California Form 568 is the Limited Liability Company Return of Income that every California LLC not taxed as a corporation files each year with the Franchise Tax Board. The return does two jobs at once: it reports the LLC’s financial activity, and it calculates the $800 annual tax plus any income-based LLC fee you owe. Both obligations keep accruing every year until you formally cancel the LLC, so filing is not optional and letting an unused LLC sit idle is expensive.
Who Has to File
Three kinds of LLCs are on the hook. Any LLC organized in California by filing articles of organization with the Secretary of State. Any foreign LLC registered with the Secretary of State to do business here. And any LLC “doing business” in California, even without registering.1Franchise Tax Board. Limited Liability Company
That third category catches out-of-state owners by surprise. California treats you as doing business here if you actively engage in any transaction for profit in the state, and also automatically if your California-connected activity crosses any one of these 2025 thresholds:
- California sales exceed $757,070, or 25% of your total sales, whichever is less.
- California real and tangible personal property exceeds $75,707, or 25% of your total property.
- California compensation paid exceeds $75,707, or 25% of your total payroll.
The FTB adjusts these figures annually. If you own an interest in another partnership, LLC, or S corporation operating in California, your share of that entity’s property, payroll, and sales counts toward your own thresholds.2Franchise Tax Board. Doing Business in California
Single-member LLCs treated as disregarded entities for federal purposes still file Form 568. The income flows through to your personal return, but the LLC itself owes the $800 tax and any income-based fee, and Form 568 is where those amounts get reported.3Franchise Tax Board. Single Member LLC
One boundary worth flagging: if your LLC has elected to be taxed as a C corporation or S corporation, you do not file Form 568. You file a corporate return instead: Form 100 for C corporations, Form 100S for S corporations, or Form 100W for water’s-edge filers.4Franchise Tax Board. LLC Treated as a Corporation
The $800 Annual Tax
Every LLC subject to Form 568 owes an $800 annual tax for the privilege of doing business in California. It applies whether or not the LLC earned a dollar or did any work during the year. It’s due by the 15th day of the 4th month of your taxable year, which is April 15 for calendar-year LLCs.
You pay it separately from the return itself using Form FTB 3522 (LLC Tax Voucher). If you pay electronically through Web Pay or by credit card, skip the voucher.5Franchise Tax Board. 2025 Instructions for Form FTB 3522 LLC Tax Voucher
For taxable years beginning before January 1, 2030, an LLC that is a small business solely owned by a deployed member of the U.S. Armed Forces may be exempt from the annual tax.6Franchise Tax Board. 2025 Instructions for Form 568, Limited Liability Company Return of Income
The Income-Based LLC Fee
On top of the $800, California charges a separate fee based on your LLC’s total income from California sources. It only applies once that income reaches $250,000. The tiers:
- $900 for California income of $250,000 to $499,999.
- $2,500 for $500,000 to $999,999.
- $6,000 for $1,000,000 to $4,999,999.
- $11,790 for $5,000,000 or more.
You calculate the fee on Schedule IW, the LLC Income Worksheet built into Side 7 of Form 568, and the result flows to the fee line on the front of the return.7Franchise Tax Board. California Form 568 – Limited Liability Company Return of Income
Unlike the annual tax, the fee has to be estimated during the year. You pay the estimated amount by the 15th day of the 6th month of your taxable year (June 15 for calendar-year filers) using Form FTB 3536, and any remaining balance is due when you file Form 568. If your taxable year ends before that 6th-month date, no estimated payment is required and the full fee is due with the return.8Franchise Tax Board. 2025 Instructions for Form FTB 3536 – Estimated Fee for LLCs
When Form 568 Is Due
The filing deadline depends on how your LLC is classified:
- Multi-member LLCs taxed as partnerships: the 15th day of the 3rd month after your taxable year ends. That’s March 15 for calendar-year filers.
- Single-member LLCs treated as disregarded entities: the 15th day of the 4th month after your taxable year ends. That’s April 15 for calendar-year filers.
Extensions are automatic. You don’t file an application. Multi-member LLCs classified as partnerships get seven months, and single-member LLCs get six months. A single-member LLC owned by a partnership or another LLC taxed as a partnership also gets the seven-month extension.6Franchise Tax Board. 2025 Instructions for Form 568, Limited Liability Company Return of Income
The extension buys time to file, not time to pay. The $800 annual tax, the LLC fee, and any tax on nonconsenting nonresident members are all still due by the original deadlines. Miss those, and penalties and interest start even if you file the return itself within the extension.
