AI agents for business finance: what they can and can't do
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The short answer
Every LLC organised in California, or doing business there, must pay the Franchise Tax Board an $800 annual tax each year until it is cancelled, even if it does no business, according to the FTB page updated 5 March 2026. The first payment is due on the 15th day of the 4th month after the LLC files with the Secretary of State. The first-year exemption that applied from 2021 covered only tax years beginning before 1 January 2024, and LLCs with California income of $250,000 or more also pay a separate LLC fee.
California is home to a growing Nigerian tech and health workforce in Los Angeles, the Bay Area and Sacramento, and many start a side business as an LLC. The $800 figure surprises people because it is due before the business may have made a dollar. It is not an income tax on profit. It is a flat charge for having an LLC on California's register or doing business in the state.
What the FTB says about the $800
- Who pays: every LLC doing business or organised in California.
- When it stops: only when the LLC is cancelled. Having no business does not stop it.
- First year: due on the 15th day of the 4th month after the LLC files with the Secretary of State. The FTB's own example: an LLC registered on 18 June 2020 owed its first payment by 15 September 2020.
- Later years: due on the 15th day of the 4th month of each taxable year, paid with voucher FTB 3522.
- Return: the LLC files Form 568, the LLC Return of Income.
The first-year exemption has ended
The FTB page says LLCs that organised, registered or filed to do business in California for tax years beginning on or after 1 January 2021 and before 1 January 2024 did not owe the $800 for their first tax year. An LLC formed in 2026 falls outside that window, so it should plan to pay in its first year. Many online guides still describe the exemption as current.
The separate LLC fee for larger LLCs
On top of the annual tax, an LLC with California income of $250,000 or more pays an LLC fee, estimated and paid by the 15th day of the 6th month of the tax year on FTB 3536:
| California income (rounded) | LLC fee |
|---|---|
| $250,000 to $499,999 | $900 |
| $500,000 to $999,999 | $2,500 |
| $1,000,000 to $4,999,999 | $6,000 |
| $5,000,000 or more | $11,790 |
Worked example
Example only. Kemi, a nurse in Sacramento, files her LLC with the Secretary of State on 10 March 2027 for a health consulting business, on a calendar tax year. Counting March as month one, the 4th month is June, so her first $800 is due by 15 June 2027. Her 2028 payment falls due by 15 April 2028 (the 15th day of the 4th month of the 2028 tax year). If the LLC earns $600,000 of California income in 2028, it also owes the $2,500 LLC fee, estimated by 15 June 2028. Total for 2028: $800 + $2,500 = $3,300, before any income tax on her profit.
Steps to form, and to close
- File articles of organization with the California Secretary of State (the fee is shown on its online filing service).
- Diary the 15th day of the 4th month for the first $800 payment.
- Get an EIN from the IRS; without an SSN or ITIN, apply by phone, fax or post.
- File Form 568 each year, with Schedule R if the LLC has income both inside and outside California.
- If you abandon the idea, the FTB page notes that a short-form cancellation filed with the Secretary of State (Form LLC-4/8) within one year of organising also avoids the first-year tax. Otherwise the $800 continues until the LLC is cancelled.
How the $800 sits next to federal tax
The $800 is a state charge on the LLC. Federal income tax is a separate question, decided by how the IRS classifies the LLC. The IRS LLC page (reviewed 10 October 2026) says a single-member LLC is disregarded for income tax by default, so its profit goes on the owner's own return, and an LLC with two or more members is a partnership by default. Neither classification changes the $800: a disregarded LLC owned by one nurse and a partnership owned by four siblings pay the same annual tax to California.
That matters for planning. If your side business will make, say, $3,000 in its first year, the $800 takes more than a quarter of it before any income tax. Some founders in that position wait until the business is ready to trade before filing articles, or test the idea as a sole proprietor first. Weigh that against the liability protection an LLC gives, and take advice if the business carries real risk, such as clinical work or handling client money.
Common mistakes
- Assuming the old first-year exemption still applies to a new LLC.
- Counting the 4th month from January instead of from the month the LLC filed with the Secretary of State.
- Letting a dormant LLC sit on the register: the $800 keeps accruing until it is cancelled.
- Forgetting the separate LLC fee once California income passes $250,000.
Forming in another state does not escape it
The tax applies to LLCs doing business in California, not only those formed there. The FTB lists "doing business in California" as a filing condition and sets the thresholds on a separate page, which you should read if you plan to form in Delaware or Wyoming and work from Los Angeles. See when a Wyoming LLC makes sense and LLC or corporation.
Where Pryme fits
A California LLC paid in dollars by US clients and paying contractors in Nigeria can use a Pryme business account opened from any country, holding USD and NGN with local details for each. The Finance agent can prepare reminders for payments like the April $800 for a person to approve. Outside Nigeria, Pryme's services are provided through regulated partners.
Questions people ask
Do I pay the $800 California LLC tax if I made no money?
Yes. The FTB says every LLC organised or doing business in California pays the $800 annual tax until it is cancelled, even if it does no business.
Is there still a first-year exemption for California LLCs?
The FTB describes it for tax years beginning from 1 January 2021 to before 1 January 2024. An LLC formed in 2026 should expect to pay in its first year.
When is my first $800 payment due?
On the 15th day of the 4th month after the LLC files with the Secretary of State.
What is the California LLC fee on top of the $800?
A separate fee for LLCs with California income of $250,000 or more, from $900 up to $11,790, estimated by the 15th day of the 6th month.
Sources
- California Franchise Tax Board: Limited liability company (updated 5 Mar 2026) · accessed Oct 2026
- IRS: Limited liability company (LLC) (reviewed 10 Oct 2026) · accessed Oct 2026
- IRS: Instructions for Form SS-4 (Rev. December 2025, page reviewed 30 Apr 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.