Introduction
In 2025, California offers more than traditional LLCs and C-Corps. Alternative legal structures like Benefit Corporations (B-Corps) and Social Purpose Corporations (SPCs) provide mission-driven businesses with the flexibility to pursue impact and profit.
But what about taxes?
This guide breaks down the Franchise Tax Board (FTB) treatment of B-Corps and SPCs in California, comparing them to standard LLCs and explaining the state tax implications.
IRC and California Tax Code References
- IRC §1363 & §1366 – S-Corporation rules (if elected)
- IRC §301 & §351 – Corporate contributions and distributions
- Cal. Corporations Code §14600 -14631 – B-Corp regulations
- Cal. Corp Code §2500 -3503 – SPC statutes
- Cal. R&TC §23151 – Franchise tax on corporations
- Cal. R&TC §17941 – LLC annual tax
Key Differences in Tax Treatment (2025)
| Entity Type | Franchise Tax | Gross Receipts Fee | Reporting Forms |
|---|---|---|---|
| LLC | $800 minimum + fee | Yes, based on tiers | Form 568 |
| B-Corp | $800 or 8.84% of net income (whichever is greater) | No | Form 100 |
| SPC | Same as B-Corp | No | Form 100 |
Note: All must also file federal Form 1120 or 1120S (if S-Corp election).
Example: GreenTech Startup Elects B-Corp Status
Example: Lina runs an environmental tech company with $500,000 net income in 2025. She converts the company to a B-Corp in California.
Tax Result:
- Pays 8.84% corporate income tax to FTB → $44,200
- Must file Form 100 (CA) and Form 1120 (IRS)
- No gross receipts fee (unlike LLCs)
- Subject to annual report requirements and mission reporting
Step-by-Step: Choosing and Filing as a B-Corp or SPC
- Choose the Structure
B-Corp for environmental/social mission + profit. SPC for a defined specific public benefit. - File Articles of Incorporation with the CA Secretary of State
Include benefit purpose clause. - Register with the FTB
File Form 100 or Form 100S (S-Corp election). - Maintain Annual Reports
B-Corps file an annual benefit report; SPCs report on special purpose goals. - Pay Franchise Tax Annually
$800 minimum or % of net income.
Conclusion
B-Corps and SPCs are tax-treated like regular C-Corps or S-Corps in California but without the gross receipts fee imposed on LLCs. For founders focused on social impact and ESG compliance, these structures provide legal flexibility with transparent tax obligations.
Just remember: you’re still a corporation in the eyes of the FTB.
Call to Action
Not sure whether to go LLC, B-Corp, or SPC in California?
Book an entity strategy call with Anshul Goyal, CPA, EA, FCA
He’ll help you:
- Evaluate your mission vs. tax strategy
- Understand FTB reporting differences
- Structure your books for clean audits and investor reviews
Pick the best structure before you raise or scale:
https://calendly.com/anshulcpa/
Anshul Goyal, CPA, EA, FCA
Anshul brings 15+ years of U.S. and international tax experience. He specializes in helping online sellers, foreign founders, and U.S. residents with IRS and multi-state compliance. Known for his deep knowledge in Shopify and Amazon seller tax strategy, Anshul has helped hundreds of entrepreneurs minimize taxes and scale legally.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional regarding your individual tax situation.
Top 5 High-Searched FAQs (2025)
1. Are B-Corps taxed differently than LLCs in California?
Yes, B-Corps pay corporate tax but no gross receipts fee.
2. Can a B-Corp elect S-Corp status?
Yes, if eligible and Form 2553 is filed with the IRS.
3. Is there a tax advantage to being an SPC?
Tax is the same as C-Corp, but mission benefits attract ESG funding.
4. Do B-Corps file CA Form 100 or 568?
They file Form 100, like all corporations.
5. Can I switch from an LLC to a B-Corp?
Yes, via conversion or forming a new entity and merging.