California Dissolution

There comes a time when a business owner realizes it’s time to close the company. No matter what the reason for the closure may be, it’s best to always comply with the legal process. Opening a company in California requires you to file documents, and closing a business here means you’ll have to deal with paperwork again.

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Dissolution at 888-366-9552

What Is California Dissolution?

A company that has decided that it will no longer conduct business should undergo the process known as California dissolution. This way, the business will be able to officially end its existence and protect the owner from future responsibilities, such as taxes, debts, and other obligations.

Why Does A Company Dissolve?

Why do companies need to dissolve? –  Dissolving your company puts a stop to necessary tax filings. It also ends the need to comply with state requirements for companies that have a record of operation.

Who makes the decision to dissolve? – LLCs require the approval of their members, while corporations need a resolution and the approval of their board of directors and shareholders.

How long does it take to dissolve a business? – California dissolution will depend on how long a company spends in taking care of its responsibilities and obligations. Then, you can add at about 4 weeks for the state to process the submission.

What Happens If Your Company Does Not Formally Dissolve?

Business entities in California operate under state law. Thus, it needs to file reports and pay taxes. Not dissolving your company means it will still have those responsibilities. Additionally, third parties will still be able to sue your company since it’s still technically in operation. This is why proper California dissolution is important.

Steps To Dissolve Your Business

California requires business entities to undergo a variety of tasks to dissolve formally, including California dissolution.

1. File Articles of Dissolution with the state – Companies that have an active status can file for dissolution with the Secretary of State. If your business has a suspended status, you should revive it first before filing for dissolution. 

If all members of your LLC have voted for the dissolution, you’ll only need Form LLC-4/7 Certificate of Cancellation. However, if the voting result isn’t unanimous, your company has to file Form LLC-3 Certificate of Dissolution along with or before the submission of Form LLC-4/7. Alternatively, your company can file Form LLC-4/8 Short Form Cancellation Certificate if all of these apply:

  •   You organized it in California within the last 12 months.
  •   It has no debts or liabilities, except for state taxes.
  •   It has filed or will file all final California tax returns.
  •   It distributed all its assets or never acquired any.
  •   It hasn’t conducted business yet.
  •   The majority of the LLC’s managers or members voted to dissolve.
  •   It returned all payments from investors.

On the other hand, corporations that received shareholders’ unanimous vote should file Form DISS STK Certificate of Dissolution. However, if voting isn’t unanimous, your company has to submit Form ELEC STK Certificate of Election to Wind Up and Dissolve before or with Form DISS STK. Another option is Form DSF STL Short Form Certificate of Dissolution, which is for corporations formed within 12 months before the dissolution and have no debts or unpaid taxes.

2. Remove all liabilities and obligations – Your company should prosecute and defend actions by or against it to collect and remove its obligations, dispose of and convey properties, pay or make adequate provisions to pay all known debts and liabilities, and distribute any remaining assets.

3. Give notice to any claimants – California requires companies to mail a written notice of commencement of winding up to creditors and claimants that appear on the records of the company.

4. Tax clearance – California doesn’t require business entities to secure a tax clearance when dissolving. However, your company will have to file a final tax return with the Franchise Tax Board.

5.   Close all bank accounts, credit lines, permits, and licenses – Don’t forget to tell agencies in charge to cancel permits and licenses to avoid any problems in the future. You should also close bank accounts and credit lines under the name of your company.

How DoMyLLC can assist with streamlining the process

Dissolving your company can be a tough decision. Undergoing the proper process can also add stress. If you’re thinking of closing your business but are overwhelmed by the requirements, you can depend on an expert that offers personalized solutions. You can even expect live support from our team of experts. Contact DoMyLLC now and find out how we can help streamline the process of California dissolution for your company.

California Dissolution FAQs

It’s free. But you’ll need to pay if you want to expedite the processing. In-person submissions require a $15 handling fee. Processing of documents within 24 hours comes with a $350 additional fee, while those done on the same day requires $750.

The Secretary of State’s normal processing usually takes about 4 weeks. Your company can also opt to expedite the processing time to either same-day or 24-hour processing.

The name of your company will immediately be available as soon as the dissolution of the business.

California Business Resources

California Office of Secretary of State
Phone Number:
(916) 653-6814

California Secretary of State
1500 11th Street
Sacramento, CA 95814