An LLC is a legal structure; S corporation treatment is a tax election for an eligible entity. A default-taxed California LLC generally owes $800 plus any income-based LLC fee. A general California S corporation pays 1.5% of California-source net income, subject to an $800 minimum unless the first-taxable-year exception applies.
Official source: https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.htmlOfficial source: https://www.ftb.ca.gov/file/business/types/corporations/s-corporations.htmlVerified against the California Secretary of State and FTB on Oct 21, 2026
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Start with the right question.
Compare different income measures
The S corporation calculation uses California-source net income. The LLC fee uses total California income, not net profit. Moving one slider cannot establish that the tax treatments have equal taxable bases, or that an election saves money.
Official source: https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.htmlModel the minimum separately
A general S corporation’s standard tax is the greater of 1.5% of California-source net income and $800. Eligible newly formed or qualified S corporations do not pay that minimum on their initial first-taxable-year return, but still owe the income-based amount. Financial S corporations have different rates and are excluded here.
Official source: https://www.ftb.ca.gov/file/business/types/corporations/s-corporations.htmlEvaluate the election before filing
Form 2553 governs federal S election eligibility and timing. The deadline generally is two months and 15 days after the beginning of the effective tax year, or during the preceding year. Shareholder taxes, federal taxes, payroll, reasonable compensation and administrative costs are outside this comparison.
Official source: https://www.irs.gov/instructions/i2553Your preparation checklist
- Confirm federal S election eligibility
- Separate California net income from total income
- Review first-year minimum exception eligibility
- Ask a tax adviser about the full federal and state picture
Illustrative California tax comparison
Illustrative California tax comparison
Default-taxed LLC
$800$800 annual tax + $0 income fee
General S corporation
$8001.5% income calculation: $750
$800 minimum applies
Illustrative only, not tax advice. Different income measures are intentional. No total savings claim: federal, shareholder, payroll and administrative costs are excluded. Financial S corporations are excluded.
Keep the requirements separate.
| Requirement | Verified detail / confirmation needed | Official authority |
|---|---|---|
| LLC annual tax | $800; general first-year exemption expired | Official source: https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html |
| LLC income fee | Starts at $250,000 total California income; separate from $800 | Official source: https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html |
| General S corporation | 1.5% California-source net income, $800 minimum | Official source: https://www.ftb.ca.gov/file/business/types/corporations/s-corporations.html |
| Eligible new S corporation | Minimum waived for initial first taxable year; 1.5% still applies | Official source: https://www.ftb.ca.gov/file/business/types/corporations/s-corporations.html |
Carry the decision forward.
Corp USA is not a law firm and does not provide legal advice. State fees are pass-through. Service fees and taxes are separate. Review the order price before payment.
Before your next step
No. It is an illustration of specified California entity-level tax rules, not tax advice or a full tax comparison.
Official source: https://www.ftb.ca.gov/file/business/types/corporations/s-corporations.htmlS status is a tax election. An eligible legal entity makes the federal election using Form 2553.
Official source: https://www.irs.gov/instructions/i2553