Key Takeaways

  • Form LLC-3, or the Certificate of Dissolution, is required to formally dissolve a California LLC when all members have not agreed to dissolution.
  • Form LLC-4/7 is used alongside Form LLC-3 to complete cancellation with the Secretary of State.
  • Form LLC-4/8 (Short Form Cancellation) can be used for recently formed LLCs meeting specific conditions.
  • Dissolution triggers include a vote by the majority of members, a member’s death or withdrawal, or fulfillment of the business purpose.
  • Final steps include filing final tax returns, canceling business licenses, and notifying creditors and stakeholders.
  • Understanding the difference between LLC-3, LLC-4/7, and LLC-4/8 helps ensure compliance and avoids administrative penalties.

Form LLC-3

Form LLC-3 is the Certificate of Dissolution that will need to be filed if you choose to dissolve your LLC in the State of California. Keep in mind that if all members vote to dissolve the LLC, then Form LLC-3 is not required, and the only document to be filed is Form LLC4/7, which is the Certificate of Cancellation.

Understanding the Purpose of Form LLC-3

Form LLC-3, officially called the Certificate of Dissolution, is filed with the California Secretary of State to formally dissolve a limited liability company when all members do not unanimously agree to dissolution. This form states the decision to dissolve, confirms that all necessary debts and liabilities have been addressed, and signals to the state that the LLC’s operations have ended.

The form is part of a two-step process: after Form LLC-3, business owners must file Form LLC-4/7 (Certificate of Cancellation) to finalize dissolution. If all members consent to dissolution, the LLC can skip the LLC-3 and file only Form LLC-4/7.

Filing Form LLC-3 is critical for properly winding down business affairs and avoiding future state tax obligations. LLCs that fail to file risk remaining active in state records, which can lead to continued minimum franchise tax assessments and penalties.

What Can Trigger an LLC Dissolution

After you’ve determined that you want to dissolve your LLC, you will need to conduct a meeting with all members of the LLC. Once it has been voted on (majority vote), you can then begin the dissolution process.

Next, you will need to submit a written agreement for dissolving the LLC, which must be signed by all members. This agreement will then be filed with the California Secretary of State.

If your LLC drafted an operating agreement at the time of the LLC’s formation, you will need to abide by the process that is laid out in the agreement. A lot of businesses have dissolution provisions within the operating agreement. However, if your LLC doesn’t have an operating agreement (as this document is not required in the State of California for LLCs), then you will simply need to abide by the California state laws in terms of the dissolution process.

There are a few events that could trigger the dissolution of a California LLC, including the following:

• If the LLC sells its property, then it might be required to dissolve (if this is in the operating agreement).

• If an LLC member leaves the business for 90 or more days, the company must dissolve. This could also occur if the owner of a single-member LLC dies.

• If a majority of the LLC owners approve of dissolving the LLC.

Legal and Financial Considerations Before Filing Form LLC-3

Before filing your LLC3 form, you must ensure the business has settled all financial obligations, including vendor payments, outstanding loans, and employee wages. The LLC must also pay any remaining California franchise taxes, as the Franchise Tax Board requires final payment even for businesses being dissolved.

You should also review your operating agreement for specific dissolution provisions. Some agreements require a supermajority vote or a formal written notice to members. If your LLC doesn’t have an operating agreement, California’s Revised Uniform Limited Liability Company Act (RULLCA) governs dissolution procedures.

Finally, LLCs that have obtained local or state permits—such as professional licenses, seller’s permits, or business registrations—must cancel or withdraw them to avoid renewal fees or legal liabilities.

Alternative Methods for Dissolving Your California LLC

There are additional methods by which you can dissolve your California LLC without having to fill out Form LLC-3. As previously mentioned, if all members agree to dissolve the LLC, then Form LLC-3 is not required, and Form LLC-4/7 will be filled out and filed instead.

Furthermore, if your business is less than a year old, has no debts aside from tax liability, has returned any investments, hasn’t conducted business since filing the articles of organization, and has had a majority of the members vote to dissolve the LLC, then the company can be dissolved by filing Form LLC-4/8, which is referred to as a Short Form Certificate of Cancellation.

