# How to Dissolve an LLC in California

> How to dissolve a California LLC: the member vote, winding up under Corp. Code 17707.04, final Form 568, Forms LLC-3 and LLC-4/7, and stopping the $800 tax.

Source: https://ridleylawoffices.com/how-to-dissolve-llc-california/

**Short answer:** To dissolve a California LLC, the members vote to dissolve, wind up the business by paying or providing for its debts and distributing what’s left, file a final Form 568 with the Franchise Tax Board, and file a certificate of cancellation (Form LLC-4/7) with the Secretary of State within 12 months of that final return. File Form LLC-3 first unless the vote was unanimous. There’s no state filing fee.

- A vote of 50 percent or more of the voting interests dissolves the LLC unless the operating agreement requires more (Corp. Code § 17707.01(b)).
- Known creditors get written notice by mail when winding up starts (Corp. Code § 17707.04(a)).
- The $800 tax stops only if the LLC files a timely final return, stops doing business, and cancels within 12 months of that return (Rev. & Tax. Code § 17947).
- Members who took distributions can be sued for up to four years after dissolution, to the extent of what they received (Corp. Code § 17707.07).

Closing an LLC in California is two jobs that people tend to treat as one. The legal job is the vote, the winding up, and the Secretary of State filings. The tax job is the final return and the timing rule that decides whether you owe another $800. Get the order wrong and the LLC keeps billing you after you’ve stopped using it.

If your LLC is less than a year old and never did business, you probably want the short form, and my page on the [California LLC $800 tax](https://ridleylawoffices.com/california-llc-800-tax/) covers that path in detail. This page is for everyone else: an LLC that had a bank account, customers, a lease, a rental, or a partner, and now needs to end properly.

## What are the steps to dissolve an LLC in California?

Work through them in this order. Most problems I see come from filing the cancellation before the money side is finished, or from finishing the money side and never filing anything.

1. **Read the operating agreement.** It may set a higher vote, name who winds up, or change how assets are split.
2. **Vote to dissolve and put it in writing.** A written consent signed by the members is enough for most small LLCs.
3. **Send written notice to known creditors.** The statute requires notice by mail to creditors and claimants whose addresses are in the LLC’s records.
4. **Wind up.** Finish or assign contracts, collect receivables, sell or distribute property, and pay or provide for every known debt.
5. **Distribute what’s left** in the order the statute or the operating agreement sets.
6. **File final tax returns**: Form 568 with the FTB and the federal return that matches how the LLC is taxed.
7. **File the Secretary of State forms**: Form LLC-3 (unless the vote was unanimous) and Form LLC-4/7, within 12 months of the final return.

Then close the accounts that sit outside the entity, such as the seller’s permit, the EDD payroll account, the city business license, and any fictitious business name. My [full checklist for closing a California business](https://ridleylawoffices.com/how-to-close-business-california/) walks through each agency.

## What vote does it take to dissolve a California LLC?

By default, members holding 50 percent or more of the voting interests. Corp. Code [§ 17707.01(b)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17707.01) dissolves an LLC on that vote, or on a higher percentage if the articles or a written operating agreement require one.

The same section lists the other ways an LLC dissolves: an event named in the operating agreement, 90 consecutive days with no members, or a court decree. The 90-day rule has an exception for a sole member who dies, whose interest can pass to heirs. I cover that in [what happens to an LLC when the owner dies](https://ridleylawoffices.com/llc-owner-dies-california/).

A 50-50 LLC is where the default rule bites. Either member alone holds 50 percent, so either one can vote to dissolve unless the [operating agreement](https://ridleylawoffices.com/california-llc-operating-agreement/) says otherwise. If you and your co-owner disagree about closing, read the agreement before anyone votes. A [buy-sell agreement](https://ridleylawoffices.com/buy-sell-agreement-california/) often gives a better exit than dissolution.

### What if the members can’t agree?

Then a member can ask a court to dissolve the LLC. Corp. Code [§ 17707.03](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17707.03) allows judicial dissolution when management is deadlocked, the business has been abandoned, or it isn’t reasonably practicable to carry on under the operating agreement, among other grounds. The other members can stop the dissolution by buying out the members who sued at fair market value, set by three court-appointed appraisers if the sides can’t agree.

That’s a lawsuit, and I don’t litigate. Owners in a dispute need litigation counsel, and I can refer you. My page on [business divorce and partner buyouts](https://ridleylawoffices.com/business-divorce-partner-buyout-california/) covers the negotiated alternatives.

## What does winding up an LLC involve?

Winding up is the period between the vote and the cancellation, when the LLC stops doing new business and settles the old. The managers who haven’t wrongfully dissolved the LLC may wind up its affairs, or the members may if there are no managers, under Corp. Code [§ 17707.04(a)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17707.04).

