California charges every LLC — active, inactive, no revenue, no business — $800 per year for the privilege of existing on January 1. Dissolve on December 31 or January 2 and the tax consequence is a full $800 apart.
The January 1 Rule
The franchise tax is an annual tax for the taxable year, due for any LLC that is registered or doing business in California on January 1. There is no proration: an LLC that exists at 12:01 a.m. on January 1 owes the full $800 for that calendar year, even if it dissolves on January 2. The first-year exemption (no $800 for the first taxable year for LLCs formed on or after 2021) does not waive later years.
The December Trap
An owner who winds down in December but files the certificate of cancellation in January owes another $800. The Secretary of State filing date controls, not the last sale or the last payroll. A December 30 filing that is rejected for a missing signature and refiled January 3 still costs $800.
Timing Formation and Exit
- Form after January 1 when possible. A January 2 formation's first $800 is not due until the next calendar year; a December formation owes $800 for the stub year plus the next year's $800 within weeks if it misses the first-year exemption window nuance.
- Cancel before year-end with buffer. File dissolution by early December and confirm acceptance before December 31. Keep the filed certificate.
- Suspended LLCs still accrue. A suspended LLC owes the $800 for each year of suspension plus penalties.
