So your company’s life has come to an end. What now? Merely closing your doors is not enough to officially dissolve your company. You should consult with your attorney and tax professional as it varies from company to company, but there are typically fourteen steps to dissolve a Delaware corporation registered to do business in California.
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Board Of Directors Approval
A majority of the board of directors must pass a written resolution approving the dissolution of the corporation.
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Shareholder Approval
If shares have been issued, a majority of the outstanding shares must approve the company’s dissolution in written resolutions.
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Notice of Dissolution To Creditors
If the company has any creditors, it should provide them with notice of when claims must be submitted for payment to be considered.
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Final Delaware Franchise Tax Report
A final annual franchise tax report for Delaware needs to be filed and the company will need to pay any outstanding franchise taxes owed to Delaware.
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Delaware Certificate Of Dissolution
Once all outstanding Delaware franchise taxes have been paid, a Delaware certificate of dissolution must be filed. If the entity has ceased transacting business and has no assets remaining then you may qualify for the short form certificate of dissolution.
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Discontinue Registered Agent For Service Of Process
Notify whichever service provider your company is using as its registered agent for service of process in Delaware so you do not continue to get charged for the service.
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File Declaration Of Closed Business With The City
If the corporation is registered with a city, most cities require that the business registration be inactivated. For example, if the corporation was registered to do business in San Francisco, a Declaration of Closed Business would need to be filed.
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File An Abandonment Form For Your Fictitious Business Name
In addition, most jurisdictions require you to file a form notifying the government that you will no longer be using the fictitious business name. In San Francisco, for example, a company would need to file a Statement Of Abandonment Of Use Of Fictitious Business Name.
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Cancel Any Other Licenses And Permits
Cancel any additional licenses or permits, such as your California Seller’s Permit and your registration with the Employment Development Department.
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California Certificate Of Surrender.
If the corporation is registered to do business in California, a California Certificate Of Surrender also needs to be filed.
11. Corporate Transparency Act.
You may need to file a final report with the U.S. Treasury Department’s Financial Crimes Enforcement Network to be in compliance with the Corporate Transparency Act.
12. IRS Form 966
Within 30 days of the board of directors approving the dissolution, IRS Form 966 must also be filed
13. IRS Forms 8594 and 4797
If the dissolution involves the sale or exchange of corporate assets, IRS Forms 8594 and 4797 may also be necessary.
14. Final State Tax Return
You will need to work with your CPA or other tax professional to file a final state tax return. You will also need to file any delinquent tax returns and pay any owed taxes.
In California, the Franchise Tax Board will continue to assess an annual franchise tax until the corporation has filed a final tax return with the FTB. You should indicate it is the final return by checking the box that it is the final return and writing “final” on the top of the return.
15. Final Federal Tax Returns
Lastly, a final federal tax return needs to be filed for the corporation. Like the state tax return, you should indicate on the form that it is the final return for the company.
For many companies these are the steps to officially dissolve a Delaware corporation registered to do business in California, but please contact us at (415) 633-6841 or info@bendlawoffice.com to make sure no additional steps are required. Each situation is unique!
Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction. Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.