The people winding up must mail written notice that winding up has started to all known creditors and claimants whose addresses appear in the LLC’s records. Unless the operating agreement says otherwise, they’re entitled to reasonable compensation for the work under § 17707.04(c). In a single-member LLC that’s you, so it rarely matters. In a multi-member LLC where one partner does all the closing work, it can.

A practical winding-up list:

- Stop taking new work, and tell customers and vendors the closing date.
- Finish, assign, or terminate open contracts. Read the lease for an early termination clause and any personal guarantee (see [personal guarantees on commercial leases](https://ridleylawoffices.com/personal-guarantee-commercial-lease-california/)).
- Collect receivables and deposits.
- Sell equipment, vehicles, inventory, and the business name or customer list if anyone will pay for them. A sale of the whole business is its own project, covered in [how to sell a small business in California](https://ridleylawoffices.com/how-to-sell-a-business-california/).
- Pay final wages and close payroll, pay sales tax through the last day, and pay trade creditors, loans, and credit cards.
- Keep the business bank account open until the last check clears and the last tax payment posts.

## How are an LLC’s assets distributed on dissolution?

Creditors first, then members. Corp. Code [§ 17707.05(a)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17707.05) requires that all known debts, including debts to members who lent the LLC money, be paid or adequately provided for before anything goes to the members as owners.

After that, unless the articles or operating agreement set a different order, the statute distributes what’s left in this sequence:

1. To members for distributions the LLC already owed them.
2. To members for the return of their contributions.
3. To members in the proportions in which they share in distributions.

A debt counts as adequately provided for if a financially responsible person assumes or guarantees it in good faith, or if the amount is deposited the way the General Corporation Law allows, under § 17707.05(c). A disputed invoice or a pending claim is the usual reason to hold money back instead of paying it out.

### A worked example

Two friends own a catering LLC in Ventura. Ana contributed $40,000, Ben contributed $10,000, and the operating agreement splits distributions 50-50. The LLC also owes Ben $15,000 on a loan he made in 2024. After selling the van and equipment and collecting receivables, the LLC has $95,000 in the bank and $22,000 of outside debt.

| Step | Paid to | Amount | Cash left |
| --- | --- | --- | --- |
| Outside creditors | Vendors, card, landlord | $22,000 | $73,000 |
| Member loan (a debt, paid with creditors) | Ben | $15,000 | $58,000 |
| Return of contributions | Ana $40,000, Ben $10,000 | $50,000 | $8,000 |
| Remainder by distribution share | Ana $4,000, Ben $4,000 | $8,000 | $0 |

Ana gets $44,000 and Ben gets $29,000. If they’d split the $73,000 left after outside creditors 50-50, Ana would have lost $7,500 of her capital. Many operating agreements track capital accounts instead, and the CPA should run those numbers before any check goes out.

## Can members be liable after the LLC is dissolved?

Yes, to the extent of what they took out. Corp. Code [§ 17707.07(a)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17707.07) lets a creditor enforce a claim against the dissolved LLC’s undistributed assets, including insurance, and against members up to the assets distributed to them on dissolution.

Those claims against members are extinguished unless the creditor sues before the earlier of the applicable statute of limitations or four years after the dissolution took effect. Four years is the practical number to plan around. Keep the LLC’s records, the creditor notices, and the distribution math for at least that long.

This is why skipping the creditor step to get the money out faster is a bad trade. The liability shield doesn’t cover a distribution the LLC couldn’t afford.

## What does an LLC file with the Franchise Tax Board to close?

A final Form 568, with the final return box checked, plus any returns that are still missing. The FTB’s [Publication 1038](https://www.ftb.ca.gov/forms/misc/1038.html) lists the steps: file all delinquent returns and pay all balances, file the final return with the Final Return box checked and “final” written at the top of page one, and stop doing business in California after the final taxable year.

An LLC taxed as a partnership files Form 568 by the 15th day of the third month after its taxable year ends, which is March 15 for a calendar-year LLC, under Rev. & Tax. Code [§ 18633.5(a)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=18633.5). A single-member LLC owned by an individual still files its own Form 568, due by the 15th day of the fourth month after the owner’s year ends, under Rev. & Tax. Code § 18633.5(i).

If the LLC’s total income from California sources reached $250,000 in its final year, the LLC fee under Rev. & Tax. Code § 17942 is due on top of the $800. The fee brackets are on my [gross receipts fee](https://ridleylawoffices.com/california-llc-gross-receipts-fee/) page.

### Do I need a tax clearance certificate to dissolve?

No. California doesn’t make an LLC get a clearance certificate from the FTB before the Secretary of State accepts its cancellation. Form LLC-4/7 instead carries a statement, which you can’t alter, that all final returns required under the Revenue and Taxation Code have been or will be filed with the FTB. The FTB’s own audit manual notes that corporations stopped needing a tax clearance certificate to dissolve in 2006.

