By: Doug Bend
So you need to dissolve your California corporation? You should consult with your attorney and CPA as the steps can vary from company to company, but there are typically twelve steps to dissolve a California corporation.
1. Approval Of The Board Of Directors.
A majority of the board of directors needs to pass a written resolution approving the dissolution of the corporation.
2. Approval Of The Shareholders.
If shares have been issued, a majority of the outstanding shares will also need to approve the company’s dissolution in written resolutions.
3. 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.
4. Certificate Of Dissolution.
A certificate of dissolution will then need to be filed with the California Secretary of State’s Office.
5. Discontinued Registered Agent For Service Of Process Services.
If you are using a third party service provider as the corporation’s registered agent for service of process, you should notify them of the dissolution so you do not continue to get charged for the service.
6. 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 your corporation is registered to do business in San Francisco, a Declaration of Closed Business would need to be filed.
7. File An Abandonment Form For Your Fictitious Business Name Statement.
In addition, most jurisdictions require you to file a form notifying the county that you will no longer be using any fictitious business names that you registered. For example, in San Francisco you would need to file a Statement Of Abandonment Of Use Of Fictitious Business Name Statement.
8. Cancel Any Other Licenses And Permits.
You will also need to cancel any additional licenses or permits, such as your California Seller’s Permit and your registration with the Employment Development Department.
9. 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.
10. IRS Form 966.
Within 30 days of the board of directors approving the dissolution, IRS Form 966 must be filed.
11. 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.
12. 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.
13. 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 close down a California corporation, but please contact us at (415) 633-6841 or info@bendlawoffice.com to make sure no additional steps are required as 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.