Tax

California Franchise Tax

By Finaloop Team
January 31, 2021

For eCommerce businesses operating out of California, the franchise tax obligations for your business will depend on whether your business entity is formed as a limited liability company (i.e., LLC), partnership, C corporation or S corporation. Below we outline the 411 on California franchise taxes for your business.

Note that the due dates we included are for calendar year taxpayers and may not apply to you if your business has a tax year that does not end on December 31. In addition, the information below refers only to franchise or net worth tax and does not include registration fees or other regulatory payments that may be due by your business.

For more information on Franchise taxes, check out the following Blog.

LLC and Limited Partnerships – Due Date: April 15

What Online Sellers Need to Know

  • Every LLC and limited partnership that is doing business in California must pay a minimum annual franchise tax of $800.
  • The $800 LLC franchise tax can be paid via mail, online from a bank account or by credit card (see instructions below).
  • The annual tax is due, even if you are not conducting business, until you cancel your LLC.
  • Your annual tax payments are generally due on the 15th day of the 4th month of your taxable year (i.e., April 15, 2021 for your 2021 tax year if you have a calendar year business).
  • If your LLC will make more than $250,000, you will also have to pay an additional fee. LLCs must estimate and pay the fee by the 15th day of the 6th month of the current tax year (i.e., a payment is due in June 2021 for the 2021 calendar year). Use Estimated Fee for LLCs (FTB 3536), to remit the estimated fee payment.
  • California LLCs, LPs, and LLPs formed between January 1, 2021 and December 31, 2024 do not have to pay the California Franchise Tax for their first taxable year.

How to pay the annual franchise tax?

Here are step-by-step for paying the annual franchise tax in California:

  1. To make a payment via Web Pay: LLCs can make an immediate payment or schedule payments up to a year in advance.
    a. Go to ftb.ca.gov/pay.
    b. Choose “Bank Account”
    c. Choose Web Pay Business or Web Pay Personal, depending on the entity type. For example, for a sole proprietorship, use Web Pay Personal.
    d. Follow the prompts to provide the requested information and pay the tax.
    e. If paying by Web Pay, do not file form FTB 3522.
  2. To pay by credit card:
    a. Go to ftb.ca.gov/pay.
    b. Choose “Credit card” and then choose “Pay npw with ACI payments.”
    c. You will be redirected to officialpayments.com which charges a 2.3% service fee.
    d. Use Discover, MasterCard, Visa or American Express Card to pay your business taxes.
    e. If paying by credit card, do not file form FTB 3522.
  3. You can also pay by mail (via check or money order and sent by mail with the FTB 3522) or Electronic Funds Withdrawal (EFW) if your tax preparation software provider supports EFW for annual tax payments.

Corporations – Due Date: March 15 (S Corps) or April 15 (C corps)

What Online Sellers Need to Know

  • All corporations incorporated in Delaware must pay the Delaware Franchise Tax • Corporations pay franchise tax if they are:
    a. Incorporated or organized in California
    b. Qualified or registered to do business in California
    c. Doing business in California, whether or not incorporated, organized, qualified, or registered under California law.
  • The franchise tax is equal to the larger of your California net income multiplied by the appropriate tax rate or the $800 minimum franchise tax.
  • Tax Rates - The following tax rates apply to both the corporation franchise tax and income tax: C corporations: 8.84%
    S corporations: 1.5%
  • Corporations are not subject to minimum tax in their first year if: (1) they did not conduct business in California during the tax year; AND (2) the tax year was 15 days or fewer.

How to pay the annual franchise tax?

  1. To make a payment via Web Pay: LLCs can make an immediate payment or schedule payments up to a year in advance.
    a. Go to ftb.ca.gov/pay.
    b. Choose “Bank Account”
    c. Choose Web Pay Business or Web Pay Personal, depending on the entity type. Follow the prompts to provide the requested information and pay the tax.
  2. To pay by credit card:
    a. Go to ftb.ca.gov/pay.
    b. Choose “Credit card” and then choose “Pay now with ACI payments.”
    c. You will be redirected to officialpayments.com which charges a 2.3% service fee.
    d. Use Discover, MasterCard, Visa or American Express Card to pay your business taxes.
  3. You can also pay by Electronic Funds Withdrawal (EFW) if your tax preparation software provider supports EFW for annual tax payments.


    The information provided on this website does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only. Readers are advised to consult with their attorney or accountant with any questions or concerns.
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