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So you want to dissolve your LLC, and you're not sure where to start. What's next?
Here, learn how to dissolve an LLC in California (and all 49 other states!) with the help of our drop-down menu below. Just select the state you're in and you'll find all the dissolution information you need to know.
Why Dissolve an LLC?
There are plenty of reasons why you might want to dissolve an LLC, and not all of them are negative.
In addition to unfortunate reasons such as losing financial viability, you could choose to dissolve your business in order to:
- prepare for retirement;
- close your business;
- start a new business venture; or
- split away from your LLC's other owners and forge your own path.
As you can see, not all reasons for dissolving an LLC are unpleasant ones. But the question remains, how do you go about doing so to begin with?
How to Dissolve an LLC in California (and Every Other State)
No matter your reasoning, dissolving a business is a bittersweet affair, and the last thing you want to do is approach the process with uncertainty.
To help ensure your dissolution goes as smoothly as possible, we've gathered everything you need to know about dissolution. First, use our drop-down menu to select any state to see the dissolution steps. Then keep reading to learn more about how to dissolve an LLC in California.
Make sure you have your
Steps to dissolve your LLC
- Ensure company is in good standing.
- Fill out form & pay fee.
- Notify any banks, creditors, licensors, other state agencies and the IRS.
For more information, contact
1. Ensure the Company Is in Good Standing
As is the case in all states, California doesn't allow LLCs to dissolve if they're not in good standing. In other words, your business must have:
- Been properly registered with the state
- Paid its taxes and fees
- Filed all necessary forms
- Complied with any other LLC-related regulations
Note that you don't necessarily need a Certificate of Good Standing (known as a Certificate of Status in California) in order to actually be in good standing. However, having a recent one on hand can make it faster and easier to prove as much.
2. File Your Final Tax Return
When you dissolve an LLC in California, you're also required to file your final tax return with the Franchise Tax Board (FTB).
To do so:
- File all overdue tax returns and pay all due balances.
- File a final tax return for the current year. Check the box marked "Final Return" on the first page, and write "final" at the top of the first page.
- Stop doing or transacting business in California after the final taxable year.
3. Fill Out the Certificate of Dissolution
Now you can finally move on to filling out the Certificate of Dissolution for your California LLC.
California is one of the few states that doesn't require you to pay a fee in order to dissolve your company, so no need to write a check or break out your credit card. If you want to get an official Certificate of Dissolution, though, you will need to pay a $5 fee.
Remember to double-check that your 12-digit entity number is correct before submitting the form.
4. Notify Other Organizations
In the final step of the dissolution process, you'll need to tie up all your business's loose ends by notifying all relevant organizations you're involved with. These can include:
- The Internal Revenue Service (IRS)
And of course, don't forget to alert your clients and employees of the company's upcoming dissolution, too.
FAQs About Dissolving an LLC
Learn the answers to your most burning questions about dissolving your LLC.
How much does it cost to dissolve an LLC in California?
With every California LLC being required to pay an annual tax of $800 minimum, the Golden State isn't exactly known as a cheap place to do business.
So, it may come as a pleasant surprise that there's no fee associated with filing a Certificate of Dissolution in California.
What happens to assets when an LLC is dissolved?
Before an LLC can be dissolved, it must first "wind up" its business. This includes paying off outstanding debts, fulfilling its remaining obligations and distributing its assets among its members.
If you created an operating agreement when forming your LLC, this process should be relatively straightforward and painless.
What else do I need to close my LLC?
It's important to remember that filing dissolution documents isn't the only step of the process.
In order to fully dissolve your LLC and avoid incurring unnecessary fees, you'll also need to cancel any existing business licenses and permits, close your tax accounts, close your business bank accounts and more.
We recommend checking your state's specific LLC dissolution policies to make sure you don't miss any steps.
Make Dissolving Your LLC a Breeze with Bizee
The process of dissolving an LLC is never a fun one, but that doesn't mean it has to be a Herculean task.
If you want to dissolve your business as easily and efficiently as possible, Bizee's dissolution service can help. We'll file the dissolution paperwork for you, so you can get back to planning the next step in your entrepreneurial journey.
Carrie Buchholz-Powers is a Colorado-based writer who’s been creating content since 2013. From digital marketing to ecommerce to land conservation, she has experience in a wide range of fields and loves learning about them all. Carrie is fond of history, animals and beauty in equal measure. In her free time, she enjoys knitting, playing video games and exploring Colorado's prairies and mountains with her husband.
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