How to Dissolve an LLC in California: SOS Forms and FTB Steps

California LLC dissolution: two agencies, one order

Closing a California LLC involves two separate agencies. The Franchise Tax Board (FTB) handles the final tax return and the annual LLC tax. The Secretary of State (SOS) handles the filing that ends the LLC's legal existence. The FTB says the process is multi-step and multi-agency, and the order matters: get current with the FTB, file the final return, then file with the SOS.

The FTB lists these requirements for any entity that wants to dissolve, surrender or cancel:

• File any delinquent tax returns and pay all balances due, including penalties, fees and interest.
• File the final current-year return, check the Final Return box on the first page and write "final" at the top.
• Stop doing or transacting business in California after the final taxable year.
• File the SOS dissolution or cancellation form within 12 months of filing the final tax return.

The FTB also notes that all returns stay subject to audit until the statute of limitations runs out, so the business records you keep matter after the filing too.

How to dissolve a California LLC, step by step

1. Get the members' approval

The SOS forms distinguish between two filings. A Certificate of Dissolution (Form LLC-3) records the members' decision to dissolve. The SOS instructions say you do not need to file LLC-3 if all members voted to dissolve and that is stated on the Certificate of Cancellation. Check your operating agreement for the vote it requires.

2. Wind up the business

Collect what the LLC is owed, sell or distribute assets, pay or settle debts, and close bank accounts, licenses and permits. The FTB also suggests notifying creditors, vendors, suppliers, clients and employees that you are going out of business, and canceling any fictitious business names.

3. File the final Form 568

For an LLC, the FTB's page says that when you close you file the final current-year return (Form 568) with the Final Return box checked and stop doing business in California. Pay any balance due. The FTB points to Publication 1038, Guide to Dissolve, Surrender, or Cancel a California Business Entity for the details.

4. File the Certificate of Cancellation online

The Certificate of Cancellation (Form LLC-4/7) ends the LLC's existence. According to the SOS forms and fees page, terminations are online only and there is no filing fee for a Certificate of Dissolution, Certificate of Cancellation or Short Form Cancellation. The same page says that from July 1, 2026, terminations must be filed online and require Full Access in bizfile Online. The forms themselves list an optional $5 fee for a certified copy.

5. Use the short form if the LLC is under 12 months old

The Short Form Certificate of Cancellation (Form LLC-4/8) is for LLCs that file within 12 months of the date the Articles of Organization were filed and meet the form's other conditions. The FTB says an LLC that files a short form cancellation within one year of organizing is not liable for the $800 annual tax for its first taxable year.

The $800 annual tax and why timing matters

The FTB is direct about it: an LLC owes the $800 annual tax until it cancels. If you stop operating but never file the cancellation, the tax keeps accruing, and so can penalties. The SOS also charges a $250 penalty for a missed Statement of Information, according to the FTB.

That is why the order above matters. File the final return and the cancellation in the same cycle, within the FTB's 12-month window, instead of letting the LLC sit dormant.

If your LLC is suspended or forfeited

A suspended LLC cannot simply cancel. The FTB says a suspended or forfeited entity has to be revived and in good standing first. Revival means filing all delinquent returns, paying all balances with penalties, fees and interest, and filing a revivor request (FTB 3557 LLC/BC).

The FTB's suspension page lists what a suspended business loses while it stays suspended: it cannot legally do business, cannot close or dissolve, cannot sue or defend itself in court, can lose its name, and its contracts can be voidable. It also warns that owners may face personal liability in some situations.

The FTB also describes a voluntary administrative dissolution or cancellation for qualified LLCs that are not doing business, have stopped or never did business, and have no remaining assets. After the SOS dissolves or cancels the business this way, the FTB says it may abate unpaid qualified taxes, interest, fees and penalties.

Before you cancel: what the LLC still owns

Once the cancellation is filed, the LLC stops existing, so sell or distribute everything it owns before that date. That includes equipment, domains, intellectual property and its data: the email archive, CRM, support tickets and internal chat history. Some buyers now pay for company records from closing businesses. The money from any sale belongs to the LLC and goes through the normal wind-up order: creditors first, then members.

Common questions