The process of Legally Closing a Corporation in California is called Dissolution.  After a California Corporation has been Dissolved, it ceases to be Legally Active in the California Secretary of State's records and may no longer Legally conduct business in the state of California.

A California Corporation is created when the CA Secretary of State approves the Formation Documents - Articles of Incorporation.  A record of the California Corporation is added to the list of Corporations which have officially registered with the California Secretary of State.  Once a Corporation is registered with the California Secretary of State, that Corporation immediately has both reporting and tax obligations which incur penalties if the obligations are not met by the required deadlines.

If you've registered a California Corporation with the California Secretary of State and want to cease business activities you have to let the CA Secretary of State know that you intend to close your company.  Only after the CA Secretary of State has made sure that all of the obligations of the California Corporation have been fulfilled will the Secretary of State approve of the closure of the company.

When the California Secretary of State approves the closing of a CA Corporation, that California Corporation is said to be Dissolved.  The process of Dissolving a California Corporation is called California Corporation Dissolution.

The voluntary Dissolution of a domestic California Corporation is initiated by an Election to Dissolve. The Election to Dissolve may be made by the vote or written consent of at least fifty percent of the outstanding shares of the California Corporation, by the Board of Directors if no shares have been issued or by a majority of the Incorporators if no Directors were named in the original Articles of Incorporation of the California Corporation and none have been elected.

Following the Election to Dissolve, the California Corporation must file Dissolution documents with the California Secretary of State. Dissolution documents for a California Corporation cannot be filed with the CA Secretary of State if the California Corporation has been suspended by the California Franchise Tax Board (California FTB).

Upon filing of Certificate of Dissolution by the California Secretary of State, the California Corporation will be completely Dissolved and its Corporate Existence will cease to exist.

As soon as a California Corporation is registered with the CA Secretary of State, that Corporation is responsible for recurring obligations of the California Secretary of State and the California Franchise Tax Board.  If a California Corporation does not file its required reports or pay its tax obligations, then that CA Corporation could be responsible for penalties which compound as time goes by.

Unless you Dissolve (Legally Close) your California Corporation with the California Secretary of State that CA Corporation will be responsible for all recurring fees and penalties until the company has been legally closed.

California Corporation Dissolution is one part of a larger process commonly called the "Winding Up" process.

There are things you need to do before you can request approval of Corporation Dissolution from the California Secretary of State; and things that you have to do after the CA Secretary of State has approved Dissolution of the California Corporation. 

When a California Corporation is originally created, the Organizers may create Bylaws that define how the Corporation will be run.  The Bylaws may include pretty much anything that has to do with running the Corporation, including specific requirements which need to be followed before the Corporation may be Legally Closed.  Before you do anything else, you should review the Bylaws for anything that needs to be done before the Business is Legally Closed.

What you have to do both before and after the California Corporation is Dissolved largely depends on how much stock, if any, has been issued and how much and what kind of debts and liabilities that the California Corporation has.  If the California Corporation has not commenced business then the CA Corporation Dissolution process is easier.

1. Hold a Board of Directors meeting and record a resolution to Dissolve the California Corporation
   
   If a Board of Directors has been appointed for the California Corporation, then the Board is required to adopt a resolution to Dissolve the CA Corporation.  There should be a majority of Board Members who vote Yes to Legally Close the company.  A formal date on which the Corporation will be closed should be specified.  Minutes of the meeting should be recorded and retained in the business records.  If the Board of Directors has not been appointed then the Incorporator(s) have to apply for Dissolution of the California Corporation.
   
   We can transcribe and compile any minutes or approvals into a form that is legally recognized by the California Secretary of State.
   
   
2. Hold a Shareholder meeting to approve Dissolution of the California Corporation
   
   If a California Corporation has issued shares of stock then a meeting of the Shareholders (owners) must be held and recorded. A majority of Corporate Shareholders must approve the Dissolution plan.  The approval actions should be documented and kept in the business records.
   
   If no shares have been issued then the California Corporation Dissolution process is easier.
   
   
   If necessary, we can transcribe and compile minutes into a form that is legally recognized by the California Secretary of State.
   
   
3. File a Certificate of Election to Wind Up and Dissolve with the CA Secretary of State
   
   The Certificate of Election to Wind Up and Dissolve must be filed with the California Secretary of State before initiating the final stages of the California Corporation Dissolution process.
   
   
   We can prepare your Certificate of Election to Wind Up and Dissolve and file it with the CA Secretary of State.
   
   
4. File all required Annual Statement of Informations with the California Secretary of State
   
   The California Secretary of State will not approve the Dissolution of a CA Corporation until all required administrative reports have been filed.
   
   We can file any requiredAnnual Statement of Informations with the CA Secretary of State.
   
   
5. File all required tax returns with the California Franchise Tax Board
   
   The California Secretary of State will not approve the Dissolution of any CA Corporation until that Corporation has fulfilled all its tax obligations with the California Franchise Tax Board.
   
   
6. Clear up any business debts
   
   All creditors of a California Corporation should be given notice of the pending Corporation Dissolution. Each creditor should be given a mailing address to which they may submit claims as well as a deadline by which claims may be submitted.
   
   While the California Secretary of State does not legally require the publication of a Notice of Dissolution of a California Corporation, publication is a good way to notify anyone who might have a claim against the California Corporation.  Evidence of publication might prove useful down the line if someone makes a claim against the CA Corporation after the California Corporation has been dissolved.
   
   
7. Pay all taxes and administrative fees owed by the California Corporation
   
   The California Secretary of State will definitely not approve the Dissolution of a California Corporation until all outstanding taxes and applicable registration and administrative fees have been paid.

