As a Delaware C-Corp startup, what do I need to know about the $800 California Franchise Tax?

What is the CA Franchise Tax?

If you are a startup that has employees, rent, or revenue in CA… and you’ve registered to do business in CA then you will need to pay CA Franchise Tax. These taxes have nothing to do with your revenue, income, profitability, or even if you have an office or presence in that state. Also, this is separate from the “tax return’ which is known as the 1120. It’s a tax for the privilege of being a C-Corp.

Do Delaware C-Corps doing business in California have to pay the California Franchise Tax?

Probably - if you are a DE C-Corp that has employees, rent or revenue in California, and you’ve registered to do business in California, then you probably owe the CA Franchise tax. And this would be in ADDITION to the Delaware Franchise Tax that you owe the state of Delaware. 

When is the CA Franchise Tax due?

CA Franchise tax is due on April 15th of each year, whereby the CURRENT year’s taxes are due. Corporations don’t need to pay for their first year of incorporation. For example, a company incorporated in 2016 would pay their 2017 CA Franchise Taxes no later than April 15th, 2017. Nothing due for 2016. Another example: If you were incorporated in 2015, we would expect to see an $800 payment around 4/15 of each subsequent year, applied to current tax year. In other words:

• 2015: no payment needed
• 2016: $800 needs to be paid by 4/15/2016
• 2017: $800 needs to be paid by 4/15/2017

How much is the CA Franchise Tax?

$800

What agency is the CA Franchise Tax paid to?

FTB = Franchise Tax Board

How/where do you pay the CA Franchise Tax?

• Pay online!
• CA FTB Webpay
• Select Pay Today (don’t register)
• Enter your company ID, which you can look up by name here: Secretary of State
• Select form 100
• then “Estimates Payment”
• Enter $800
• and 1/1/201X-12/31/201X

How do you check if the CA Franchise Tax has been paid?

Note that the CA Franchise Tax site does not have an easy login for us to double check on this; therefore, the most efficient thing for us to do is verify payments within your books.