If your California LLC had no income this year, you still have to file Form 568, and you still owe the $800 annual tax. Filing Form 568 with no income is the normal outcome for an inactive LLC, not an exception to the rule. The obligation is tied to your registration with the Secretary of State, not to whether the business made a dollar. It stops only when you formally cancel the LLC.
Why Zero Income Doesn’t Excuse the Filing
The Franchise Tax Board requires Form 568 from any LLC that is organized in California or registered to do business here. That includes single-member LLCs treated as disregarded entities for federal purposes. California does not follow the federal disregarded-entity treatment for this form, so even a one-owner LLC with no separate federal return still files Form 568 with the FTB.1Franchise Tax Board. Single Member Limited Liability Company
The requirement runs continuously from the date the Secretary of State accepts your Articles of Organization until the date a Certificate of Cancellation is filed. Reporting zero on every income line is perfectly normal for an inactive LLC. The return still has to go in.2California Legislative Information. California Revenue and Taxation Code 17941
Foreign LLCs registered with the Secretary of State face the same obligation. California also treats a foreign LLC as “doing business” here if it engages in any transaction for financial gain in the state, or if its California sales, property, or payroll cross certain annually adjusted thresholds. For 2025, those thresholds are $757,070 in California sales, $75,707 in California property, or $75,707 in California payroll.3Franchise Tax Board. Doing Business in California
The $800 Annual Tax Still Applies
Zero income does not excuse the $800 annual tax. Every LLC doing business in California or registered with the Secretary of State owes this amount each year, and the obligation continues until the LLC is formally canceled.4Franchise Tax Board. Limited Liability Company This catches many owners off guard. They shut down operations, assume the entity is dead, and then get hit with $800 bills for years.
The $800 is due by the 15th day of the 4th month after the beginning of the current taxable year. For a calendar-year LLC, that means April 15. You pay it using Limited Liability Company Tax Voucher (FTB 3522), not with the Form 568 return itself. Electronic payment is also available through the FTB’s Web Pay portal.4Franchise Tax Board. Limited Liability Company
One narrow exception exists for single-member LLCs. If the SMLLC conducted no business in California during the tax year and the tax year was 15 days or fewer, it is not subject to the annual tax. In practice this covers LLCs formed in the last two weeks of December.1Franchise Tax Board. Single Member Limited Liability Company
What You Owe for the Annual LLC Fee at Zero Income
The annual LLC fee is a separate charge from the $800 tax and is based on total California source income. It follows a tiered schedule:5Franchise Tax Board. Instructions for Form 568 Limited Liability Company Tax Booklet
- Under $250,000: $0
- $250,000 to $499,999: $900
- $500,000 to $999,999: $2,500
- $1,000,000 to $4,999,999: $6,000
- $5,000,000 or more: $11,790
An LLC with zero income owes nothing for this fee. The only amount actually due on a zero-income return is the $800 annual tax.4Franchise Tax Board. Limited Liability Company
How to File a Zero-Income Form 568
California law requires business entities that prepare a return using tax preparation software to e-file. If you use any tax software to prepare Form 568, you must submit it electronically. Waivers are available where technology constraints or undue financial burden prevent electronic filing.6Franchise Tax Board. e-file for Business
The mechanics are simple. Enter zero on the total income line. The line for the annual LLC fee will also show zero because your income falls below the $250,000 threshold. Your $800 annual tax should already have been paid separately using FTB 3522 by April 15. If any balance remains unpaid, it will show up on the return.
When Form 568 Is Due
The due date depends on how the LLC is structured:
- Multi-member LLCs taxed as partnerships: 15th day of the 3rd month after the close of the tax year (March 15 for calendar-year filers).
- Single-member LLCs owned by an individual: 15th day of the 4th month (April 15 for calendar-year filers).
- Single-member LLCs owned by an S corporation or partnership: 15th day of the 3rd month (March 15 for calendar-year filers).
These are the dates for the return itself. The $800 annual tax is a separate prepayment due by April 15 of the current year on FTB 3522, not with the return.7Franchise Tax Board. Due Dates: Businesses
What Happens If You Skip the Return
The FTB runs two separate penalty tracks, and an inactive LLC can trigger both at once.
Late Filing Penalty
If Form 568 is not filed by the due date (including extensions), California charges $18 per member for each month the return is late, up to 12 months. A two-member LLC hits $432 after a full year. A single-member LLC hits $216.8Franchise Tax Board. FTB 1024 Penalty Reference Chart
Late Payment Penalty
Missing the deadline on the $800 annual tax triggers a separate penalty: 5% of the unpaid amount, plus 0.5% for each month it stays unpaid, up to a combined 25%.9Franchise Tax Board. Common Penalties and Fees On $800, that starts as a $40 hit with another $4 piling on each month.
Interest
Interest accrues on any unpaid tax and penalties until the balance is paid. For the period from July 2025 through June 2026, the underpayment rate is 7%.10Franchise Tax Board. Interest and Estimate Penalty Rates
Demand to File
If the FTB sends a written demand and you still don’t file within 60 days, the state can add a $2,000 penalty per tax year. That single escalation turns a small delinquency into a serious bill.11Franchise Tax Board. My Business Is Suspended
Suspension
Sustained non-compliance leads the FTB or the Secretary of State to suspend or forfeit the LLC. A suspended LLC cannot conduct business, sell or transfer real property, sue or defend itself in court, keep the exclusive right to its name, or even legally dissolve without being revived first.11Franchise Tax Board. My Business Is Suspended Contracts entered while suspended can be voided by the other party. And the $800 keeps accruing every year the LLC exists, suspended or not.
How to Stop the Obligation for Good
If the LLC has no income and no future, the single most important step is to formally cancel it. Until a Certificate of Cancellation is filed with the Secretary of State, the $800 annual tax and the Form 568 filing requirement keep coming every year.2California Legislative Information. California Revenue and Taxation Code 17941
Cancellation runs on two tracks:
- Short Form Cancellation (Form LLC-4/8): available only if the LLC was formed in California within the last 12 months, never conducted business, has no debts, and has distributed all assets. No filing fee.12California Secretary of State. Short Form Cancellation Certificate
- Standard Cancellation (Form LLC-4/7): for every other LLC. If members did not unanimously vote to dissolve, you also file a Certificate of Dissolution (Form LLC-3) before or with the cancellation. No filing fee.13California Secretary of State. LLC Certificate of Dissolution, Certificate of Cancellation
Before you can cancel, you must file all final tax returns with the FTB, including a final Form 568 for the last taxable year. If the LLC is already suspended, you have to revive it first, which means paying every outstanding balance before the state will accept the cancellation. Every year of delay costs another $800 at minimum, plus penalties and interest if returns are not being filed.
Form 568 Does Not Cover Your Federal Return
Form 568 handles only the California side. Depending on how your LLC is classified for federal purposes, the IRS may require a separate return even with no income.
Single-member LLCs treated as disregarded entities report income and expenses on Schedule C of the owner’s Form 1040. With no activity, you report zero. Multi-member LLCs taxed as partnerships must file Form 1065 regardless of income level, and the penalty for failing to file is $255 per partner per month the return is late, up to 12 months.14Internal Revenue Service. About Form 8832, Entity Classification Election LLCs that elected corporate taxation by filing Form 8832 file Form 1120 or 1120-S instead.
Missing the federal return can be more expensive than missing the California one. A three-member LLC that ignores Form 1065 for a full year owes $9,180 in federal penalties by itself.