Dissolving a California Limited Liability Company

If for some reason things have not worked out as you hoped, and your small business is not a resounding success, you may decide it is time to move on to other things. Alternatively, your business could be growing in a new direction, and you may wish to change its structure, and do so by closing down the current business entity type. If you created your business by filing legal documents with the state, you must to go through certain formalities to close the business. One such situation arises if you are dissolving a California limited liability company.

Winding down, terminating and closing a California limited liability company (LLC)  is called “dissolution” and is the formal process for dissolving a California limited liability company. Dissolution may be involuntary, as when ordered by a court order, or voluntary, when the owner of the business seeks to end it. Note that if the LLC is made up of more than one member, all the members would most likely need to vote on the LLC’s dissolution. In addition, the LLC’s formation documents may include a date at which the company will dissolve, and how the dissolution will take place.

Steps to Dissolving a California Limited Liability Company

In order to cancel the articles of organization, and therefore end the business, a member who executed the articles of organization for the LLC needs to file a Certificate of Dissolution and a Certificate of Cancellation with California’s Secretary of State Office. It is important to note that the forms required for dissolving a California Limited Liability Company are different than those required for dissolving a California corporation.  If the dissolving LLC meets certain requirements, in place of these two forms it can formally end by filing one Short Form Certificate of Cancellation. The requirements to be met include:

• The LLC is filing the Short Form Certificate of Cancellation within twelve months of filing the Articles of Organization with the Secretary of State;
• The domestic LLC has not conducted any business from the time of the filing of the Articles of Organization;
• The LLC is domestic and has no debts or other liabilities except possible tax liability;
• If the LLC has any assets, any assets that remain after settling debts and liabilities should be distributed to any people who are entitled to it;
• The LLC’s final tax return or final annual tax return has been filed with or will be filed with the Franchise Tax Board;
• A majority of the members, managers, or if there are not managers or members, a majority of the signatories of the Articles of Organization vote to dissolve the LLC; and
• Any Investor payments have been returned to the investors.

If the LLC opened any bank accounts for the business, it may also need to close those down as part of the business termination. In addition, if the LLC held licenses, these must be canceled. It is a good idea to tell customers of the ending of the business, and complete any outstanding orders or other obligations before dissolution. Retaining a good relationship with customers is important if you ever start another business in the future.

A People’s Choice Can Help Dissolve Your California Limited Liability Company

If you are dissolving a California limited liability company and want to avoid the high cost of attorney’s fees, contact A People’s Choice for low-cost legal document assistance. Although we cannot give legal advice, A People’s Choice can help you in preparing all the required legal documents to help you dissolve your California limited liability company without having to hire a lawyer.