California $800 Franchise Tax Guide for Union City LLCs and Corporations

If you own an LLC or a corporation in Union City, one state bill arrives every year whether your business made money or not: California’s $800 franchise tax. The Franchise Tax Board (FTB) calls it the annual tax for LLCs and the minimum franchise tax for corporations. Late in the year is when the California franchise tax decisions that cost or save Union City owners the most get made: when to form a new entity, whether to close one you no longer use, and whether an S corporation election makes sense for 2027.

Accountico Inc. is a CPA firm in Union City, CA, and we work with business owners in Fremont, Newark, Hayward, San Leandro, Castro Valley and across the Bay Area. This guide is general information based on FTB, California Secretary of State (SOS), IRS and City of Union City guidance available as of October 6, 2026. It is not tax or legal advice for your specific business.

Who pays the California franchise tax in Union City

Despite the name, the $800 is not based on profit. According to the FTB pages for limited liability companies and corporations:

• LLCs that are organized, registered or doing business in California pay an $800 annual tax every year. FTB says it is due “even if you are not conducting business, until you cancel your LLC.” It is paid with the LLC Tax Voucher, form FTB 3522.
• Corporations that are incorporated, registered or doing business in California pay at least the $800 minimum franchise tax. Under FTB’s business tax rates, a C corporation pays the greater of $800 or 8.84% of California net income, and an S corporation pays the greater of $800 or 1.5%.
• Limited partnerships and LLPs also pay an $800 annual tax. General partnerships do not pay the annual tax or the LLC fee, according to FTB’s business due dates page.

Forming in Delaware, Nevada or Wyoming usually does not avoid the tax if you run the business from the Bay Area. FTB’s 2025 Form 568 instructions treat an entity as doing business in California if it is commercially domiciled here, and an LLC is doing business in California if its members or managers conduct business here on its behalf. For 2025, California sales above the lesser of $757,070 or 25% of total sales also count as doing business.

California franchise tax due dates for 2026 and 2027

For calendar-year entities, these are the dates to put on your calendar. When a due date falls on a weekend or holiday, FTB allows you until the next business day.

• December 15, 2026: fourth 2026 estimated tax payment (Form 100-ES) for calendar-year C and S corporations, which is due on the 15th day of the 12th month.
• March 15, 2027: 2026 Form 100S for S corporations and 2026 Form 568 for LLCs taxed as partnerships, plus any 2026 LLC fee not covered by your estimate.
• April 15, 2027: the 2027 $800 LLC annual tax with FTB 3522 (the 15th day of the 4th month of the tax year), 2026 Form 100 for C corporations, 2026 Form 568 for single-member LLCs owned by an individual, and the first 2027 corporate estimated payment. FTB says an S corporation’s $800 minimum tax is due in the first quarter of each accounting period.
• June 15, 2027: estimated 2027 LLC fee with form FTB 3536 if you expect total California income of $250,000 or more.

Two practical notes from the Form 568 instructions: send the $800 annual tax separately with FTB 3522 rather than with Form 568, and you can use Web Pay to pay now or schedule payments up to a year in advance. If your 2025 LLC return is still on extension, see our guide to the October 15 tax extension deadline.

The LLC fee: a second bill based on gross receipts

On top of the $800, an LLC with total California income of $250,000 or more owes the LLC fee. FTB’s chart:

• $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

The catch is the definition. For the fee, the Form 568 instructions define “total income” as gross income plus cost of goods sold attributed to California. It is not net profit. A Union City contractor or online seller with $620,000 of receipts and $90,000 of profit still lands in the $500,000 to $999,999 tier, so the state bill for the year is $800 plus $2,500, or $3,300.

The fee is estimated by the 15th day of the 6th month of the tax year. If the estimate comes in short, FTB adds a penalty of 10% of the shortfall, unless your timely estimate was at least as much as the prior year’s fee. Use October and November to check year-to-date revenue so you know which tier 2026 will land in. If your books are behind, our bookkeeping services can bring them current before year-end.

Starting a new LLC or corporation in Union City before year-end

Many owners form a new entity in the fourth quarter. Your filing date decides when the first $800 is due.

New LLCs no longer get a first-year exemption

FTB’s exemption from the first-year annual tax only covered LLCs for tax years beginning in 2021 through 2023. Today a new LLC owes its first $800 by the 15th day of the 4th month after it files with the Secretary of State. For example, an LLC filed on October 20, 2026 owes $800 for its short 2026 year by January 15, 2027, and then another $800 for 2027 by April 15, 2027. That is $1,600 within about three months.

