What are the typical franchise tax fees in California?

A franchise tax is a government tax charged by individual U.S. states to corporations, limited liability companies and partnerships that have nexus in the state. The franchise fees are based on the net worth or capital held by the entity. In essence, the franchise tax charges corporations for the privilege of doing business in that state.

In the state of California, franchise taxes are known as LLC taxes, and they have a minimum tax amount of $800. The franchise tax in California applies to limited liability companies, S corporations, limited partnerships, traditional corporations, and limited liability partnerships.

In general the S corporations franchise tax in 1.5 percent of the net income with a minimum tax of $800. For standard limited liability companies, the franchise tax is rather a flat fee than a percentage, and it varies on total income or gross income, as follow:

• Gross income from $250,000 to $499,999 = $900 fee
• Gross income from $500,000 to $999,999 = $2,500 fee + $800 LLC tax
• Gross income from $1,000,000 to $4,999,999 = $6,000 fee + $800 LLC tax
• Gross income from $5,000,000 or more + $11,790 fee + $800 LLC tax