California Business Returns Explained: Minimum $800, Rates, and Penalties

This guide clarifies which California business return you file, what you owe even with no income, the minimum $800 rules, how C corporations and S corporations are taxed differently, and the penalties if you don't file or pay on time

Form 100 — C Corporation Franchise/Income Tax Return
Covers calendar or fiscal years. Use the 2024 booklet for years beginning in 2024, and for short-year/fiscal-year situations per the FTB instructions. First return must use the corporation's incorporation date as the start date. Short-year returns should be labeled "short year." Include CA corporation number, FEIN, SOS file number, and complete all questions A–DD.

Form 100S — S Corporation Franchise Tax Return
Same timing conventions as Form 100 (calendar or fiscal year; short year labeling). Complete required identification items and questions A–U.

Form 568 — LLC Return of Income
Applies to LLCs (multi-member and SMLLCs) taxed as partnerships or disregarded entities. Separate corporate return applies if the LLC elects corporate tax treatment. The 2024 booklet explains conformity differences and reporting requirements.

C corps (Form 100) and S corps (Form 100S): California requires a filed return for each year you are registered/doing business. The Form 100 and 100S booklets provide the annual filing framework and first/short-year mechanics. If it's the first taxable year of a newly incorporated/qualified corporation, the corporation computes tax on net income at the applicable tax rate and is not subject to the minimum franchise tax that first year. Minimum franchise tax starts in year two.

LLCs (Form 568): You must file Form 568 if the LLC is registered in California—even if it is not actively doing business and even if it has no California-source income. To satisfy the requirement, complete Form 568 and Schedules K-1 (568). Enter total members in Question K. SMLLC/partnership filing due dates and the automatic extension are detailed in the instructions.

For C corps and S corps: The tentative tax for franchise tax filers may not be less than the minimum franchise tax (generally $800). If the corporation is in its first taxable year after incorporation/qualification, it computes tax on net income and is not subject to the minimum franchise tax that first year. Minimum applies beginning in the second taxable year.

For LLCs filing Form 568: The LLC annual tax and related filing/payment timelines are handled on Form 568. The instructions emphasize timely payment and that the automatic extension to file does not extend time to pay the LLC fee or any nonconsenting nonresident tax.

Core Tax Differences: Form 100 vs. Form 100S

C corporations (Form 100) pay the corporate franchise/income tax at the corporate rate (financial corporations have a distinct, higher rate). Mechanics and identification items are laid out in the Form 100 booklet.

S corporations (Form 100S) generally pay the S corporation tax regime (separate from C corporations). Additionally, if the S corporation recognizes "built-in gains" from C-corporation years, that portion is taxed at 8.84% (10.84% for financial S corporations), calculated on Schedule D (100S) and carried to Form 100S, line 27. This demonstrates that Form 100S applies a different rate structure on certain income than a Form 100 C corporation return.

Practical takeaway: Form 100 applies the C-corp corporate rate to net income. Form 100S uses the S-corp regime and imposes the corporate-equivalent rate on built-in gains (and financial S corps at 10.84%), which is different from the standard C-corp treatment of all net income.

Due Dates, Extensions, and Zero-Income Timing

Form 100 and 100S estimated payments are made on Form 100-ES. If no tax is due, do not mail a zero-balance payment voucher (payments must still be made if tax/fees apply). Electronic payment rules and entity coverage for Form 100-ES (including S corporations) are specified.

LLCs have an automatic extension to file (six or seven months depending on SMLLC ownership), but the extension does not extend time to pay the LLC fee or nonconsenting nonresident members' tax. The original due date is generally the 15th day of the third (partnership/SMLLC-passthrough) or fourth month (other SMLLCs) after year-end, and Form 3537 must be used for extension payments.

Penalties, Interest, and SOS Issues

Late payment and late filing: Interest accrues from the original due date even if you have an automatic filing extension. If you fail to file by the extended due date (or are suspended/forfeited as of the original due date), a delinquency penalty plus interest will be assessed from the original due date. If you are required to pay electronically and don't, a 10% non-compliance penalty applies. Reasonable cause may waive late payment penalties, but not interest.

Secretary of State (SOS) penalty: FTB must assess an SOS penalty for failure to file the annual Statement of Information. Contact SOS for penalty details; FTB references are provided in the corporate instructions.

"Doing business" nexus: Crossing California's doing-business thresholds can require filing and payment of the minimum franchise/annual tax (for corporate members) even through pass-through ownership.

"No Income" Examples and Practical Tips

C corp with zero income: Still file Form 100. If it's not the corporation's first taxable year and it is subject to the franchise tax, the tentative tax cannot be less than the minimum franchise tax (generally $800). If it is the first taxable year after incorporation/qualification, the minimum does not apply. You compute tax on income (which is zero, so no tax), but you must still file the return.

S corp with zero income: Still file Form 100S. Built-in gains tax can still apply if you triggered it (e.g., disposals of C-corp assets during the recognition period), even if ordinary operations show zero income.

LLC with no activity/no CA income: Still file Form 568 if registered, complete Schedules K-1 (568) and observe the due dates. The filing extension does not extend time to pay amounts due (LLC fee or nonconsenting nonresident tax).

Quick Comparison

Filing and Payment Logistics to Avoid Penalties

Use the correct year's booklet, and if you file short-year/fiscal-year returns, clearly mark the return "short year." Ensure entity ID (CA corp number, FEIN, SOS file number) and legal name/address are correct to expedite processing.

Estimated tax vouchers (Form 100-ES) cover Form 100, 100W, 100S, and 109 filers. Don't mail a zero-balance voucher. If you're required to pay electronically, using another method triggers a 10% penalty.

Interest always accrues from the original due date on unpaid tax, regardless of filing extensions. Aim to pay at least 90% of tax (but not less than the minimum franchise tax, if applicable) by the original due date to meet reasonable cause standards for late-payment penalty relief.

Conclusion

File even with no income: C corps (Form 100), S corps (Form 100S), and LLCs (Form 568) generally must file annual returns if registered/doing business. Zero-income returns still satisfy legal requirements and avoid penalties.

Minimum $800: Corporations are generally subject to the minimum franchise tax (typically $800), except that the first taxable year after incorporation/qualification is not subject to the minimum. LLCs have a separate annual tax/fee regime and must pay on time even when an extension to file applies.

Different rate structures: C corps are taxed at the corporate rate (financial corps have a higher rate). S corps use the S-corp regime, with built-in gains taxed at 8.84% (10.84% for financial S corps), which is distinct from C-corp full-income taxation.

Penalties bite: Late filing, late payment, and e-pay noncompliance penalties, plus interest and record-maintenance penalties, can add up quickly. Keep SOS Statement of Information current to avoid SOS penalties.

Recommended action: Confirm whether your entity is in its first taxable year (corporations) to evaluate the minimum tax exception. Set calendar reminders for original due dates and required estimates/e-payments to prevent penalties and interest.

In Essence

If you're registered, you file—zero income doesn't excuse Form 100, 100S, or 568. Pay the minimum/annual amounts on time to avoid penalties.

C corps and S corps are taxed differently—S corps can owe 8.84%/10.84% on built-in gains, highlighting the different rate structures compared to C corps' corporate rate.