California's $800 minimum franchise tax: who owes it, when it's due, and the first-year exemption

Every corporation that is incorporated in California, qualified or registered with the California Secretary of State, or doing business in California must pay at least the $800 minimum franchise tax each year, and it is owed whether the corporation is active, inactive, operating at a loss, or filing a short-period return. The one big exception is a newly incorporated or qualified corporation's first taxable year, which pays tax measured by its income instead of the minimum. From the second taxable year on, at least $800 is due by the 15th day of the 4th month of the year (April 15 for a calendar-year corporation) as the first estimated tax installment, and the annual return is Form 100.

This guide covers who owes it, how the first-year rule works, the estimated payment schedule, how LLCs differ, and what happens when the tax goes unpaid. Every figure below comes from the Franchise Tax Board's current instructions, linked at the end.

Who owes California's $800 minimum franchise tax?

The Form 100 booklet says the minimum franchise tax must be paid by corporations that meet any of these tests:

• Incorporated or organized in California.
• Qualified or registered to do business in California with the Secretary of State. This catches the common startup setup: a Delaware C-corp registered in California because the founders work there.
• Doing business in California, whether or not it is incorporated, qualified, or registered here. A corporation can be 'doing business' by meeting the sales, property, or payroll thresholds in Revenue and Taxation Code Section 23101(b), even without registering.

The amount is $800 for corporations generally (a $25 minimum applies only to qualified inactive gold or quicksilver mining corporations). A combined group filing a single return pays at least the minimum for each member subject to the franchise tax.

Do you owe the $800 if the corporation lost money?

Yes. This is the part that surprises founders most. The FTB's instructions are explicit: the minimum franchise tax must be paid 'whether the corporation is active, inactive, operates at a loss, or files a return for a short period of less than 12 months.'

The mechanics are simple. California's corporate franchise tax is the corporation's net income times the tax rate (8.84% for most corporations; 10.84% for banks and financial corporations), but Form 100, line 23 is 'at least minimum franchise tax, if applicable.' A pre-revenue startup with a $500,000 net loss still owes $800. Credits cannot get you under it either: the booklet says corporations may not reduce line 23 below the minimum franchise tax.

Is there a first-year exemption for new corporations?

Yes, for corporations that incorporate or qualify through the California Secretary of State. According to the 2025 Form 100 booklet, such a corporation 'is not subject to the minimum franchise tax for its first taxable year and will compute its tax liability by multiplying its state net income by the appropriate tax rate.' It becomes subject to the minimum franchise tax beginning in its second taxable year. The FTB's corporations page describes this as applying to corporations newly incorporated or qualified on or after January 1, 2020.

Three details matter:

• It does not apply to corporations that are not qualified by the Secretary of State, or to corporations that reorganize solely to avoid paying the minimum tax.
• The first year is a taxable year, not twelve months. A calendar-year corporation formed in December has a first taxable year of a few weeks. Its second taxable year starts January 1, and the $800 is due with the first estimated payment that April.
• First-year income is still taxed. A first-year corporation with California net income pays 8.84% of it. To avoid an estimated tax penalty, the 100-ES instructions tell new corporations to base their installments on annualized current-year income.

A separate rule exempts a corporation that did no business in California during a taxable year of 15 days or fewer. If you registered a foreign corporation (for example, a Delaware C-corp) in California after it had already been operating elsewhere, check FTB Publication 1060 to confirm which year counts as your first taxable year before relying on the exemption.

When is the $800 due? The 30/40/0/30 estimated tax schedule

California corporations pay estimated tax in installments due by the 15th day of the 4th, 6th, 9th, and 12th months of the taxable year. The required percentages are uneven:

• 1st installment (15th day of month 4; April 15 for calendar-year filers): 30%, and never less than the minimum franchise tax.
• 2nd installment (15th day of month 6; June 15): 40%.
• 3rd installment (15th day of month 9; September 15): 0%. No estimated payment is required.
• 4th installment (15th day of month 12; December 15): 30%.

For most early-stage startups the schedule collapses to a single payment. The Form 100-ES instructions say that if the estimated tax does not exceed the minimum franchise tax, the entire minimum is due as an estimate by the 15th day of the 4th month. So a loss-making calendar-year corporation in its second year or later pays $800 by April 15 and nothing else that year. If the estimated tax is larger, it is paid in installments, but at least the minimum must be paid with the first one to avoid an estimated tax penalty. When a due date falls on a weekend or holiday, the deadline moves to the next business day.

