How to Dissolve an LLC in California

LLC dissolution: California

In fact, if you have a California LLC—that is, an LLC formed in California and therefore governed by California LLC laws—it's very important to accurately follow all the steps required to properly dissolve your LLC. In California, this is referred to as "cancelling" your LLC.

Annual minimum franchise tax affects your timing

California law requires all LLCs to pay an $800 annual minimum franchise tax. This payment is required whether or not the LLC is actively in business, which means it must be paid even if the LLC is not actively generating revenue.

There are also other annual maintenance requirements with which the LLC must comply, including an annual information return and the annual filing of a tax return with the Franchise Tax Board of California.

If you've decided it's time to cut your losses and dissolve your business, it's a good idea to act on your decision in a timely manner and have your LLC properly cancelled before the annual minimum franchise tax and annual filings are due again.

According to the Franchise Tax Board, in order to avoid having to pay the annual minimum franchise tax for the current or subsequent years, your LLC must:

• File its final franchise or annual tax return for the preceding taxable year in a timely manner
• Cease doing business in California after the last day of the preceding taxable year
• File the necessary documents to cancel the LLC within twelve months of filing the LLC's final tax return

3 ways to cancel an LLC in California

There are three ways to dissolve an LLC in California. The required form(s) vary, depending on how long you've been in operation and on whether or not you have all the LLC members' approval.

While the steps to formally dissolve your company are fairly straightforward, navigating the formal dissolution process can be daunting to do by yourself. Online dissolution services like LegalZoom can help.

If you decide to dissolve your company by yourself, it's important to choose the right form for your particular situation, as submitting the wrong form might delay the proper cancellation of your California LLC.

If you filed your articles of organization fewer than 12 months ago

If you filed your articles of organization fewer than 12 months ago, you may be eligible to file the Short Form Certificate of Cancellation (Form LLC-4/8).

In order to file for cancellation using the Short Form Certificate, you must meet all of the eligibility requirements specified by the California Franchise Tax Board.

If you have obtained the unanimous consent of all LLC members

If you've held a formal vote according to the procedures and rules outlined in your LLC's operating agreement and received a unanimous consent, you may file for cancellation using the Certificate of Cancellation (Form LLC-4/7).

In order to dissolve your California LLC using the Cancellation Form only, you must indicate on the form that a vote to dissolve the company was made by all the members of the LLC.

If you have not obtained the unanimous consent of all LLC members

If you're unable to obtain the unanimous consent of all the LLCs members, but you meet the requirements to dissolve your LLC, you can file for cancellation by submitting the Certificate of Cancellation (Form LLC-4/7) plus a Certificate of Dissolution (Form LLC-3).

All necessary forms can be downloaded from the California Secretary of State website.

Completing your cancellation paperwork

Once you've selected the right form for your specific situation, you'll need to correctly fill out the form. This may seem straightforward, but each form has its own requirements and any mistakes can delay your cancellation, possibly costing you time and money.

For example, in order to complete the Certificate of Dissolution (Form LLC-3), which must be filed in conjunction with the Certificate of Cancellation (Form LLC-4/7) if you do not have unanimous consent of your members, you must be able to check one of the options in Section 3 of the form, which outlines the circumstances causing the dissolution of the LLC.

These options include, among others, the happening of an event as set out in the LLC's operating agreement or articles of organization, or the vote of a majority of the LLC members, or the percentage required for such a vote as specified in the LLC's articles of organization or operating agreement. If you're unable to select one of the listed options, you cannot file Form LLC-3.

Submitting the paperwork

If you choose to mail in your signed and dated form, you won't be charged a filing fee. However, if you decide to drop off the form in person, you'll be charged a small non-refundable service fee.

Making the decision to end a business endeavor is stressful enough; after doing so, you will want the closing-out process to go as smoothly as possible.

If you need to dissolve an LLC, LegalZoom can help. The process begins by completing a simple online questionnaire. A specialist will create your dissolution paperwork, file it with the state, and send your paperwork to you.

California LLC dissolution FAQs

What happens if I don't officially dissolve my California LLC?

You'll keep paying California's $800 yearly tax even if your business isn't making money or doing anything. This tax bill comes every year until you properly shut down your LLC through the state. You could also face penalties that add up to more than 50% of what you owe, and in some cases, you might become personally responsible for the LLC's debts. Think of it like a gym membership—even if you never go, you still have to pay until you officially cancel it.

How do I know which dissolution form to use for my California LLC?

The form you need depends on how long your LLC has been around and whether all owners agree to shut it down. If your LLC is less than 12 months old, has no debts (except state taxes), and never really did business, you can use the short form (LLC-4/8).

If all your LLC owners agree to dissolve, you only need Form LLC-4/7. But if some owners don't agree or you can't get everyone to vote yes, you'll need to file Form LLC-3 first, then Form LLC-4/7.

How long does it take to dissolve an LLC in California?

Most LLC dissolutions take 4 to 8 weeks to process once you mail your forms to the state. The short form option (LLC-4/8) is usually faster at 2 to 4 weeks. If you need it done quicker, you can pay extra fees ($350–$750, depending on turnaround) to speed things up. Remember, you can't file these forms online—they have to be mailed to the Secretary of State's office. The timing also depends on whether you file one form or two, and how busy the state office is when they receive your paperwork.

Do I need all LLC members to agree before I can dissolve the company?

No, you don't need everyone to agree, but it makes the process easier if they do. California law says you only need more than half of the voting members to agree (a simple majority vote). However, your LLC's operating agreement might have different rules, so check that document first. If everyone agrees, you can skip some paperwork and just file one form. If some members disagree with dissolution, you'll need to file two separate forms and follow a longer process.

What debts and obligations do I need to handle before dissolving my LLC?

You must pay off all your LLC's debts and notify everyone you owe money to before you can officially close. This includes business loans, credit cards, unpaid bills to suppliers, and money owed to employees. You also need to send written notices to all creditors (people you owe money to) giving them 90 to 180 days to make claims.

Don't forget about your final tax returns—both federal and California state taxes need to be filed and paid. If you have business licenses, permits, or bank accounts, those need to be canceled too.

When should I start the dissolution process to avoid paying next year's franchise tax?

You should start dissolving your LLC before April 15th if you want to avoid paying the $800 tax for the following year. Here's how it works: If you stop doing business in March 2025, you need to file your final 2024 tax return by April 15, 2025, and then submit your dissolution paperwork by April 15, 2026.

If you miss these deadlines, you'll be stuck paying another year's worth of taxes even though your business is closed.

What records do I need to keep after dissolving my California LLC?

You should keep all your LLC's important documents for at least seven years after dissolution. This includes financial records, tax returns, bank statements, contracts, and the actual dissolution paperwork you filed with the state.

You'll also want to keep records of how you distributed the company's assets and paid off debts, plus any meeting minutes where members voted to dissolve. These documents protect you if anyone later claims you didn't handle the dissolution properly or if the IRS has questions about your taxes.