The California LLC $800 tax for Inland Empire owners

Short answer: The Franchise Tax Board says every LLC organized, registered or doing business in California owes an $800 annual tax, due by the 15th day of the 4th month of its tax year on Form FTB 3522. An LLC with total California income of $250,000 or more also owes a separate LLC fee, from $900 to $11,790. The tax is due each year, even with no business, until you cancel the LLC.

Who pays it in the Inland Empire

Many Inland Empire owners formed an LLC for liability protection. A Fontana owner-operator who runs one truck under his own authority. A Riverside landlord who puts each rental house in its own company. A Temecula electrician with two trucks and a helper.

All of them owe California's $800 annual tax for each LLC. The Franchise Tax Board (FTB) says the tax is due even when the LLC does no business, and it keeps coming due until the LLC is cancelled.

One LLC per rental means one $800 per LLC

The tax is per company, not per owner. A landlord with three Moreno Valley rentals in three LLCs owes three annual taxes, $2,400 a year, before any repairs or mortgage interest.

Each of those LLCs also files its own Form 568. Whether separate companies are worth it is a legal and tax question for your attorney and your CPA. The bookkeeping cost is clear: separate bank accounts, separate books and separate returns for each one.

Single-member LLCs still file and pay

Many owner-operator and solo contractor LLCs have one member. For federal tax purposes, a one-member LLC is usually a disregarded entity, and its income goes on the owner's own return.

California does not let it go that easily. The FTB requires a single-member LLC to file Form 568 even though it is a disregarded entity, and it is subject to the annual tax and the LLC fee.

When each payment is due

For an LLC on a calendar year, the 4th month means April 15 and the 6th month means June 15. If a due date falls on a weekend or holiday, it moves to the next business day.

The FTB grants an automatic extension to file Form 568, but the extension does not give you more time to pay the LLC fee.

The first-year break is gone, and a smaller one is coming

For tax years starting in 2021, 2022 and 2023, new LLCs did not owe the $800 for their first year. The FTB lists that exemption only for those years. If your LLC was formed in 2024, 2025 or 2026, its first year carried the full $800, with no discount.

A 2026 budget bill, SB 122, cuts the first-year tax from $800 to $400. The FTB says it applies to tax years beginning on or after January 1, 2027, and before January 1, 2030. After the first year, the tax goes back to $800.

The LLC fee is based on total income, not profit

The LLC fee is separate from the $800. It applies when total California income reaches $250,000. The FTB defines total income as gross income plus cost of goods sold, so expenses like fuel, materials and subs do not lower it the way they lower profit.

That matters for Inland Empire trucking and construction. A Corona contractor who bills $600,000 of California jobs can have a thin margin and still sit in the $2,500 tier, if that is its total California income.

You estimate the fee by the 15th day of the 6th month, before the year is over. If the fee is not paid by the return's original due date, the FTB adds penalties and interest.

What your books need to show

• Gross receipts by month for each LLC, so you can estimate the fee tier by mid-year
• One bank account per LLC, with no rental or trucking income crossing between companies
• The $800 tax and the LLC fee booked to their own expense accounts, with the FTB confirmation attached
• Income from inside and outside California kept apart, for an owner-operator who runs loads across state lines
• A year-end trial balance for each LLC that your CPA can carry into Form 568

Cancelling an LLC you no longer use

An LLC that sits idle still owes $800 every year. Common cases here: a truck sold, a rental refinanced into personal names, or a side business that never started.

To stop the tax, the FTB says you file paperwork with the Secretary of State and file a final tax return with the FTB, check the final return box, and stop doing business in California. The FTB also describes a short form cancellation for an LLC cancelled within one year of organizing, which can avoid the first-year tax. Ask your CPA which route fits before you file.

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