Dissolve LLC California | How to Officially Close Your Business Hassle Free

If you are planning on dissolving an LLC in California, it is important to be aware of the appropriate protocol. The terms ‘dissolving’ and ‘winding up’ is often confused as interchangeable, though actually refer to two different things when dissolving an LLC in California.

In this guide, we will be taking a look at the right way to dissolve your California LLC, covering every key aspect of the dissolution process for your business entity in California. Moreover, you can check out how to dissolve an LLC in Florida nearby, or find out more about Nevada LLC dissolutionWe also give you a dedicated post on how to dissolve an LLC without any fines. On the other hand, if you are just about to set up a business, find a trusted LLC formation service.

Dissolve a California LLC – Dissolution Process Basics

Your business in California can only be formally dissolved by formalizing the matter with the California Secretary of State. This means you must file a certificate with the California Secretary of State – or more specifically, the appropriate LLC (limited liability company) dissolution form.

At the moment you dissolve the company, you formally terminate its existence as a legal and registered business entity in California. This can only occur after you file the certificate to the Secretary of state, after which your business will no longer be within the reach of creditors.

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Dissolution of your California LLC sometimes occurs on an involuntary basis, when business entities are forced to dissolve due to a court decree. However, the vast majority of business entities that dissolve do so on a voluntary basis, when the LLC’s stakeholders vote in favor of dissolution. You can also check out here how to dissolve LLC in Texas - a state that doesn't have a specific LLC Act, how to dissolve LLC in Missouri, this guide to closing your Ohio LLC, or a guide to closing your Colorado LLC.

One important thing you need to know if looking to terminate a business – there are different rules in California for an LLC that has never conducted any business prior to dissolution. Further information on this can be found via the Secretary of State – here we will be discussing dissolving a California LLC that has conducted at least some business. 

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Starting the Dissolution Process

The first step in the LLC dissolution process of the LLC in California is to carefully consult the information in every business registration form and document form when you established your California LLC. Either in your operating agreement or articles of organization, there will be a section containing information on how to legally dissolve your  California LLC and the steps that need to be taken. In addition, we also show you how to dissolve an LLC in NJDelaware LLC dissolution, and the ways to dissolve LLC in New York and dissolve LLC in Wisconsin if you have a business there. Interestingly, after reading a guide to closing your Pennsylvania LLC, you'll realize PA doesn't require LLCs to publish or notify creditors about the upcoming LLC dissolution.

In most instances, this will include the requirement for a members' vote – i.e. for all members of your LLC to vote in favor of dissolving the company. Things can get a little tricky if a majority of members or managers choose not to vote in favor of terminating the company, but this is a comparatively rare occurrence and an entirely different topic of discussion.

The rules in the statement may include various specific procedural requirements, such as organizing a formal meeting for members to vote on the subsequent course of action. All such requirements need to be followed by the letter – failure to do so could affect whether or not your business is terminated illegally. Check out if this is similar to how to dissolve an LLC in Georgia, or how to dissolve an LLC in Kentucky.


When all LLC members have voted to dissolve the business, it is only necessary to file a certificate of cancellation. If a majority of LLC members voted to terminate, you must also file a certificate of dissolution. Remember that you do not need to secure the vote to dissolve the LLC from every member – just a majority.

When the meeting is called and members are asked to vote, everything that takes place should be recorded in the minutes of the meeting for future reference.

At this point, it is important to note that LLC dissolution will not bring a halt to any legal action that has already been directed at your business. If you need help or legal advice, it should be sought at the earliest possible stage.

Certificate of Dissolution

As mentioned above, you do not need to file a certificate of dissolution with the Secretary of State if every LLC members' without exception votes in favor of terminating the company. If there is even one vote against the proposal, a certificate of dissolution must be filed.

The bare minimum information this dissolution statement must provide includes the name of the LLC and your LLC’s SOS file number. A return mailing address and the authorized signatures of one or more primary members or managers must also be provided.

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There is no specific fee to pay for filing these certificates, though you will be required to pay a fee of $15 if you choose to hand your documents in personally at the SOS office in Sacramento. After receiving the form in the mail or handed over personally, it may be several weeks before the certificate is processed by the SOS.

However, there is the option to pay an additional fee for an accelerated service, if preferred.

“Winding Up”

The dissolution of your business brings to an end its status as a legally registered business entity. However, your LLC in California will still exist in a capacity that enables it to address any final matters that are still outstanding.  This is referred to as ‘winding up’ and is a process that can be handled by one or more members of the former business.

According to the LLC Act of California, the most important winding up tasks to dissolve a California LLC are as follows:
  • Collecting and dividing the LLC’s remaining assets
  • Disposing of and conveyancing the LLC’s property
  • Prosecuting and defending actions by or against the LLC or Limited Liability Company in order to collect and discharge obligations

In terms of collecting and dividing the remaining assets of the LLC, the process must be handled in a specific order.

First of all, all outstanding debts and liabilities must be settled, with particular emphasis on taxes. All outstanding taxes should be settled as a matter of priority, so as to prevent any subsequent penalties or legal action.


Interim distributions must then be paid to members as specified in the rules of your operating agreement. Unless specific exceptions are outlined in this agreement when you start a business, these distributions will be made on the basis of the contribution each member made to the LLC.

After which, all of the LLC’s remaining assets must be paid to members (a) for the return of their contributions to the LLC; and then (b) in the proportions in which members generally share in distributions.

Notice to Creditors and Other Claimants

It is a legal requirement in California to issue a formal notice that you have commenced winding up your LLC to any claimants or creditors listed in your business records. Properly drafting this notice typically calls for expert legal advice, so be sure to consult with a business attorney if you need help.

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Certificate of Cancellation

After the dissolution and winding up processes are complete, you must file a certificate of cancellation with the Secretary of State. Information that must be provided in this statement includes:

  • the name of your LLC
  • the LLC’s SOS filing number; and
  • a statement that the proper final tax return has been or will be filed with the Franchise Tax Board.

The SOS has produced a simplified cancellation form complete with detailed instructions that are available online and can be downloaded for free, covering the most frequently asked questions and issues.


A return mailing address and at least one authorized signature must be included, as with a certificate of dissolution.

One important note – you must complete and submit the Form LLC 4 7 if your LLC has conducted any business – the Form LLC 4 8 is exclusively for those that have conducted no business at all.

You will not need to pay a fee for your certificate to be processed unless you choose to hand it over in person. In which case, you will be required to pay a special handling fee of $15.00.

Immediately after the dissolution of your company, the name you chose for your business will once again be freely available for anyone who chooses to use it.

Tax Clearance

Under state law, tax clearance does not need to be obtained prior to terminating a limited liability company. However, this does not mean that all outstanding taxes must not be paid in full and on time by those responsible for the dissolved business.

Within your certificate of cancellation, a statement should be included confirming that you have either filed or will subsequently file a final annual tax return or a final franchise tax return in due course.  Which applies will be determined by whether your business was registered as a corporation or a partnership for taxation purposes.


In addition, a certificate of cancellation should be filed within 12 months of filing your final return.

Out-of-State LLC Registrations

It’s important to note that if your LLC was either registered in another state or qualified to do out-of-state business, you will need to file for its termination in these states accordingly. Different states use different terminology in reference to ending the right to do business – examples of which include a certificate of surrender of right to transact business, application of withdrawal, certificate of termination of existence, and termination of registration.

If you fail to file the appropriate certificates with the states in which your LLC conducted business, you will remain liable for business taxes and annual report fees. Refer to the respective Secretary of State websites for each of the states for further information, or consult with a business attorney if unsure as to your out-of-state liabilities.

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