California LLC annual tax and filings for makers
What does a California LLC owe every year, and when?
California LLCs owe an $800 annual tax every year they exist
Every LLC organized in California, or doing business there, owes an annual tax equal to the state's $800 minimum franchise tax, whether or not the shop sold anything that year.
The statute ties the tax to the filing. An LLC that has filed articles of organization with the Secretary of State owes it even when it is not actively doing business. This is the single most important fact for a small maker weighing an LLC in California, and it is the one competitors' setup guides most often leave until the end.
The tax is paid to the Franchise Tax Board, not the Secretary of State, which is part of why sellers miss it. The formation filing and the annual tax come from two different agencies, and the second one does not send a welcome letter.
California imposes an annual tax on every LLC doing business in the state, and on every LLC that has filed articles of organization with the Secretary of State. — California Revenue and Taxation Code section 17941, retrieved 2026-09-27
$800The minimum franchise tax referenced by the LLC annual tax is $800. — California Revenue and Taxation Code section 23153, retrieved 2026-09-27
What the $800 means for a small handmade shop's margins
For a shop with a few thousand dollars of profit, $800 a year is a large share of what it earns. That fixed cost is the main reason many California makers are better off waiting to form.
Consider two potters, each netting $4,000 a year. One runs as a sole proprietor and pays no state entity tax. The other formed an LLC and hands $800 of that $4,000 to the state before income tax. That is a fifth of the profit, for a liability wall that a product liability policy partly covers anyway.
The picture changes as the shop grows. At $40,000 of profit, $800 is 2 percent, and the protections of an LLC may be well worth it. Whether you need an LLC yet lays out the triggers that tip the balance.
| Annual shop profit | $800 as a share of profit |
|---|---|
| $2,000 | 40% |
| $4,000 | 20% |
| $10,000 | 8% |
| $40,000 | 2% |
California's LLC annual tax applies whether or not the LLC is actively doing business, once it has filed articles of organization. — California Revenue and Taxation Code section 17941, retrieved 2026-09-27
The separate LLC fee once California income reaches $250,000
On top of the annual tax, a California LLC pays a fee once its total income from California reaches $250,000. The fee starts at $900 and rises in tiers.
Most handmade shops never reach the first tier, so this is a later concern. It is worth knowing it exists, because it is calculated on total income, not profit. A shop with high sales and thin margins can owe it without feeling rich.
| Total California income | LLC fee |
|---|---|
| Under $250,000 | None |
| $250,000 to under $500,000 | $900 |
| $500,000 to under $1,000,000 | $2,500 |
| $1,000,000 to under $5,000,000 | $6,000 |
| $5,000,000 or more | $11,790 |
$900 to $11,790California charges an LLC fee of $900 for total California income of $250,000 to under $500,000, rising to $11,790 at $5,000,000 or more. — California Revenue and Taxation Code section 17942, retrieved 2026-09-27
The statement of information, due at 90 days and every two years
A California LLC files a statement of information with the Secretary of State within 90 days of forming, then every two years, for a $20 fee each time.
The statement records who runs the LLC, its addresses and its agent for service of process. It is due in the month of original registration, in either even or odd years depending on when you formed.
The filing is small, but missing it is not free. The Secretary of State notes that penalties for late statements are assessed through the Franchise Tax Board. Put the month on your calendar the day you form, next to the annual tax.
90 daysCalifornia requires an LLC to file a statement of information within 90 days after filing its original articles of organization, and biennially after that. — California Corporations Code section 17702.09, retrieved 2026-09-27
$20The Secretary of State charges $20 for a domestic LLC statement of information, initial or biennial. — California Secretary of State fee schedule, retrieved 2026-09-27
The Secretary of State says LLCs file every two years in the month of registration, in even or odd years based on the year of registration. — California Secretary of State, retrieved 2026-09-27
Closing the LLC is what stops the annual tax
The annual tax keeps coming due each year until the LLC is formally ended with the state. Simply stopping sales, or letting the shop go quiet, does not stop it.
This catches makers who formed an LLC, found the shop was not for them, and walked away. The LLC still exists on paper, and the tax keeps accruing. If you decide to close, file the dissolution and cancellation paperwork rather than leaving the entity dormant. The Secretary of State's fee schedule lists no fee for the certificate of dissolution itself.
If you are still deciding whether to form at all, this is one more reason to be sure first. The cost breakdown shows the five-year cost side by side with staying a sole proprietor.
No feeThe California Secretary of State lists no fee for filing an LLC Certificate of Dissolution (Form LLC-3). — California Secretary of State fee schedule, retrieved 2026-09-27
If you form one, calendar both agencies on day one
Put the annual tax and the statement of information on your calendar the day the LLC is formed. They come from two agencies that do not coordinate reminders.
Your federal filing barely changes: a single-member LLC's profit still goes on your Schedule C. So the new work is almost entirely at the state level, and it is small once calendared. The setup guide covers the other accounts to move to the LLC, and the formation-services comparison shows which services include annual report reminders.
A single-member LLC owned by an individual generally reports on the owner's Schedule C unless it elects corporate treatment. — Internal Revenue Service, retrieved 2026-09-27
Questions
Who collects California's LLC annual tax?
The Franchise Tax Board, which is separate from the Secretary of State where the LLC was formed. The annual tax and any income-based LLC fee go to the Franchise Tax Board, while the statement of information goes to the Secretary of State.
Does a single-member LLC with no profit still file with California?
Yes. The annual tax is owed because the LLC exists, and the statement of information is due on its own schedule. A year of no sales or a loss changes neither obligation.
Is the LLC fee the same thing as the $800 annual tax?
No. The $800 is the annual tax every LLC pays. The LLC fee is a separate charge that applies only once total California income reaches $250,000, starting at $900 and rising in tiers.