How to Dissolve an LLC in California: Complete 2026 Guide

How to Form an LLC: Step-by-Step

1. 1

   Vote to Dissolve

   California LLCs must follow their operating agreement's dissolution procedures. If no operating agreement exists, California law requires unanimous consent from all members to dissolve. Document this decision with a written resolution that includes the dissolution date and reason for dissolution. All members should sign this resolution.

   Pro tip: Keep detailed records of the dissolution vote as the California Secretary of State may request documentation during the filing process.
2. 2

   Obtain Tax Clearance Certificate

   CRITICAL: California REQUIRES tax clearance before dissolution is finalized. Contact the California Franchise Tax Board to obtain a tax clearance certificate. You must pay all outstanding franchise taxes, including the $800 annual minimum tax, and file all required tax returns before receiving clearance. This step is mandatory and dissolution cannot be completed without it.

   Pro tip: Request tax clearance early in the process as it can take several weeks to resolve any outstanding tax issues with the Franchise Tax Board.
3. 3

   File Certificate of Dissolution with the California Secretary of State

   Submit the Certificate of Dissolution to the California Secretary of State along with the $60 filing fee. You can file online at https://www.sos.ca.gov or by mail. Include your tax clearance certificate with your filing. Processing time varies based on current state workload, but most filings are processed within a few weeks.

   Pro tip: Online filing is faster and provides immediate confirmation of receipt. Keep your confirmation receipt for your records.
4. 4

   Notify Creditors and Settle Debts

   California law requires you to notify known creditors of your LLC's dissolution. The notice period varies by state statute depending on the type of creditor and debt. Send written notice to all creditors, vendors, and anyone your LLC owes money to. Pay all debts or make arrangements for payment before completing dissolution.

   Pro tip: Keep certified mail receipts as proof you notified creditors. This protects you from future claims that proper notice wasn't given.
5. 5

   Close California State Tax Accounts

   File your final California tax returns and close all state tax accounts. This includes final franchise tax returns, sales tax returns (if applicable), and employment tax returns (if you had employees). Notify the California Franchise Tax Board and Employment Development Department that your LLC has dissolved.

   Pro tip: File final returns promptly to avoid penalties and interest charges on late filings.
6. 6

   Cancel Your EIN with the IRS

   Send a letter to the IRS Cincinnati office to close your LLC's Employer Identification Number (EIN). Include your LLC name, EIN, business address, and dissolution date. Also state that you're closing the account because the LLC has dissolved. Send the letter via certified mail to: Internal Revenue Service, Cincinnati, OH 45999.

   Pro tip: Keep a copy of your cancellation letter and certified mail receipt. The IRS doesn't send confirmation, so this is your proof of cancellation.
7. 7

   Distribute Remaining Assets to Members

   After paying all debts and obligations, distribute remaining LLC assets to members according to their ownership percentages or as specified in your operating agreement. California law requires debts and obligations to be paid first, then member capital contributions returned, then any remaining assets distributed per ownership interests.

   Pro tip: Document all asset distributions in writing and have members acknowledge receipt. This prevents future disputes about who received what assets.

Winding-Up Checklist

• Cancel all California business licenses and permits

  Contact each licensing authority to formally surrender your business licenses and permits. This prevents future fees and compliance issues.

• Close business bank accounts

  Close all LLC bank accounts after paying final expenses and distributing remaining funds to members.

• Cancel business insurance policies

  Cancel general liability, property, and other business insurance policies to stop premium charges and potentially receive refunds.

• Notify vendors, suppliers, and customers in writing

  Send formal written notice to all business relationships about your dissolution date and final invoice/payment procedures.

• File final payroll tax returns and W-2s (if you had employees)

  Submit final quarterly payroll tax returns and issue final W-2s to employees by January 31st following the dissolution year.

• Retain business records per California retention requirements

  Keep tax returns, financial records, and legal documents for at least four years as required by California law.