How to Close a Business in California: FTB, SOS, CDTFA and EDD Steps

Closing a business in California at a glance

California has no single "close my business" form. The California Office of the Small Business Advocate (CalOSBA) describes closing as ending the business's legal existence by closing out each state and local account or registration it holds. In practice that means up to five agencies:

• Franchise Tax Board (FTB): delinquent returns, the final return, and any balance due.
• Secretary of State (SOS): the termination filing for a corporation, LLC or partnership. The SOS says there is no filing fee for termination documents.
• California Department of Tax and Fee Administration (CDTFA): the seller's permit and any other tax or fee accounts.
• Employment Development Department (EDD): the employer payroll tax account, if you had employees.
• City and county: the business license or tax certificate, the fictitious business name and any local permits.

Federal steps, such as the final IRS return and final payroll returns, apply on top of these. The order matters most for the first two, because the FTB and SOS steps are tied together by a 12-month window.

What "close" means for your type of California business

The FTB uses three different words for the same end result, depending on the entity:

• Domestic corporations (incorporated in California) dissolve.
• Foreign corporations (incorporated in another state or country) surrender their right to do business in California.
• LLCs and partnerships, domestic or foreign, cancel.

Sole proprietors

The SOS termination list covers corporations, LLCs, limited partnerships, general partnerships and limited liability partnerships. It lists no SOS form for a sole proprietorship. If you ran a sole proprietorship, closing mostly means the tax accounts, permits and local registrations covered further down: the CDTFA, EDD, city and county steps, plus your final income tax returns.

Nonprofits

FTB Publication 1038 says domestic public benefit, religious and mutual benefit corporations that hold charitable assets in trust need a Dissolution Waiver from the California Attorney General, filed with the SOS documents. This guide focuses on for-profit businesses.

Step 1: File final returns with the Franchise Tax Board

The FTB lists three requirements before an entity can terminate:

1. File any delinquent tax returns and pay all balances due, including penalties, fees and interest.
2. File the final or current-year return. Check the Final Return box on the first page and write "final" at the top of the first page.
3. Stop doing or transacting business in California after the final taxable year.

The FTB adds that every return stays subject to audit until the statute of limitations runs out, so filing "final" does not end your exposure on that return.

Avoiding the next year's minimum or annual tax

Publication 1038 says an entity can avoid the minimum franchise tax or annual tax for the current and later years only if it meets all of these conditions:

• It timely files its final return, including extension, for the preceding taxable year.
• It stops doing or transacting business in California after the last day of that preceding year.
• It files the right SOS documents within 12 months of the filing date of the final return.

For LLCs, the dollar amount and the short-form exception are covered in our California LLC guide. Publication 1038 shows a revision date of April 2015, so check the FTB's newer closing page as well, which shows a last-updated date of June 8, 2026.

Step 2: Terminate the entity with the Secretary of State

The FTB and Publication 1038 both say to file the SOS dissolution, surrender or cancellation forms within 12 months of filing the final tax return. The SOS FAQ says most of these filings are made online at bizfile Online: find the entity under My Business Records, choose File an Amendment, and follow the prompts.

Which SOS filing you need

• California stock corporation: Election to Terminate and Termination, or only the Termination if all outstanding shares voted to dissolve. A short-form termination exists for corporations formed within 12 months, in limited circumstances.
• Out-of-state corporation registered in California: Termination for an out-of-state corporation (a surrender).
• California LLC: Election to Terminate and Termination, or only the Termination if all members voted to dissolve. A short form applies to some LLCs formed within 12 months.
• Out-of-state LLC: Termination for an out-of-state LLC. Publication 1038 says a foreign LLC cannot use the short form.
• Limited partnership: Termination for a California or out-of-state LP, online.
• General partnership: a paper Certificate of Dissolution (Form GP-4), submitted to the Sacramento office.
• Limited liability partnership: a paper Notice of Change of Status (Form LLP-4).

No filing fee, and a warning about solicitations

The SOS states that there is no filing fee to submit a termination document. It also warns that private companies, including one using the name "Business Filings Division", have mailed California businesses letters asking for $495 or another amount to handle dissolution. The SOS says these letters are not from any government agency and that no business has to use an intermediary to file.

If the entity is suspended or forfeited

The SOS cannot accept termination documents for an entity the FTB has suspended or forfeited. Publication 1038 says you must first pay all balances, file all delinquent returns, and file an Application for Certificate of Revivor (FTB 3557). The FTB also offers a voluntary administrative dissolution or cancellation for qualified domestic corporations and LLCs that have stopped doing business and have no remaining assets.

Step 3: Close your seller's permit with the CDTFA

If you sold or leased tangible goods, you probably hold a seller's permit. CDTFA says you must tell it in writing that you are closing or selling the business. You can close accounts through CDTFA Online Services or, without online access, file CDTFA-65, Notice of Closeout.

What CDTFA may ask for

• The date you stopped being actively engaged in business, and the reason.
• How you disposed of resale inventory, furniture, fixtures and equipment, with the selling price of anything you sold.
• The purchase price of inventory you kept.
• Your current contact details and the address where you keep your books and records.

You also have to file the final sales and use tax return and any unfiled earlier returns, and pay what you owe. CDTFA says you must keep your business records for four years after closing the account. Its permits page adds that using a seller's permit after you stop doing business is a misdemeanor, and that if you sell the business without notifying CDTFA, you can be held liable for the buyer's later taxes and penalties.

Step 4: Close your EDD payroll tax account

If the business had employees, EDD says that when you close and will not report wages in any future quarter, you must submit your final tax return, wage report and payment within 10 days, regardless of the normal due dates. CalOSBA lists the forms involved:

• Final Payroll Tax Deposit (DE 88) with payment.
• Quarterly Contribution Return and Report of Wages (DE 9), completing Boxes B and B1.
• Quarterly Contribution Return and Report of Wages Continuation (DE 9C).

Then close the account in EDD e-Services for Business: choose Close Account, enter the closure date, the date of last wages paid and the closure reason, and complete the declaration. EDD also requires employers to give workers who become unemployed information on unemployment insurance claims, such as the DE 2320 pamphlet, and points employers with plant closures or mass layoffs to the WARN Act.

Step 5: Cancel city and county registrations

CalOSBA tells owners to contact the city and county where they registered: the county clerk for a doing-business-as (fictitious business) name, and the city finance department for the business license or tax certificate. The SOS confirms that fictitious business names are filed with the county of the principal place of business, so check that county's rules for ending one.

For other licenses, CalOSBA points to CalGOLD, its permit lookup tool, to list the local, state and federal agencies that may have issued you permits. The FTB's own closing page adds a few practical steps: notify creditors, vendors, customers and employees; close business bank accounts and credit cards; and cancel licenses, permits and fictitious names.

Federal steps that run alongside the state ones

CalOSBA reminds owners that the IRS needs an annual return for the year the business closes, plus final employment tax returns and deposits if you had employees. The IRS closing-a-business page lists the forms by entity type. Our separate guide on closing a business with the IRS walks through them.

Before you terminate: records and assets

Two state rules shape what you keep. CDTFA requires four years of records after the account closes, and the FTB says returns stay open to audit until the statute of limitations expires. Keep accounting, payroll and sales records in a form you can still open after your software subscriptions end.

Anything the business owns should be sold or distributed before the termination is filed, because the entity stops existing afterward. That includes equipment and inventory (which CDTFA asks about), domains and intellectual property, and company data such as email archives, CRM records, support tickets and internal chat. Any money from those sales belongs to the business and goes to creditors first.

Common questions