Thinking of starting a business in California or already running one? Then you need to understand how the California franchise tax works in 2025. This mandatory tax applies to most business entities—including LLCs, corporations, and S corps—and must be paid even if your company doesn’t earn a profit. From the $800 minimum tax to additional LLC fees and filing requirements, franchise tax compliance is a key part of doing business in the state. This guide breaks down what you need to know to stay compliant, avoid penalties, and keep your business in good standing.

What Is the Franchise Tax in California?

In California, there’s no escaping the franchise tax. It’s not based on profits—it's a privilege tax, meaning you pay simply for doing business in the state. This applies whether or not your company is active, profitable, or even operational for the full year.

Here’s what that means in practice:

• LLCs owe an $800 minimum annual tax—no exceptions.

• S Corporations pay the greater of $800 or 1.5% of their net income.

• C Corporations are taxed at $800 minimum or 8.84% of net income, whichever is higher.

Even if your business made zero income in 2025, you’re still required to file and pay the franchise tax if you’re registered with the state.

How to Calculate Franchise Tax in California

For most business entities, the calculation is simple: you’ll pay at least $800 per year. But depending on your business type and revenue, you might owe more.

Here’s how it breaks down:

• LLCs pay a flat $800 tax + an LLC fee if total income exceeds $250,000 (Form 3536).

• S Corporations pay $800 or 1.5% of net income, whichever is higher.

• C Corporations pay $800 or 8.84% of net income.

📌 Keep in mind: “Total income” for LLCs means gross receipts from all sources, not just California-based activity.

Key Filing Deadlines and Where to File

Staying on top of deadlines is non-negotiable in California. Late filings bring immediate penalties—and could even suspend your business.

Deadlines:

• LLCs: Form 3522 is due by the 15th day of the 4th month of your tax year (typically April 15 for calendar-year filers).

• Corporations: Franchise tax is due on the 15th day of the 4th month after your fiscal year ends.

Where to file:

• Use FTB Web Pay for online payments.

• Paper forms can also be mailed, but electronic filing is recommended.

What Happens If You Miss a Deadline?

California doesn’t give you much wiggle room. If you miss your filing or payment deadline, here’s what you’re looking at:

• 💸 5% penalty on the unpaid tax, plus 0.5% interest per month

• 📉 Suspension or forfeiture of your business status

• 🚫 Ineligibility for contracts, state licenses, or bank financing

• 🧾 Continued tax obligations even if your business is inactive

Moral of the story? File early. Even if you owe nothing beyond the minimum, the paperwork is still required.

Payment Options for the California Franchise Tax

There are several ways to pay your franchise tax—choose what works best for your business:

• Online via FTB Web Pay – Fastest and safest method

• By mail – Accepted, but slower and riskier for last-minute payments

• Electronic Funds Transfer (EFT) – Required for businesses with estimated tax payments over $20,000

📌 Just because your tax is zero doesn’t mean you skip the filing. A missed $0 report can still trigger penalties.

Common Mistakes That Can Cost You

Even experienced founders can slip up. Here are the top errors that trip up California business owners:

• Assuming $0 income means no tax due – You still owe $800.

• Missing Form 3536 – LLCs that cross the $250K income line often forget this.

• Not filing at all – Leads to automatic penalties and legal headaches.

• Forgetting local taxes – Many California cities have their own business license taxes.

California Tax Compliance Checklist (2025)

✔ Form 3522 – $800 minimum franchise tax

✔ Form 568 – Required for all LLCs annually

✔ Form 3536 – For LLCs with total income over $250,000

✔ Form 100 – Corporate income tax return

✔ Form 100S – S Corporation return

✔ Seller’s Permit – Required for taxable sales (via CDTFA)

✔ City license – Check via CalGold based on your business location

How Jupid Helps Simplify It All

Let’s be real—California tax compliance is not intuitive. Forms, deadlines, penalties, and changing rules can overwhelm even seasoned entrepreneurs.

Jupid is designed to remove that complexity. Our AI-powered assistant helps business owners:

• File state franchise tax forms (3522, 568, 3536)

• Track due dates automatically

• Organize LLC formation, S corp setup, and bookkeeping

• Get reminders before deadlines hit

• Stay in good standing with the state

No jargon. No paperwork chaos. Just clean, simple tax support for California founders.

📌 Get started Jupid

Final Thoughts

Whether you're forming a brand-new LLC or managing a growing corporation, California’s franchise tax isn’t optional—and it’s not simple. But once you know what’s required, staying compliant becomes a lot more manageable.

Use this guide as your go-to reference for 2025. File on time, pay what’s due, and keep your focus on growing the business—not dealing with tax problems.

References & Useful Resources

California Franchise Tax Board – LLC Tax & Fees: https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html
California Franchise Tax Board – Forms & Publications: https://www.ftb.ca.gov/forms/
California Web Pay – Franchise Tax: https://www.ftb.ca.gov/pay/
California Department of Tax and Fee Administration (CDTFA): https://www.cdtfa.ca.gov/taxes-and-fees/sales-use-tax.htm
CalGold – California Business Permit Search: https://calgold.ca.gov
California Secretary of State – Business Filings: https://www.sos.ca.gov/business-programs/business-entities