Does your LLC owe the $800 Minimum Annual Franchise Tax?

If so, you risk having your company suspended. 

During the pandemic there was a first year exemption for the $800 annual franchise tax fee, if you formed between January 1, 2021 and January 1, 2024. This led to confusion about the existence of this fee and when it is due. Many did not realize this payment was due last April by the 15th. 

Here is the official government copy regarding the exemption:

For tax years beginning on or after January 1, 2021, and before January 1, 2024, LLCs that organize, register, or file with the Secretary of State to do business in California are not subject to the annual tax of $800 for their first tax year.

Regarding when the $800 franchise fee is due, the government provides this information:

You have until the 15th day of the 4th month from the date you file with the SOS to pay your first-year annual tax. Example: You form a new LLC and register with SOS on June 18, 2020. Your annual LLC tax will be due on September 15, 2020 (15th day of the 4th month).

From that time on the subsequent annual tax payments will continue to be due on the 15th day of the 4th month of your taxable year. This aligns with yearly tax filing deadlines. This fee is due until you file documents to dissolve the corporation. It you owe back payments, then you cannot dissolve the corporation until those are paid. 

Please note this annual tax will be due, even if you are not conducting business, until you cancel your LLC. If you do not pay this fee on time, your LLC can be suspended. When your business has been suspended or forfeited, it is not in good standing and loses its rights, powers, and privileges to do business in California.

To learn more about this or other legal requirements of an LLC contact the SBDC at to schedule an appointment with an advisor.

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