When Is California $800 Minimum Tax Due?

The California $800 minimum franchise tax is an annual levy on businesses for the privilege of operating in the state. This tax ensures that entities registered or doing business in California contribute a baseline amount to the state’s revenue, regardless of their profitability or activity level. It serves as a foundational tax for many business structures, distinct from taxes based on net income. The tax is a mandatory payment that applies from the moment a business is incorporated or registered until its formal dissolution.

Entities Subject to the Tax

The California $800 minimum franchise tax applies to a broad range of business entities operating within the state, including C corporations, S corporations, limited liability companies (LLCs), limited partnerships (LPs), and limited liability partnerships (LLPs). These entities are subject to the tax if organized in California, registered to do business in the state, or “doing business” within California’s borders. “Doing business” can encompass various activities, including being commercially domiciled in California or exceeding a certain threshold of sales within the state.

The tax applies regardless of the entity’s financial performance. Businesses must pay the $800 minimum tax even if they are inactive, operate at a loss, or file a short-period return. This universal requirement underscores the tax’s nature as a fee for operating as a legal entity in California. Sole proprietorships, general partnerships, and tax-exempt non-profits are generally not subject to this tax.

Historically, corporations were often exempt from the minimum franchise tax in their first taxable year. LLCs, LPs, and LLPs formed between January 1, 2021, and December 31, 2023, were temporarily exempt from the $800 minimum tax in their initial year. As of 2024, this first-year exemption no longer applies to newly formed LLCs, LPs, and LLPs, meaning they are generally required to pay the $800 tax from their first taxable year.

Determining Your Due Date

The specific due date for the California $800 minimum franchise tax depends on whether the entity is newly formed or established. For newly formed or registered entities, the initial $800 payment is generally due on the 15th day of the fourth month after their incorporation or registration with the California Secretary of State. For instance, if an LLC is formed in June, its first annual tax payment is due by September 15th of that same year. This payment covers the initial period of operation.

Following the initial payment, established entities typically pay the annual $800 minimum franchise tax by the 15th day of the fourth month of their taxable year. For most businesses operating on a calendar year, the annual due date is April 15th. This applies to both corporations and LLCs, though LPs and LLPs may have slightly different annual deadlines, sometimes falling on the 15th day of the third month of their taxable year.

Entities operating for a short taxable year (less than 12 months) are still generally subject to the minimum franchise tax. The due date for their return and payment aligns with the standard schedule based on their short year-end. A specific exception exists for entities that incorporate or begin business within the last 15 days of their taxable year and do not conduct business during that period; they may not be required to file a return or pay the $800 tax for that initial period. This effectively shifts their first taxable year and corresponding tax obligation.

If any due date, whether for initial or subsequent payments, falls on a weekend or a legal holiday, the deadline extends to the next business day. While extensions to file a tax return may be available, these extensions do not prolong the deadline for paying the tax itself. Estimated tax payments, including the minimum franchise tax, must be made by their original due dates to avoid penalties.

How to Pay the Tax

The California Franchise Tax Board (FTB) provides several methods to pay the $800 minimum tax. Businesses can pay online through the FTB’s Web Pay service, which allows direct transfers from a bank account. This online method is generally free of charge. The FTB website also facilitates credit card payments, although these typically incur a convenience fee charged by the third-party processor.

Another payment method is by mail, using a check or money order. When paying by mail, include the appropriate payment voucher or form. For LLCs, this is often the LLC Tax Voucher (Form FTB 3522). Corporations typically use forms such as FTB 100-ES for estimated payments, or pay with their annual return, Form 100 or 100S.

Businesses can also use their MyFTB account, an online portal that provides access to tax account information and various online services, including payment scheduling. Submit separate payments for different tax years to ensure accurate processing by the FTB. Failure to pay the minimum franchise tax by the due date can result in penalties and interest.