How To Dissolve An LLC In California: Everything You Need to Know
Understanding how to dissolve an LLC in California and what circumstances may lead to its suspension or dissolution is key to ensuring your business runs how you want.3 min read
Understanding how to dissolve an LLC in California and what circumstances may lead to its suspension or dissolution is key to ensuring your business runs how you want. Highlighted below are important details outlining how you can dissolve your California limited liability company (LLC).
Dissolving Your LLC in California
Do you do business in California? Depending on how your company is structured, you may have registered your enterprise with the California Secretary of State. This is required, for example, if you run an LLC or corporation. If you ever need to dissolve that company, you'll also need to go through the Secretary of State's office.
If you want to dissolve your LLC, you'll have to file the proper documents with this organization. The exact documents you need to submit, however, vary depending your company's status and whether the other owners also want to dissolve the enterprise. The first step of dissolution is to officially terminate the business's status as a state-registered entity.
If you want to process a voluntary dissolution, check your formation documents — namely, the Articles of Organization and Operating Agreement. When the original owners created the company, they should have outlined the internal requirements that must be met for a dissolution in one of these forms. Also check these documents for specific situations that require the LLC be dissolved. Such stipulations are common in Articles of Organization for California LLCs.
Most LLCs require a member vote to decide whether to dissolve the enterprise. If the majority want to dissolve, then you can move forward with the paperwork. Check other requirements for dissolution that may be outlined in your business documents and follow them closely.
In addition to following a dissolution agreement, an LLC may be automatically dissolved under certain circumstances. For example, if an LLC doesn't have a member for three consecutive months, it's dissolved. Though this situation is often the result of a member passing away, it can create lots of legal confusion regarding how to move forward with an LLC. Establishing a trust is one way to prevent such consequences and ensure that the named beneficiaries receive the property and other assets associated with the company.
As another example, domestic LLCs must file a Statement of Information with the California Secretary of State every other year. Failing to do this will result in a suspension of the LLC. You'll receive a notification by mail if your LLC has missed this date and be assessed a $250 penalty. You then have 60 days to respond before the LCC is suspended or forfeited.
Note that if an LLC is suspended, it can't be dissolved. It must be active to proceed with this option.
Methods to Dissolve Your California LLC
If you want to dissolve your California LLC, you must first choose your method of dissolution. There are three options for companies in California:
- Method 1: You can voluntarily dissolve your LLC. This requires a majority vote from all members or a certain percentage of votes as required per your operating agreement. With the required votes, you can move forward with the dissolution. File a Certificate of Dissolution and a Certificate of Cancellation with the California Secretary of State.
- Method 2: If you meet all internal requirements, you can dissolve an LLC by filing form LLC-3 — Certificate of Dissolution — with or before filing a certificate of cancellation.
- Method 3: If you have the required member votes, you can also cancel your LLC by filing Form LLC-4/8 — Short Form Certificate of Cancellation. However, your LLC must meet the following criteria: be less than a year old; have no debts other than tax liability; have no assets or investments; and have not conducted business since completing the Articles of Organization.
Regardless of which dissolution method works for you, you need to record the official meeting and decision to approve the dissolution. Write down the minutes of the dissolution meeting for your records.
You can retrieve the necessary forms from the California Secretary of State. You can fill out the forms online, print them, and submit them. There's a $15 processing fee if you deliver the files to the office in person.
It can take longer than eight weeks to process your forms. Check the Secretary of State's website for a more precise timeline. You can pay $350 for 24-hour processing or $750 for same-day processing if you need to expedite the dissolution.
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