How to close a California LLC depends in large part on the operating agreement between parties of the LLC, assuming there is one. One of the most important elements of a solid LLC operating agreement is thoroughly outlining all of the details involved in dissolving the LLC if that should become necessary.
What Are the Key Steps in Dissolving an LLC?
In summary:
- Member Approval Per the LLC’s Operating Agreement
- Tie Up Loose Ends
- State Taxes
- State Filings
- File Final Form 568 with the Franchise Tax Board.
- File the Appropriate Federal Tax Returns.
- Notify the IRS That Your EIN Is Closed.
- Make Sure All Local Business Licenses and Permits Are Cancelled.
If you are looking to dissolve an LLC in California, it is a requirement for the LLC termination to be filed with the California Secretary of State. It is important to know that the California Secretary of State will want proof that the members of the LLC are in agreement. Specific details of how members vote on dissolving an LLC and all of the parameters around the voting process should also be part of a legally sound operating agreement. Documentation is critical so that if questions arise from the Secretary of State, your business will be able to present a historical timeline with thorough documentation.
Don’t Get Lost in the Myriad of California LLC Forms.
It is critical that you file the correct dissolution and cancellation forms with the California Secretary of State, which depend on each business’s particular situation. Filing an incorrect form when closing a corporation can lead to delays and even closure. This is one reason that working with a business law firm with experience in setting up LLCs, developing detailed operating agreements, and LLC dissolution in California can pay huge dividends in terms of getting it done properly and efficiently.
In addition to filing with the California Secretary of State, a tax closure must also be filed with the Franchise Tax Board. Having filed the incorrect form or forms with the Secretary of State can also negatively impact tax closure. It is obviously not a good situation to be in to later learn that your business is still in existence when you assume it has been dissolved. You will likely be hit with the annual franchise tax of $800 in the meantime (in addition to penalties). This is yet another reason why engaging a professional business formation law firm makes sense.
At Chauvel and Glatt, we guide our clients through the process of closing a corporation correctly. We understand the pitfalls that a business can fall into when not following the right protocol. We understand – literally – how to file the proper forms and check all of the necessary boxes . An LLC must be paid up on its taxes before it will be legally accepted as a dissolved LLC. As well, the correct final federal return, per your LLC’s tax classification, must be filed and processed. Be sure to close the LLC’s EIN with the IRS in writing afterward.
LLC Dissolution in California Need Not Be Difficult.
When you engage Chauvel & Glatt, we can guide you through the process seamlessly and efficiently. Our comprehensive experience and history in business law means that you can count on us to handle every aspect of the process. This is true whether your business is forming an LLC or dissolving an LLC. We work tirelessly on your behalf so that you can concentrate on your next endeavor, whether that is forming a new business or whatever that may be.