Some national filing services still tell California owners to “get tax clearance.” What you need is a filed final return and a zero balance, because the FTB can still audit the final years until the statute of limitations runs.

### What about the federal return?

It depends on how the LLC is taxed. The IRS’s [closing a business](https://www.irs.gov/businesses/small-businesses-self-employed/closing-a-business) page lists what each type files for its last year:

- **Single-member LLC (disregarded):** the owner reports the final year on Schedule C, or Schedule E for a rental, with the individual return.
- **Multi-member LLC (partnership):** a final Form 1065 with the final return box checked, and final Schedule K-1s to each member.
- **LLC taxed as an S corporation:** a final Form 1120-S. My page on [closing an S corp in California](https://ridleylawoffices.com/how-to-close-s-corp-california/) covers the corporate side, including Form 966 and the Form 100S.

Payroll returns (Forms 941 and 940), final W-2s, and 1099s for contractors are separate, and the IRS will close the EIN account only after all returns are filed and taxes paid.

## Which Secretary of State forms do I file?

It depends on the vote and on whether the LLC ever did business. The Secretary of State charges no fee for any of these, and an optional certified copy is $5. You can file online through bizfile Online or by mail.

| Situation | Form | Notes |
| --- | --- | --- |
| Vote to dissolve was less than unanimous | LLC-3, Certificate of Dissolution | Filed before or with the LLC-4/7. It tells the world the LLC is winding up. |
| Winding up is finished | LLC-4/7, Certificate of Cancellation | Check the box if ALL members voted to dissolve, and no LLC-3 is needed. |
| Formed within 12 months, never did business, no debts | LLC-4/8, Short Form Certificate of Cancellation | See the [$800 tax page](https://ridleylawoffices.com/california-llc-800-tax/). Not available to a foreign LLC. |
| Out-of-state LLC registered in California | LLC-4/7 | Cancels the California registration only. Close it in its home state separately. |

Corp. Code [§ 17707.08(a)(3)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17707.08) is what lets a unanimous LLC skip the separate certificate of dissolution. The certificate of cancellation is filed once winding up and distribution are complete, and on filing, the LLC’s powers, rights, and privileges cease under § 17707.08(c).

### Does the LLC still exist after cancellation?

For limited purposes, yes. Corp. Code [§ 17707.06](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=17707.06) keeps a canceled LLC alive to finish winding up, defend and bring lawsuits, sell property, and divide assets, but not to carry on business. An asset you forgot, like a refund check or a deposit, stays in the LLC for the people entitled to it and can be collected and distributed later.

Real estate is the common omission. If the LLC still holds title to a property, deed it out before you cancel. A canceled LLC signing a deed years later makes title companies nervous, and the fix costs more than doing it in order. My [rental LLC guide](https://ridleylawoffices.com/guides/rental-llc/) covers how those properties are usually held.

## When does the $800 tax stop?

For the year after the final year, if the closing is done in the right order. Rev. & Tax. Code [§ 17947(a)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=17947) exempts an LLC from the annual tax for a taxable year if it files a timely final return for the preceding year, does no business in California after the end of that year, and files its certificate of dissolution or cancellation within 12 months of filing the final return.

Until then, Rev. & Tax. Code § 17941(b) keeps the tax running for each taxable year, or part of one, until the certificate of cancellation is filed. A final return by itself doesn’t stop it, and the FTB is required to tell you so when it receives one.

### A timing example

Take a calendar-year LLC that stops operating on December 31, 2026. It already paid its 2026 tax in April 2026. It files its final 2026 Form 568 on March 1, 2027, and its Form LLC-4/7 on March 20, 2027. It owes nothing for 2027, because it filed a timely final return for 2026, did no business in 2027, and canceled within 12 months of the return.

Now move the last day of business to February 15, 2027. The LLC is doing business in 2027, so 2027 becomes the final year and the 2027 tax is owed. When an owner is deciding between December and a few weeks into January, that’s an $800 decision. The exact numbers for a first-year or short-year LLC are on the [$800 tax page](https://ridleylawoffices.com/california-llc-800-tax/).

## What if the LLC is suspended?

You have to revive it before you can cancel it. The FTB’s Publication 1038 says the Secretary of State can’t accept termination documents from an entity the FTB has suspended or forfeited. You file the delinquent returns, pay the balance with penalties and interest, and file Form FTB 3557 LLC, the revivor application, first. My page on [suspended LLCs and corporations](https://ridleylawoffices.com/suspended-llc-corporation-california/) explains the revivor process.

