Return of Income, is the California return for an LLC that is taxed as a partnership or disregarded for federal purposes. It reports the LLC's income, computes the LLC fee, and, for multi-member LLCs, produces a Schedule K-1 (568) for each member.

If your LLC has elected to be taxed as a corporation, you do not file Form 568. A C corp-taxed LLC files Form 100 and an S corp-taxed LLC files Form 100S. Everything below is for the default classifications.

What makes Form 568 unusual is that California charges LLCs two separate amounts that have nothing to do with profit: a flat $800 annual tax and a gross-receipts-style LLC fee. A loss-making LLC still owes the $800, and an LLC with $300,000 of revenue and zero profit still owes the fee. Founders coming from other states are often caught off guard by that.

An LLC must file Form 568 and pay the $800 annual tax if any of these are true, according to the FTB:

• It was organized in California (articles of organization accepted by the Secretary of State).
• It registered with the California Secretary of State as a foreign LLC, even if it does no business here.
• It is doing business in California, whether or not it registered.

The third test catches many Delaware and Wyoming LLCs. 'Doing business' includes being commercially domiciled in California (run from here) or exceeding any of the FTB's indexed thresholds for California sales, property or payroll. For 2025, the FTB thresholds were California sales over $757,070, or property or payroll over $75,707, or 25% of the entity's total sales, property or payroll. The 2026 amounts are indexed for inflation; check the FTB's doing business page before relying on them.

The classic example: two founders in San Francisco form a Delaware LLC to save on fees. The LLC is managed from California, so it is commercially domiciled here, so it files Form 568 and pays the $800 regardless of where it was formed. It also pays Delaware's $400 annual LLC tax. Forming out of state did not save anything.

Single-member LLCs are not exempt. A disregarded SMLLC files Form 568 and pays the tax and fee. The one narrow exception in the instructions is a single-member, nonregistered foreign LLC that is not doing business in California, which need not file.

Every LLC that is doing business, organized or registered in California owes the $800 annual tax for each taxable year until it formally cancels. It is a prepayment for the privilege of doing business, due by the 15th day of the 4th month of the taxable year, paid with form FTB 3522. For a calendar-year LLC, that is April 15 of the same year the tax covers, not the following year.

For a new LLC, the first payment is due by the 15th day of the 4th month after you file with the Secretary of State. The FTB's own example: an LLC registered on June 18 owes its first $800 by September 15.

From 2021 to 2023, California waived the $800 for an LLC's first tax year. That exemption applied only to tax years beginning on or after January 1, 2021 and before January 1, 2024. It has not been extended, so an LLC formed in 2026 pays $800 in its first year. As of our October 2026 check, the FTB page still describes the exemption only for that 2021 to 2023 window.

Two details save people money. If you cancel within 12 months of organizing using the short-form cancellation (SOS Form LLC-4/8), the LLC is not subject to the $800 for its first year. And a tax year of 15 days or less with no California business generally avoids the tax, which matters if you form in the last two weeks of December.

On top of the $800 tax, an LLC with total income from California of $250,000 or more owes an annual LLC fee under Revenue and Taxation Code §17942. Total income here means gross income plus cost of goods sold, not net profit, and only the portion derived from or attributable to California counts. The tiers have not changed in years:

The tiers are cliffs, not marginal brackets. An LLC with $499,000 of California income pays $900; at $500,000 it pays $2,500. If you are near a boundary, how you source receipts to California matters, and so does timing at year-end.

A worked example: a two-member SaaS LLC based in Los Angeles books $1.2 million of revenue, $700,000 of it from California customers. Its California total income is $700,000, so the fee is $2,500, plus the $800 annual tax, for $3,300 before any member-level income tax.

California splits LLC payments across three forms with three different deadlines. For a calendar-year LLC:

• FTB 3522 (annual $800 tax): April 15 of the current year. For a new LLC, the 15th day of the 4th month after formation or registration.
• FTB 3536 (estimated LLC fee): June 15 of the current year (the 15th day of the 6th month). You estimate the fee for the year you are in.
• Form 568 (the return): March 15 of the following year for an LLC taxed as a partnership, and for an SMLLC owned by a pass-through entity. April 15 of the following year for most other SMLLCs, such as one owned by an individual or a corporation.

If the June 15 estimate is short, the penalty is 10% of the difference between the fee owed and the timely estimated payment. There is a safe harbor: no penalty if the estimate equals or exceeds the prior year's total fee. A growing company can simply pay last year's fee by June 15 and settle the rest with the return.

Any remaining fee is paid with FTB 3536 by the return's original due date. When a due date falls on a weekend or holiday, it moves to the next business day.

California does not require a written extension request. An LLC in good standing that is classified as a partnership gets an automatic seven-month extension to file Form 568; the FTB changed this from six months recently, so a calendar-year partnership LLC now has until October 15. A disregarded SMLLC gets an automatic six-month extension, except one owned by a partnership or partnership-classified LLC, which gets seven.

The extension covers the return, not payment. Any unpaid LLC fee, and any tax owed for nonconsenting nonresident members, is still due by the original due date. Pay it with FTB 3536 (for the fee) to avoid penalties and interest.

California also requires business entities that prepare their return with tax software to e-file it, and LLCs can pay the annual tax, estimated fee or extension payment through tax software by electronic funds withdrawal. If you use a CPA, they will handle this, but confirm the June 15 fee estimate is on someone's calendar. It is the payment founders most often miss.

Form 568 is the FTB side. The Secretary of State has its own requirement: LLCs file a Statement of Information, and the FTB collects a $250 penalty on behalf of the SOS when it is not filed. It lists managers, members or officers, the business address and the agent for service of process.

A few other items worth tracking for a startup LLC operating in California:

• Nonresident members may require Form 592 withholding or Form 568 Schedule T tax for nonconsenting nonresident members.
• The elective pass-through entity tax lets certain LLCs taxed as partnerships pay California tax at the entity level so members get a credit.
• If your LLC has employees in California, registration with the EDD for payroll taxes is a separate process.

When you shut down, file a final Form 568 with the final return box checked and file a cancellation with the Secretary of State. Otherwise the $800 tax keeps accruing every year, with penalties, even after the business stops operating.

For a venture-backed startup, an LLC is usually a temporary structure. Investors want a Delaware C corp, and the California math reinforces that. A C corp pays the $800 minimum franchise tax and 8.84% of California taxable income, but it does not pay an LLC fee on gross receipts. A profitable LLC also passes income through to members, who pay California personal income tax at their own rates.

A C corp qualified in California also gets a first-year break that LLCs no longer have: the FTB says newly incorporated or qualified corporations are not required to pay the minimum franchise tax in their first taxable year. If you are converting, time it with your fundraising and talk through the QSBS and holding-period consequences first.

The LLC remains a good fit for a services business, a real-estate holding entity, or a side project that will never raise money. In those cases, budget the $800 tax and the fee into your pricing and put April 15 and June 15 on the calendar. This is general information, not tax advice for your specific facts.