Difference Between LLC-3, LLC-4/7, and LLC-4/8 Forms

California LLC owners often confuse Form LLC-3, Form LLC-4/7, and Form LLC-4/8, but each serves a specific purpose:

  • Form LLC-3 (Certificate of Dissolution): Filed when not all members agree to dissolve or when formal dissolution is required before cancellation.
  • Form LLC-4/7 (Certificate of Cancellation): Filed after dissolution to remove the LLC from the state’s records permanently.
  • Form LLC-4/8 (Short Form Cancellation): Simplified version available when the LLC is less than one year old, has no debts or business activities, and all members consent to dissolution.

Choosing the correct form ensures your LLC is properly terminated with both the Secretary of State and the Franchise Tax Board. Filing the wrong form—or failing to file the necessary forms—can result in ongoing tax obligations or administrative suspension.

Steps for Dissolving Your LLC

If you are filing Form LLC-3, you will need to identify your company filing number, business name, how and why your LLC is being dissolved, and any other relevant information that you might choose to include. Keep in mind that if not all members approve of the dissolution, you will need to file both Form LLC-3 and Form LLC-4/7.

Submitting these forms must be done by mail. The documents can be mailed to the California Secretary of State’s Office, c/o Document Filing Support, P.O. Box 944228, Sacramento, CA 94244-2280. There is no filing fee. If you choose to deliver the documents in person at the Sacramento office, you will be charged a $15 fee.

Remember that you still must file a tax return for the year in which you dissolve your business. Furthermore, if you have employees working for your LLC, then you must file final employment tax returns while also making final federal tax deposits on such tax returns. When you do submit your taxes, you’ll want to identify that it is the final tax return for the LLC.

After you’ve submitted the necessary documents and submitted final employer tax returns, you should also ensure that your business licenses and permits are canceled. You will also need to cancel workers compensation, healthcare, and unemployment insurance.

You will also need to provide closure notices to all customers, clients, suppliers, bank lenders, and others who you have done business with.

What Happens After Filing Form LLC-3

Once you submit Form LLC-3, your dissolution becomes effective upon filing or on the future effective date listed in the form. You must then:

  1. File Form LLC-4/7 to complete the cancellation.
  2. Submit final tax filings with both the IRS and California Franchise Tax Board.
  3. Notify creditors and claimants by sending written notice of dissolution. This gives them an opportunity to present any final claims before winding up business operations.
  4. Distribute remaining assets among members according to ownership percentages or as stated in the operating agreement.
  5. Maintain records for at least four years, including tax documents, meeting minutes, and proof of dissolution, in case of audit or dispute.

After the Secretary of State processes your LLC3 and related filings, your company will no longer be recognized as active. However, failure to complete tax filings or provide notice to creditors can result in continued liability.

Common Mistakes When Filing Form LLC-3

Business owners often make errors that delay dissolution or lead to penalties. The most common mistakes include:

  • Failing to file Form LLC-4/7 after submitting LLC-3.
  • Neglecting final tax obligations, resulting in future Franchise Tax Board notices.
  • Providing inconsistent information, such as mismatched business names or filing numbers between forms.
  • Overlooking licenses and insurance policies that remain active after dissolution.
  • Missing the vote documentation, which serves as proof of member approval.

Taking the time to verify that each dissolution requirement is completed—both at the state and federal level—can prevent financial and administrative complications.

Frequently Asked Questions

  1. What is Form LLC-3 used for in California?
    Form LLC-3 is the Certificate of Dissolution, used to officially dissolve an LLC when the members are not in unanimous agreement to dissolve.
  2. Do I need to file Form LLC-3 if all members agree to dissolve?
    No. If every member votes in favor of dissolution, you can skip Form LLC-3 and file only Form LLC-4/7 (Certificate of Cancellation).
  3. Can I file Form LLC-3 online?
    As of now, Form LLC-3 must be filed by mail or in person at the California Secretary of State’s Sacramento office.
  4. What’s the difference between LLC-3 and LLC-4/8?
    Form LLC-4/8 is a short-form cancellation used only if your LLC is under one year old, has no assets or liabilities, and all members consent to dissolution.
  5. What happens if I don’t file Form LLC-3 or LLC-4/7?
    Your LLC remains active on California’s records, meaning you’ll continue to owe minimum franchise taxes and may face penalties for failing to file annual statements.

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