The 15-day rule for late-December filings

The Form 568 instructions say an LLC is not required to file a return, and is not subject to the annual tax or LLC fee, if its tax year is 15 days or less and it does not conduct business in California during that period. An LLC filed on December 20, 2026 that does not open, sign customers or earn revenue until January has a 12-day 2026 tax year. Its first $800 would generally be the 2027 annual tax due April 15, 2027. If you plan to start operating in January anyway, compare late-December and early-January filing before you submit your articles.

New corporations: first-year minimum tax exemption

Corporations work differently. FTB says newly incorporated or qualified corporations do not pay the minimum franchise tax in their first taxable year, but they still pay the 8.84% or 1.5% rate on any net income. The 2025 Form 100S instructions add that the minimum tax applies starting in the second taxable year. A corporation formed in November 2026 uses its exemption on a short 2026 year, so it should plan on at least $800 for 2027.

Local and state setup steps

• Union City business license. The City of Union City business license page says a license is needed for all businesses operating in the city, including home-based businesses, contractors and out-of-town businesses working in Union City. Businesses located in the city need a zoning compliance review first, and the review process typically takes about three weeks. After voters approved Measure QQ in November 2024, the city’s business license tax model includes a gross receipts rate structure, so check the current tax schedule for your business type.
• Statement of Information. File it with the SOS within 90 days of registering. After that, LLCs file every two years ($20) and California stock corporations file every year ($25). Since August 1, 2026, the Secretary of State requires web User Access to file a Statement of Information online. The SOS also warns about misleading solicitations that charge many times the state fee; you can file directly.

Our company formation services cover entity selection, SOS filings, an EIN and the first FTB payments. For background, see our guide to LLC formation in California.

LLC or S corporation for 2027? Comparing the California numbers

California taxes these structures differently, and the difference shows up on the franchise tax line:

• LLC taxed as a partnership or disregarded entity: $800 annual tax plus the LLC fee on gross receipts. Profit flows to the owners’ personal returns.
• S corporation, including an LLC that elects S status: the greater of $800 or 1.5% of California net income, on Form 100S. The Form 568 instructions say an LLC classified as an S corporation files Form 100S and is treated as a corporation under California’s corporation tax rules instead of filing Form 568.
• C corporation: the greater of $800 or 8.84% of California net income.

Here is an illustration at the state level only. Take the same Union City business with $620,000 of receipts and $150,000 of California net income. As an LLC it owes $800 plus the $2,500 fee, or $3,300. As an S corporation it owes 1.5% of $150,000, or $2,250. A gap that size rarely decides the question on its own. Federal self-employment tax, a reasonable salary for owner-employees, payroll costs and an extra return usually matter more. Our tax planning team can run both scenarios, and our payroll services handle owner salary if you elect.

Timing matters too. The IRS Form 2553 instructions let an existing entity file the election any time during the tax year before it takes effect, or no more than 2 months and 15 days after the year begins. For S status starting January 1, 2027, that means filing during 2026 or by March 15, 2027. For cost basics, see our post on the cheapest way to register an LLC or S corp.

Closing a dormant Union City LLC or corporation before 2027

An LLC you stopped using still owes $800 every year until it is formally cancelled. To avoid the minimum franchise tax or annual tax for current and later years, FTB Publication 1038 says you need to meet all of these requirements:

1. Clear the account. File any past-due returns and pay all balances, including penalties and interest.
2. Stop doing business in California after the final taxable year. For a calendar-year entity planning to close this year, that means by December 31, 2026.
3. File a timely final return (Form 568, 100 or 100S) for that year. Check the Final Return box and write “final” at the top of the first page.
4. File the SOS termination documents within 12 months of filing the final return. A domestic LLC files a Certificate of Dissolution (LLC-3) and Certificate of Cancellation (LLC-4/7). A domestic stock corporation files the dissolution forms that apply to it.

Miss the timing and it costs you. The Form 568 instructions warn that if the cancellation is filed after the tax year ends, another year’s return and another $800 may be required. An LLC that never did business can use the Short Form Cancellation (LLC-4/8) if it files within 12 months of forming. In that case FTB says it is not subject to the $800 for its first tax year.

Two practical hurdles. First, according to the Secretary of State’s LLC forms and fees page, since July 1, 2026 terminations must be filed online and require Full Access to your entity in bizfile Online. There is no SOS fee for LLC terminations. Second, the SOS cannot accept termination documents from an entity that FTB has suspended, so a suspended entity has to file, pay and request a revivor before it can close. Our tax preparation team can prepare the final return and coordinate the timing.

