Franchise tax vs. annual report: what your LLC actually owes each year

Last reviewed July 13, 2026 · state specifics sourced to official filing and tax sites (linked below)

The single most common LLC compliance mistake isn't missing a deadline — it's assuming your state has one recurring obligation when it has two, or assuming the thing called a "franchise tax" is the same thing as an "annual report." They're different obligations, often owed to different agencies, on different dates. Paying one does not satisfy the other, and the agency you paid won't warn you about the one you didn't.

The two obligations, untangled

An annual (or biennial) report is an information filing, usually with the Secretary of State: who runs the company, who the registered agent is, where it's located. The fee is typically small. Its job is keeping the public record current — skipping it is what triggers loss of good standing and, eventually, administrative dissolution (what that escalation looks like).
A franchise tax is a tax on the privilege of existing or doing business in the state, usually owed to the tax authority (not the Secretary of State). It can be a flat amount (Delaware: $300 for LLCs), a fixed minimum (California: $800), or revenue-based (Texas). It's owed even in years with zero profit — it is not an income tax.

Some states have both. Some have one. A few have neither. The three states below generate the most confusion because each runs a different model.

California: a tax AND a report — to two different agencies

Obligation	The rule
$800 annual franchise tax (Franchise Tax Board)	Every LLC organized, registered, or doing business in California owes $800 every year, paid to the FTB with Form 3522. The first payment is due by the 15th day of the 4th month after you file with the Secretary of State. The first-year exemption you may have read about applied only to LLCs whose first tax year began in 2021–2023 — it has expired, so a 2026 LLC owes the $800 from year one. The $800 is owed even at $0 revenue.
Statement of Information (Secretary of State)	A separate filing with the SOS: due within 90 days of formation, then every two years for LLCs (corporations file annually). Miss it and the SOS assesses a $250 penalty — collected by the FTB on the SOS's behalf. Note the trap: the penalty is more than ten times the filing fee.

Obligation

The rule

$800 annual franchise tax (Franchise Tax Board)

Every LLC organized, registered, or doing business in California owes $800 every year, paid to the FTB with Form 3522. The first payment is due by the 15th day of the 4th month after you file with the Secretary of State. The first-year exemption you may have read about applied only to LLCs whose first tax year began in 2021–2023 — it has expired, so a 2026 LLC owes the $800 from year one. The $800 is owed even at $0 revenue.

Statement of Information (Secretary of State)

A separate filing with the SOS: due within 90 days of formation, then every two years for LLCs (corporations file annually). Miss it and the SOS assesses a $250 penalty — collected by the FTB on the SOS's behalf. Note the trap: the penalty is more than ten times the filing fee.

The trap pattern: owners pay the FTB $800, see "franchise tax — done," and never file the Statement of Information — or file the SOI and are blindsided by the FTB bill. Two agencies, two calendars.

Delaware: a tax and NO report (for LLCs)

Delaware LLCs, LPs, and GPs do not file an annual report at all. The entire recurring obligation is a flat $300 annual tax due June 1, paid to the Division of Corporations. Miss it and the penalty is $200 plus 1.5% interest per month on both tax and penalty — the cost compounds while you wait. (Delaware corporations are the opposite: they file an annual report and pay franchise tax by March 1 — one reason secondhand Delaware advice is so often wrong for LLCs.)

Texas: a tax report you probably won't owe tax on — but must still file

Obligation	The rule
Franchise tax report (Comptroller)	Due May 15 each year. For 2026 reports, LLCs with annualized total revenue at or below the $2.65 million no-tax-due threshold owe no tax and (since the 2024 changes) no longer file a No Tax Due Report.
Public Information Report (Form 05-102)	Here's the catch: the PIR is due every year regardless — even when your revenue is under the threshold and no tax is owed. Filing nothing because "we're under the threshold" is exactly how small Texas LLCs lose good standing.

Texas has no separate Secretary-of-State annual report for LLCs — the PIR plays that role, but it rides along with the franchise-tax system at the Comptroller.

Two agencies, two calendars, zero reminders. EntityMinder tracks every recurring obligation for your entity — report and tax, state by state — and warns you before each one is due, so "I paid the other one" never costs you $250.

Track my LLC's deadlines →

How to know what YOUR state requires

Check the Secretary of State first — is there an annual/biennial report or information statement? What's the due date: fixed calendar date (Florida: May 1), anniversary-based, or a filing window?
Then check the tax authority separately — is there a franchise, privilege, or annual entity tax that exists independent of income tax? (Common in CA, DE, TX, TN, and others.)
Assume they don't talk to each other. If both exist, put both dates on your calendar. Our 50-state annual-report deadline lookup covers the report side for every state.

Sources

Where this gets worse. The two-obligations problem multiplies once an LLC is registered outside its formation state — foreign qualification walks through California's rule that a member's activity alone can trigger the $800. And a California Certificate of Status attests to both the Statement of Information and current franchise taxes, so paying one agency does not get you one: certificate of good standing.