There’s a second path for an LLC that has nothing left. The FTB’s voluntary administrative cancelation program is open to a domestic LLC registered with the Secretary of State for more than 12 months that has stopped doing business or never did any and has no assets. You apply on Form FTB 3716 PC or through MyFTB. If the Secretary of State cancels the LLC, the FTB may abate unpaid qualified taxes, fees, penalties, and interest.

Read the fine print before you apply. The program doesn’t forgive taxes owed from before the LLC stopped doing business, and it doesn’t itself end the LLC. You still file the cancellation with the Secretary of State. The FTB can impose a penalty of 50 percent of the abated tax, plus interest, if the LLC keeps doing business or turns out to have undisclosed assets.

## What’s the difference between dissolving and canceling an LLC?

Dissolution is the decision to end the LLC and start winding up. Cancellation is the filing that ends its legal existence once winding up is done. The Secretary of State’s Form LLC-3 says it puts all on notice that the LLC is winding up, and the LLC must also file Form LLC-4/7 to terminate.

People say “dissolve” for the whole thing, and that’s fine in conversation. On the forms, the difference matters, because a certificate of dissolution alone leaves the LLC on file and the $800 accruing.

## Frequently asked questions

### How much does it cost to dissolve an LLC in California?

The Secretary of State charges nothing to file Form LLC-3, LLC-4/7, or LLC-4/8. The real costs are the final year’s $800 tax, any LLC fee, the CPA’s fee for the final returns, and any debts the LLC still owes. If you’re behind on returns, the back taxes and penalties are usually the largest number.

### Can I dissolve an LLC that still has debt?

You can dissolve it, but you can’t skip the debts. The certificate process assumes known debts have been paid or adequately provided for, and members who take distributions ahead of creditors can be sued for them for up to four years. If the LLC can’t pay what it owes, talk to a bankruptcy or insolvency attorney before you distribute anything.

### Can a single member dissolve an LLC alone?

Yes. A sole member holds 100 percent of the voting interests, so the vote is a one-page written consent. Because the vote is unanimous, a single-member LLC can skip Form LLC-3 and check the box on Form LLC-4/7.

### What happens if I stop using the LLC and don’t file anything?

The $800 keeps accruing every year, with penalties and interest, and eventually the FTB suspends the LLC. A suspended LLC has to be revived before it can be canceled, which means paying the back years. Walking away costs more than closing.

### How long does it take to dissolve an LLC in California?

The filings themselves are quick, and the Secretary of State posts current processing times on its website. The winding up usually takes longer: collecting receivables, selling equipment, and waiting for the final tax returns. For a small LLC with no disputes, plan on a few months from the vote to the cancellation.

### Do I need to file a final Statement of Information?

No. The termination filings are the LLC-3 and LLC-4/7. If a Statement of Information comes due while you’re winding up, check its due date against your cancellation date, because the LLC is still on file until the cancellation is accepted. My [Statement of Information](https://ridleylawoffices.com/statement-of-information-california/) page covers the filing schedule.

### Do I need a lawyer to dissolve my LLC?

Not always. A single-member LLC with no debts, no property, and current returns can often close with its CPA’s help and the Secretary of State’s forms. A lawyer earns the fee when there are co-owners, a lease or loan with a personal guarantee, real estate in the LLC, a suspended status, or money to distribute among members.

More in this series

- [Closing a California business: the full checklist](https://ridleylawoffices.com/how-to-close-business-california/)
- [How to close an S corp in California](https://ridleylawoffices.com/how-to-close-s-corp-california/)
- [The California LLC $800 tax and the short form cancellation](https://ridleylawoffices.com/california-llc-800-tax/)
- [Suspended LLC or corporation: how to revive it](https://ridleylawoffices.com/suspended-llc-corporation-california/)
- [California LLC annual requirements](https://ridleylawoffices.com/california-llc-annual-requirements/)
- [All business owner guides](https://ridleylawoffices.com/business-guides/)

I review dissolution plans, draft the member consent and creditor notices, and prepare the Secretary of State filings at my $500 hourly rate. See [fees](https://ridleylawoffices.com/fees/), or my [business law practice](https://ridleylawoffices.com/business-law-attorney/) page for what else I handle for business owners.

[Talk to Eric](https://ridley.click/eric-60)

Book a consultation at [ridley.click/eric-60](https://ridley.click/eric-60) or call 805-244-5291. I work with business owners in Ventura, Santa Barbara, and Los Angeles counties by Zoom or phone.

**Please read:** This page is general information about California law as of September 2026. It isn’t legal, tax, or financial advice, and reading it doesn’t make you my client. The final returns and the distribution math depend on facts this page can’t see, so talk with your CPA as well. An attorney-client relationship starts only with a signed engagement agreement.