Penalties and suspension if the $800 goes unpaid

• Late payment: 5%, plus 0.5% for each additional month, up to 25% of the unpaid tax, plus interest.
• Late filing: 5% of the unpaid tax per month, up to 25%. LLCs with a Form 568 requirement also face $18 per member per month, for up to 12 months.
• Statement of Information: the SOS imposes a $250 penalty for not filing, and FTB collects it.
• Demand to file: a $2,000 penalty per tax year can apply if missing returns are not filed within 60 days of a written demand.

Suspension is the bigger risk. Per the FTB suspended business page, a suspended entity cannot legally do business, get a refund, defend itself in court or legally close, and contracts it signs while suspended can be voided by the other party.

California franchise tax checklist for Union City owners: Q4 2026

1. Look up every entity you own on the SOS business search and in MyFTB, and confirm each is active and in good standing.
2. Calendar-year corporations: schedule the fourth 2026 estimate for December 15, 2026.
3. LLCs: project 2026 total California income, find your LLC fee tier, and set aside any balance due with the return.
4. Decide whether any dormant entity should close. If so, stop doing business by December 31, 2026 and plan the final return and SOS filings.
5. Forming a new entity? Compare a late-December filing with no activity against filing now, and apply for the Union City business license and zoning review.
6. Set up bizfile Online User Access or Full Access, and check when your next Statement of Information is due.
7. Decide on an S corporation election for 2027 (Form 2553 by March 15, 2027) and set up payroll for owner salary if you elect.
8. Schedule the 2027 $800 LLC annual tax (FTB 3522) for April 15, 2027 with Web Pay.
9. Book a year-end planning review. Our Fremont small business year-end tax checklist covers the other Q4 deadlines for East Bay owners.

Frequently asked questions

Do I have to pay the $800 California franchise tax if my Union City LLC made no money?

Yes. FTB says every LLC organized, registered or doing business in California owes the $800 annual tax each year, even with no business activity, until the LLC is cancelled. After their first taxable year, corporations owe the $800 minimum even when inactive or operating at a loss.

When is the 2027 California LLC annual tax due?

For a calendar-year LLC, the 2027 annual tax of $800 is due by April 15, 2027, the 15th day of the 4th month of the tax year. It is paid with form FTB 3522 or online with Web Pay, separately from Form 568.

Is there still a first-year $800 exemption for new California LLCs?

No. That exemption only covered LLC tax years beginning in 2021 through 2023. A new LLC now owes its first $800 by the 15th day of the 4th month after it files with the Secretary of State. New corporations are still exempt from the minimum franchise tax in their first taxable year, but pay tax on any net income.

If I form an LLC in late December 2026, do I owe $800 for 2026?

Generally not if the LLC’s 2026 tax year is 15 days or less and it does not conduct business in California during that period. FTB’s Form 568 instructions say such an LLC is not required to file a return and is not subject to the annual tax or LLC fee for that short year. Its first $800 would then be the 2027 annual tax, due April 15, 2027.

How do I stop paying the $800 on an LLC I no longer use?

Stop doing business, clear any past-due returns and balances, file a timely final California return marked final, and file the cancellation with the Secretary of State within 12 months of that return. FTB Publication 1038 says meeting all of these requirements can avoid the annual tax for later years. SOS terminations are now filed online in bizfile Online.

Can Accountico help Union City businesses with California franchise tax?

Yes. Accountico Inc. is a CPA firm in Union City that helps LLCs and corporations in Union City, Fremont, Newark, Hayward, San Leandro, Castro Valley and the Bay Area with entity formation, S corporation decisions, franchise tax payments, final returns and year-end tax planning.

Get your California franchise tax plan in place before January

An October review of your California franchise tax position helps Union City owners avoid paying $800 twice on a new LLC, an LLC fee that comes as a surprise, or another year of tax on a business that has already stopped operating. Accountico’s Union City team handles entity formation, business tax returns and planning for owners across the Tri-City area and the Bay Area.

Book a free 30-minute consultation, call (510) 400-9341, or contact our Union City team.

This article is general information based on Franchise Tax Board, California Secretary of State, IRS and City of Union City guidance available as of October 6, 2026. It is not tax or legal advice for your specific business. Rules, forms, rates and due dates can change. Confirm current instructions for your situation.