California’s $800 Franchise Tax: Is a CA LLC Worth It? (2026)

Every California LLC pays a minimum $800 franchise tax per year — due even if the LLC earns nothing, even in its first year. On top of that, LLCs with California-source gross receipts over $250,000 pay an additional tiered LLC fee. Before you form in California, run the honest math below.

The real annual cost of a CA LLC

• $800 minimum franchise tax — every year, no exceptions, no first-year waiver anymore.
• Tiered LLC fee on gross receipts: starts at $900 once receipts pass $250,000 and climbs to $11,790 at $5M+.
• $20 Statement of Information every two years.
• $70 Articles of Organization to form.

A small LLC earning under $250,000 pays $800/year, every year — before a dollar of income tax. Compare that to Wyoming (~$60/year) or New Mexico ($0/year) and the gap is obvious.

When a California LLC still makes sense

• You actually operate in California. If your business, employees, or physical presence are in CA, you owe the $800 whether you formed there or not — a Wyoming LLC “doing business” in California must register as a foreign LLC and pay the same tax. Forming out of state to dodge it doesn’t work if you operate there.
• You need California credibility — local clients, licenses, or leases that expect a CA entity.
• You’re raising California venture capital — some investors prefer familiar entities (though many startups use Delaware C-corps instead).

When forming out of state wins

If you run an online business with no California physical presence — e-commerce, SaaS, freelancing, agencies — forming in a low-cost state and simply not operating in California saves you $800+ every year. Your customers’ location doesn’t create the tax; your business presence does.

The trap to avoid

Forming a Wyoming LLC while living and working in California, then skipping CA registration, is the classic expensive mistake. California’s Franchise Tax Board is aggressive about nexus — and the penalties plus back taxes dwarf what the $800 would have cost. Either operate in CA and pay, or genuinely operate elsewhere.

Frequently asked questions

Is the $800 waived for new LLCs?

The first-year waiver applied to LLCs formed in 2021–2023. It has expired — new LLCs owe the $800 in year one.

Do I owe the $800 if my LLC had zero revenue?

Yes. The minimum tax applies regardless of income or activity.

What if I form in Wyoming but live in California?

If you’re doing business in California, you must register your Wyoming LLC there as a foreign entity — and pay the $800 anyway.

Can I dissolve my CA LLC to stop the $800?

Yes, but you must formally dissolve and file a final return — simply abandoning the LLC keeps the tax (and penalties) running.

Related:

• Where Is the Best State to Form an LLC? — https://epicsdeals.com/where-is-the-best-state-to-form-an-llc
• How Much Does It Cost to Form an LLC? (State-by-State Breakdown 2026) — https://epicsdeals.com/how-much-does-it-cost-to-form-an-llc

Epics Deals forms LLCs in all 50 states for $130 + state fee — and we’ll tell you honestly whether California is the right call for your situation.