How to Dissolve an LLC in California

Voluntarily dissolving your California limited liability company (LLC) – taking legal and tax steps with the Secretary of State and California Franchise Tax Board so that it no longer exists – can be a great decision. Perhaps your small business can no longer compete in the market, or maybe you and your partners are no longer aligned on the business vision. Whatever the reason, it is your responsibility to take the necessary steps to dissolve your small business. Following proper dissolution protocols helps avoid ongoing tax liability and penalties.

If you're considering dissolving your LLC or are ready to go, use this blog as your free step-by-step guide to determining, preparing, and ultimately dissolving your LLC in the state of California. 

Determine if Dissolution Is Necessary

There are several reasons why you may want to cancel an LLC in California, but none will affect the actual winding-down process. Common reasons to shut down an LLC in California include: 

• It's no longer economically viable 

• A planned expiration

• The primary purpose of the business is complete 

• Member disagreements and infighting 

Compliance pressures from new data privacy and reporting laws may also lead some LLC owners to dissolve inactive California businesses.

Alternatives to dissolving your LLC in California include selling your stake in the company or buying out an LLC member who is no longer aligned with the business's strategic vision. In certain instances, the courts can become involved, which is referred to as a "judicial dissolution." This type of costly intervention is usually viewed as a last resort to handling the dissolution process independently. 

Prepare to Dissolve Your California LLC

Many LLCs have a requirement to hold a member vote before the dissolution process may begin. The exact process your LLC must follow may be outlined in the Articles of Incorporation, so be sure you're familiar with and ready to adhere to the rules you and your partners agreed to follow. 

If a majority vote from the members indicates that the business should be dissolved, then you can go through a series of steps to complete the process. Verify that your LLC's operating agreement provisions and ensure tax obligations are satisfied before filing dissolution paperwork with the state.

Four Steps to Dissolve a California LLC

Once a vote to dissolve has concluded, you must begin the multistep process of winding down your business. Follow these steps and use the appropriate forms to dissolve your LLC in California. You can submit your paperwork in person or dissolve your LLC in California online.

Step 1: File Certificate of Dissolution (Form LLC-3, if required)

You must file a certificate of dissolution with the Secretary of State to dissolve your LLC in California. Include this pertinent information on the certificate: 

• LLC name 

• File number provided by the Secretary of State

• At least one authorized signature 

• Return mailing address

Although there is no filing fee associated with submitting this certificate, you can opt to pay for expedited processing. It typically takes between a couple of weeks and a couple of months to fully process this certificate.

Also of note, if all LLC members vote to dissolve the business, you can skip filing this certificate altogether. Simply state that all the members voted in unison to dissolve your LLC on the certificate of cancellation, Form LLC-4/7.

Step 2: Notify Creditors & File Final Taxes

You will need to draft and distribute a notice of the commencement of dissolution to all creditors, claimants, and anyone else whose address appears in your business records. LLCs must file the final CA Form 568 and the federal return marked “Final.”

This notice allows them to collect unpaid LLC debts and address outstanding issues before you permanently close your business in California. You must also submit the remaining LLC tax return to the California Franchise Tax Board.

Recent tax law updates may affect your final return filings, such as the threshold reporting adjustment ($2,000) for IRS Form 1099-NEC, Nonemployee Compensation, and the One Big Beautiful Bill Act changes impacting bonus depreciation and the expanded SALT deduction.  

Step 3: File Certificate of Cancellation (Form LLC-4/7)

You must file a certificate of cancellation with the Secretary of State once your LLC is dissolved in California. Like the certificate of dissolution, you would include your:

• LLC name

• Secretary of State filing number

• Return address

• At least one authorized signature 

In addition to that information, a statement that your final tax return will be filed (or has been filed) with the Franchise Tax Board must be included.

Use the certificate of cancellation form to help dissolve your California LLC. 

Step 4: Terminate Out-of-State Registrations

If your LLC conducts business in other states or has been cleared to do so, you also have a responsibility to take steps to terminate your LLC's ability to do business in those territories. The process for this can vary from state to state and is sometimes referred to as a certificate of termination or application of withdrawal, among other labels.

Until this step is completed, you will continue to be responsible for providing materials and fees to those states, including business taxes. For example, starting January 1, 2026, in the state of New York, LLCs must adhere to the New York LLC Transparency Act if registered there. While beneficial ownership information at the federal level isn't currently required, this act makes it a requirement at the state level in New York. 

Compliance Considerations for 2026

There are several compliance considerations that your California LLC should be familiar with at both the state and federal levels in 2026. They include: 

• California Delete Act: Starting in August 2026, data brokers must process deletion requests, which may be relevant if you're dissolving a business in that sector.

• Payroll thresholds: The California minimum exempt salary is $1,320 per week (2025–2026), effective January 1, 2025, and may impact your final payroll closeout.

• One Big Beautiful Bill Act changes: Passed in 2025, these changes may affect final business tax filings, including the restoration of bonus depreciation, SALT cap increases, and updated 1099 thresholds.

How 1-800Accountant Can Help

Staying compliant with the Secretary of State and Franchise Tax Board while dissolving your LLC in California can be overwhelming, which is why so many owners and entrepreneurs trust 1-800Accountant, America's leading virtual accounting firm, for their LLC dissolution service needs. Our experts will guide you through the process, ensure certificates are prepared accurately, and provide guidance if you have been conducting business in other states, such as New York, with its upcoming LLC Transparency Act. 

When you begin planning your next business launch, as many owners and entrepreneurs will do, we have you covered with affordable, tax-deductible small business tax preparation and filing, business entity formation, advisory for startups, and California tax guidance.

Close your business the right way — schedule a free 30-minute consultation today.