CA
California Small Business Tax Guide
Sales tax, the LLC annual tax and estimated payments in California, each figure quoted from the CDTFA, the Franchise Tax Board or the IRS with its date. Educational, not tax advice.
Disclaimer: This page is educational content only. Tax laws change, and your situation may differ. It is not legal, tax, or financial advice. Consult a qualified professional licensed in California before making filing or planning decisions.
Tax landscape for small businesses
California splits small-business taxes between two agencies: the California Department of Tax and Fee Administration (CDTFA) for sales and use tax, and the Franchise Tax Board (FTB) for income tax and the LLC annual tax. Every rate, fee and deadline below is quoted from one of them or from the IRS, with its date. Anything the pages checked don't state, California's income tax brackets included, is left out.
On sales tax, the CDTFA (California, checked October 31, 2026) says: "The statewide tax rate is 7.25%." It also says: "In most areas of California, local jurisdictions have added district taxes that increase the tax owed by a seller. Those district tax rates range from 0.10% to 2.00%."
Worked example, sample figures at the statewide rate only: a ceramics studio invoices a café $1,000.00 for tableware. At the CDTFA's quoted 7.25% (California, checked October 31, 2026), the tax line is $1,000.00 × 7.25% = $72.50, so the invoice total is $1,072.50. Where a district tax applies the rate is higher, so confirm the rate for the address with the CDTFA before you send the invoice.
Tax overview
Each row lists a tax area and its notes. Confirm current figures with your state's tax agency or the IRS.
| Tax type | Rate or basis | Notes |
|---|---|---|
| Sales and use tax (CDTFA) | "7.25%" statewide | California, checked October 31, 2026. District taxes are added "In most areas of California"; the CDTFA says they "range from 0.10% to 2.00%." |
| LLC annual tax (FTB) | "$800" a year | California, last updated March 5, 2026: "Every LLC that is doing business or organized in California must pay an annual tax of $800." |
| LLC fee (FTB) | Above "$250,000" | The same FTB page (California, last updated March 5, 2026): "If your LLC will make more than $250,000, you will have to pay a fee." It lists the fee for each income band. |
| Self-employment tax (federal) | "15.3%" | IRS, US federal, page last reviewed or updated October 30, 2026: "12.4% for social security" plus "2.9% for Medicare". |
Filing requirements
This list isn't a complete checklist for your business.
Register with the CDTFA before you sell
The CDTFA (California, checked October 31, 2026) says: "Retailers engaged in business in California must register with the California Department of Tax and Fee Administration (CDTFA) and pay the state's sales tax, which applies to all retail sales of goods and merchandise except those sales specifically exempted by law."
Pay the LLC annual tax
The FTB (California, last updated March 5, 2026) says: "Your subsequent annual tax payments will continue to be due on the 15th day of the 4th month of your taxable year." and "The annual tax payment is due with LLC Tax Voucher (FTB 3522)." It also says: "This yearly tax will be due, even if you are not conducting business, until you cancel your LLC."
Estimate and pay the LLC fee
Where the fee applies, the same FTB page (California, last updated March 5, 2026) says: "LLCs must estimate and pay the fee by the 15th day of the 6th month, of the current tax year."
File the LLC return
The FTB's LLC page (California, last updated March 5, 2026) says: "File Limited Liability Company Return of Income (Form 568) by the original return due date." Its business due dates page (California, last updated March 18, 2026) gives those dates.
Make California estimated payments
The FTB's estimated tax page (California, last updated January 21, 2026) says: "Your tax payments are due in 4 payments. California differs from federal." Its table lists "30%" due "April 15, 2026", "40%" due "June 15, 2026", "0%" due "September 15, 2026" and "30%" due "January 15, 2027".
Check the federal estimated tax rule
In the US, the IRS (US federal, page last reviewed or updated September 25, 2026) says: "Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed."
Deductions and write-offs
Confirm with your state how it treats each item.
- Self-employment tax: the IRS (US federal, page last reviewed or updated October 30, 2026) says "you can deduct the employer-equivalent portion of your SE tax when calculating your adjusted gross income."
- Health insurance: the same IRS page says "a deduction, for income tax purposes, is allowed to self-employed individuals for the cost of health insurance."
- California's own deductions and credits aren't listed here. Whether California follows a federal deduction is a question for the FTB or a tax professional.
Practical tips
- Before you add a tax line, look up the rate for the address; the CDTFA's rates page (California, checked October 31, 2026) offers "Find a Sales and Use Tax Rate by Address".
- Billed's invoice software page says: "Save your tax rates and settings once, and Billed calculates taxes automatically when you create invoices and estimates."
- Put each FTB date from the filing list into your calendar as soon as the tax year starts.
- Billed's financial reporting page says: "See where your business is spending most money and export expense reports for better accounting during tax season."
Frequently asked questions
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At a glance
| Question | California agency that answers it |
|---|---|
| Sales tax rate for an address | CDTFA |
| Seller's permit | CDTFA |
| LLC annual tax, LLC fee and Form 568 | Franchise Tax Board |
| State estimated payments | Franchise Tax Board |
| Self-employment tax and federal estimated tax | IRS |
When this isn't for you
This overview doesn't cover California income tax rates, payroll taxes, sales in more than one state or an audit. For those, or for advice on your own position, ask a tax professional licensed in California or contact the FTB or the CDTFA.