How to Dissolve an LLC in California: Forms, Fees and FTB

California LLC dissolution: forms, fees and agencies

Closing a California LLC involves two agencies. The Secretary of State takes the termination documents, and the Secretary of State's LLC forms page lists the Certificate of Dissolution (LLC-3), Certificate of Cancellation (LLC-4/7) and Short Form Cancellation Certificate (LLC-4/8) with no fee. The Franchise Tax Board (FTB) decides whether the LLC still owes the annual tax, and its rules set the timing.

Domestic LLCs cancel, domestic corporations dissolve and foreign corporations surrender, in the FTB's terms. The table shows the California documents for each. For the steps common to every state, see how to dissolve an LLC.

Source: California Secretary of State: LLC forms (California domestic)

Steps to close an LLC in California, in the order the FTB expects

FTB Publication 1038 sets out the sequence that keeps the $800 tax from following you into another year:

• File every delinquent return and pay all balances, including penalties, fees and interest.
• File the final Form 568 for the last year, checking the Final Return box and writing "final" at the top of the first page.
• Stop doing business in California after the final taxable year.
• File the Secretary of State termination forms within 12 months of filing that final return.
• Close the EDD payroll account within 10 days of the last payroll and the CDTFA seller's permit.
• Close the IRS account and keep the records with a named custodian.

Source: FTB Publication 1038: guide to dissolve, surrender or cancel

Filing LLC-3 and LLC-4/7 on bizfile Online

The Secretary of State says terminations may be filed online through bizfile Online for fastest processing, but you need Basic or Full access to the LLC's record in bizfile before the online termination will open, so set that up first. Paper forms are also available.

You may not need both forms. Under Corporations Code section 17707.08, when all members voted to dissolve and the certificate of cancellation says so, the separate certificate of dissolution is not required. If the vote was less than unanimous, file LLC-3 first or together with LLC-4/7. The cancellation also states that a final franchise tax return has been or will be filed with the FTB.

If the FTB has suspended or forfeited the LLC, the Secretary of State cannot accept termination documents until it is revived: pay the balance, file the missing returns and file FTB 3557 LLC, the application for certificate of revivor.

This guide is general information, not legal or tax advice. Fees and forms change: confirm them with the agency before you file, and ask an attorney or accountant about your situation.

Source: California Corporations Code 17707.08

The $800 annual tax and California's 12-month window

This is the part of a California LLC dissolution that costs money when it goes wrong. Every LLC that is doing business or organized in California must pay an annual tax of $800, and the FTB is explicit that the tax is due every year, even with no business, until you cancel. An LLC that stops trading in March but files nothing still owes the next year's $800.

Publication 1038 gives the escape route: an entity avoids the minimum or annual tax for later years if it timely files its final return, stops doing business after the last day of that year, and files with the Secretary of State within 12 months of filing the final tax return. New LLCs have a shortcut: cancelling within one year of organizing with the short form LLC-4/8 means the LLC is not subject to the $800 tax for its first year.

Source: Franchise Tax Board: limited liability company

California LLCs with no assets: FTB administrative cancellation

If the LLC has already stopped doing business and has nothing left, the FTB runs a voluntary administrative dissolution/cancelation program for domestic corporations and LLCs registered with the Secretary of State for more than 12 months. Once the Secretary of State cancels the entity, the FTB may abate unpaid qualified taxes, interest, fees and penalties from after the business stopped; it does not forgive tax owed from before. Applying alone does not terminate the LLC, which still files its cancellation paperwork, and the FTB can impose a 50% penalty on abated tax if the LLC keeps doing business or has undisclosed assets.

Separately, the FTB starts administrative dissolution or cancellation of domestic entities suspended for 60 or more consecutive months, after an intent notice that allows 60 days to object. Waiting for that is not a plan: the years of suspension carry their own penalties.

Source: Franchise Tax Board: voluntary administrative dissolution/cancelation

EDD and CDTFA: California accounts to close

California's payroll and sales tax agencies each need their own closing.

• EDD: if you are closing and will not report wages in a future quarter, submit your final tax return, wage report, and payment within 10 days, regardless of the normal due dates, and close the employer payroll tax account in e-Services for Business.
• CDTFA: close a seller's permit through Online Services, or with form CDTFA-65, Notice of Closeout. CDTFA may ask the date you stopped business, how inventory and equipment were disposed of, and where the books are kept.
• Local business tax certificates from California cities and counties are separate and close on their own forms.

Source: EDD: Changes to your business

Dissolving a California corporation

A California stock corporation files up to two documents, both free: the Certificate of Election to Wind Up and Dissolve (Form ELEC-STK) and the Certificate of Dissolution (DISS-STK). The election form is not required when the vote to dissolve was made by all of the shareholders and the Certificate of Dissolution says so; otherwise it is filed first. A corporation incorporated within the last 12 months that meets the conditions can use the Short Form Certificate of Dissolution (DSF-STK). The tax rule mirrors the LLC rule: every corporation that is incorporated, registered, or doing business in California must pay the $800 minimum franchise tax, and the same 12-month window after the final return applies.

Corporate approvals, final Form 100 or 100S and distributions to shareholders are covered in how to dissolve a corporation.

Source: California Secretary of State: corporation forms (California domestic)

Foreign LLCs registered in California

An LLC formed in another state that registered in California cancels its registration on Form LLC-4/7, also with no fee, after filing its final California return. The FTB notes that a foreign LLC is not eligible to file the Short Form Certificate of Cancellation, even if it registered recently. The $800 annual tax applies to registered foreign LLCs just as it does to California ones until the cancellation is filed.

Source: California Secretary of State: LLC forms (foreign)

Records to keep, and export, after a California cancellation

Returns stay open to audit after the LLC is cancelled; Publication 1038 says all tax returns remain subject to audit until the statute of limitations expires. Keep the federal records too: the IRS asks for employment tax records for at least 4 years, and a final federal return is due for the year the business closes (IRS). Keep the filed LLC-3 and LLC-4/7, the final Form 568 and the EDD and CDTFA closure confirmations together.

Then export the data before cancelling SaaS subscriptions. Our export checklist and closing a business checklist cover the order.

Source: FTB Publication 1038: guide to dissolve, surrender or cancel

A California company's records may be worth licensing

California startups and service firms often close with years of code, support tickets, design files and product discussions. AI developers license material like that, de-identified, to train and test models, and a closing company can sometimes license it instead of deleting it. Check ownership, customer contracts and California privacy rules first; selling company data after closing explains the process.

Closing the company? Before you cancel software or delete files, find out whether its records are worth licensing: years of tickets, work orders, email and code can be. Get a free estimate of what your records could be worth.