How to File
To complete Form 568 you’ll need the LLC’s Federal Employer Identification Number (or the owner’s SSN or ITIN for a single-member LLC) and the business activity code that classifies what the LLC does. Multi-member LLCs classified as partnerships must attach a copy of their federal Form 1065.
California law requires any business entity that prepares its return using tax preparation software to e-file.10Franchise Tax Board. e-file for Business In practice that covers most LLCs working with a preparer or commercial software. Paper filing is still available if you prepare the return by hand.
Penalties for Filing or Paying Late
California’s late penalties stack, and this is where procrastination gets expensive fast.
Late Filing
If a multi-member LLC misses its filing deadline (including extensions), the FTB charges $18 per member for each month or partial month the return is late, up to 12 months. An LLC with 10 members that files six months late owes $1,080 in this penalty alone.11Franchise Tax Board. FTB 1024 Penalty Reference Chart
Late Payment
If you don’t pay the full amount due by the original deadline, the penalty is 5% of the unpaid tax and fees, plus an additional 0.5% for each month or partial month the balance stays unpaid. The 0.5% piece caps at 40 months, meaning 25% on top of the initial 5%.12Franchise Tax Board. FTB 7268 LLC Limited Liability Company Collections
Underestimating the LLC Fee
If you owe the income-based fee and underestimate what you owe on the June 15 payment, the FTB charges 10% of the underpayment. There is a safe harbor: you avoid this penalty if your estimated payment for the current year equals or exceeds the total fee your LLC owed for the prior year.13Franchise Tax Board. FTB Pub. 3556 – Limited Liability Company Filing Information
Interest
Interest accrues on any unpaid tax, fee, or penalty from the date it was due. The rate is set by the FTB and adjusted periodically.14Franchise Tax Board. Interest and Estimate Penalty Rates
The FTB will waive the late filing penalty if you can show reasonable cause: circumstances beyond your control that prevented timely compliance despite ordinary diligence. Natural disasters, serious illness, and inability to obtain necessary records are examples the FTB recognizes. Forgetting or lacking funds generally does not qualify.
First-Year Rules for New LLCs
California previously waived the $800 annual tax for an LLC’s first taxable year, but that exemption applied only to tax years beginning on or after January 1, 2021, and before January 1, 2024. For LLCs formed in 2024 or later, the full $800 applies in year one.1Franchise Tax Board. Limited Liability Company
Newly formed domestic LLCs have until the 15th day of the 4th month after filing their articles of organization to pay that first-year tax.13Franchise Tax Board. FTB Pub. 3556 – Limited Liability Company Filing Information
If you realize soon after forming the LLC that you don’t need it, there’s an escape: file a short-form cancellation (SOS Form LLC-4/8) with the Secretary of State within one year of organizing. Cancel within that window and the LLC is not subject to the $800 annual tax for its first year.1Franchise Tax Board. Limited Liability Company
A single-member LLC may also be exempt from both the annual tax and the fee if it did not conduct any business in California during the tax year and its tax year was 15 days or fewer.3Franchise Tax Board. Single Member LLC
Fixing a Return You Already Filed
If you find an error on a Form 568 you already filed, correct it by filing another Form 568 with the “amended return” box checked on the first page. Attach amended Schedule K-1s for any member whose information changed. There is no separate amendment form.15Franchise Tax Board. Correct an Income Tax Return
Stopping the $800 Clock
The $800 annual tax keeps accruing every year until you formally cancel the LLC. Walking away does not end the obligation. Cancellation is a two-agency process.
With the FTB: file all delinquent returns, pay any outstanding tax, fees, penalties, and interest, then file a final Form 568. Check the “Final Return” box on the first page and write “final” at the top. With the Secretary of State: file a Certificate of Cancellation (Form LLC-4/7) within 12 months of that final return. There is no filing fee for the cancellation certificate.16California Secretary of State. Certificate of Cancellation – Form LLC-4/7
If your LLC has been suspended or forfeited by the FTB for unpaid taxes, you have to go through the revivor process first before the Secretary of State will accept the cancellation. Letting years of $800 taxes pile up before dealing with an unused LLC is one of the most common and avoidable mistakes California owners make.17Franchise Tax Board. Closing a California Business Entity