Payments go through Web Pay, EFT, or Form 100-ES. Corporations that make an estimated or extension payment over $20,000, or have total tax liability over $80,000, must pay electronically, and the penalty for not doing so once required is 10%.

When is Form 100 due?

Form 100 is due by the 15th day of the 4th month after the close of the taxable year: April 15 for a calendar-year corporation. California grants an automatic extension to the 15th day of the 11th month (November 15) without a written request. That extension is to file, not to pay. Any unpaid tax is due by the original due date, using form FTB 3539 if you pay by mail, and interest runs from the original due date. Suspended corporations do not get the automatic extension.

How is it different for an LLC?

LLCs pay an annual tax rather than a franchise tax, but the number is the same:

• Every LLC doing business in California or organized or registered here pays an $800 annual tax, due even if it is not conducting business, until it is cancelled.
• The tax is due by the 15th day of the 4th month of the LLC's taxable year, with Form FTB 3522. In the first year, the clock starts from the date the LLC files with the Secretary of State.
• LLCs with more than $250,000 of total California income also owe an LLC fee, estimated and paid by the 15th day of the 6th month on Form FTB 3536. The fee is $900 at $250,000 to $499,999, $2,500 at $500,000 to $999,999, $6,000 at $1,000,000 to $4,999,999, and $11,790 at $5,000,000 or more.
• The return is Form 568.

The LLC first-year exemption is gone. It applied only to taxable years beginning on or after January 1, 2021 and before January 1, 2024. Unlike corporations, a new LLC formed today owes its $800 in year one.

What happens if the corporation doesn't pay?

If a corporation does not file Form 100 or does not pay tax, penalties, or interest due, its powers, rights, and privileges may be suspended (a California corporation) or forfeited (a foreign corporation). A suspended business, according to the FTB, cannot legally do business, cannot be issued a refund, cannot file with an automatic extension, cannot bring or defend an action in court, and may lose the right to its business name. Contracts entered into while suspended are voidable by the other party until the FTB grants relief.

On top of that, corporations that operate while suspended or forfeited may owe a $2,000 penalty per taxable year, in addition to tax, penalties, and interest. The Secretary of State can suspend a corporation separately for not filing its Statement of Information and imposes a $250 penalty that the FTB collects.

Getting back into good standing means filing all past-due returns, paying all past-due balances, and filing an Application for Certificate of Revivor (FTB 3557 BC for corporations). The FTB notes that entities registered with the Secretary of State must file and pay at least $800 from their registration date to the present, regardless of activity, so years of 'we weren't doing anything' still add up.

How do you stop owing it?

Not by going quiet. A domestic or qualified corporation stays subject to the minimum franchise tax for every taxable year it exists until it files a certificate of dissolution, withdrawal, or surrender with the Secretary of State. The minimum tax is not assessed for later years if the corporation files a timely final return, does no business in California afterward, and files its dissolution or surrender documents within 12 months of that final return. FTB Publication 1038 walks through the steps.

The practical checklist

• Year one (California-incorporated or qualified): no $800 minimum, but compute and pay 8.84% of any California net income using annualized estimates.
• Every year after: put $800 on the calendar for the 15th day of the 4th month, even if the company has no revenue.
• If you expect profit: size the 30/40/0/30 installments from year-to-date books, not last year's bank balance.
• File Form 100 every year, even at a loss. The extension moves the filing date, not the payment date.
• Keep the Statement of Information current with the Secretary of State.

ClearBooks prepares a California Form 100 draft from your books, including the $800 floor and the estimated payment schedule, so the April number is already sitting in your ledger.

This article is general information, not tax or legal advice. Check the current FTB instructions or a California tax professional for your situation.

Sources

• Franchise Tax Board, 2025 Form 100 California Corporation Franchise or Income Tax Return Booklet: https://www.ftb.ca.gov/forms/2025/2025-100-booklet.pdf
• Franchise Tax Board, 2026 Form 100-ES Instructions: https://www.ftb.ca.gov/forms/2026/2026-100-es-instructions.pdf
• Franchise Tax Board, Corporations: https://www.ftb.ca.gov/file/business/types/corporations/index.html
• Franchise Tax Board, Limited Liability Company: https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html
• Franchise Tax Board, My business is suspended: https://www.ftb.ca.gov/help/business/my-business-is-suspended.html