1. Distribute all remaining assets of the California Corporation
2. Close all business bank accounts of the California Corporation
3. Cancel all local business licenses and permits
4. File Form 966 with the IRS
5. Cancel the IRS account associated with the CA Corporation's Federal Tax ID (EIN)
6. Keep Records of all Pertinent Business Documents

1. Distribute all remaining assets of the California Corporation
   
   If the California Corporation has any remaining assets, these may be divided according to the Shareholders' ownership interests in the CA Corporation. All distributions to Corporate Shareholders must be reported to the IRS.  Refer to the Corporation Bylaws for specific requirements, if any, for asset distribution.
   
   
2. Close all business bank accounts of the California Corporation
   
   If there are any business accounts that have been opened for the California Corporation then those accounts must be closed.  If any Corporate business accounts are left open there may be liability and obligations of the Dissolved California Corporation which could lead to legal problems.
   
   
3. Cancel all local business licenses and permits of the CA Corporation
   
   If the California Corporation has obtained any state, regional, county or city business licenses or permits, there may be cancellation requirements associated with those licenses or permits.  Each of those must be cancelled to avoid any reporting or fiscal obligations the California Corporation may have.  This includes business registration licenses as well as reseller permits.
   
   
4. File IRS Form 966
   
   A Dissolved California Corporations may be required to file IRS Form 966 with the US Internal Revenue Service.  This filing is required within 30 days after the final Dissolution plan is approved.  Filing IRS Form 966 lets the Federal Government know that the California Corporation has been legally Dissolved so that it may take the appropriate actions.
   
   
   We can prepare IRS Form 966 for you to file.
   
   
5. Cancel the IRS account associated with the CA Corporation's Federal Tax ID (EIN)
   
   A Federal Tax ID, or Federal Employer Identification Number (EIN), is like a Social Security Number for the California Corporation.  Once the IRS links an EIN to a California Corporation, that EIN stays with the California Corporation even after the Company has been Dissolved by the California Secretary of State.
   
   When the IRS processes the final tax return for the California Corporation, they automatically make the EIN inactive.  However, the account associated with the EIN is not automatically closed.  Closing the account associated with the EIN lessens the likelihood of any problems with the EIN account, or with the IRS, in the future.
   
   If you should decide to revive the California Corporation down the line the IRS will reactivate the old EIN for your new Business.
   
   Before a California Corporation can close an EIN account, it must be in Good Standing with the IRS.  The California Corporation must have filed all required tax returns and paid any applicable fees and penalties due to the IRS.  The California Corporation cannot close its EIN account until the IRS has received payment for any tax amounts the Company may owe.
   
   
   We can prepare the formal documents which you can sign and submit to the IRS in order to close the account associated with your EIN.
   
   
6. Keep Records of all Pertinent Business Documents
   
   In order to avoid problems down the line, you should keep copies of all tax filings, contracts and employment records on file as well as Certified Copies of all company documents filed with the Secretary of State.  This includes your Formation Documents - your original Articles of Incorporation and any Amendments - and all Dissolution douments.

You notify the IRS that your California Corporation has been Closed on the final tax return that is filed for your Business. 

If you have employees and file taxes quarterly with IRS Form 941, Employers Quarterly Tax Return, check the appropriate box on that form to let the IRS know that your Corporation has Closed.  If you file yearly taxes do the same on IRS Form 944, Employers Yearly Tax Return. You should also attach a statement to the return showing the name of the person keeping the payroll records and the address where those records will be retained.

When you opened your California Corporation you most likely were assigned a Federal Employer Identification Number (EIN).  Once the IRS links an EIN to a Corporation, that EIN stays with the Corporation even after the Company has been Dissolved.  If you don't plan to reopen your California Corporation after it has been Closed, you should cancel the EIN account that has been assigned to your Company.

The time it takes to Dissolve a California Corporation varies depending on how long it takes to complete the actions that are required in each specific case - holding meetings, closing accounts, distributing assets, etc.

The California Secretary of State requires a Tax Clearance Certificate from the CA Franchise Tax Board before it will approve the Dissolution of a California Corporation.

The time it takes the CA Franchise Tax Board to process a request for a Tax Clearance Certificate depends on the tax status of the California Corporation. In some cases it could take 5-6 weeks to get a Tax Clearance Certificate from the California Franchise Tax Board.

Once the initial actions are completed, the California Secretary of State usually takes around 5-7 business days to process the Certificate of Dissolution.

Processing times for California Corporation Dissolution filings vary depending on the work load of the Secretary of State's staff.  We've found that normal processing of California Dissolution filings takes the state around 5-7 business days.

We are dependent on, and have no control over, the staff and systems of the California Secretary of State or California Franchise Tax Board. In our experience 5-7 business days is the time it usually takes the California Secretary of State to process a California Dissolution filing. We get your California Corporation Dissolution filing to the CA Secretary of State as soon as possible after we receive your order. Once it is at the state we have no control over the California Dissolution approval process.

The total cost to Dissolve a California Corporation varies depending on exactly what is required for each specific CA Dissolution. We charge $249 plus any state fees for our California Corporation Dissolution services. This includes:

• Same day processing
• Transcribe minutes of Board of Directors meeting which proposes Dissolution
• Transcribe minutes of Shareholders meeting at which Dissolution was approved
• Prepare and file Certificate of Dissolution with the California Secretary of State
• Prepare US IRS Form 966 for you to sign and file
• Prepare documents to cancel Federal EIN account
• Certified copy of Dissolution filing from CA Secretary of State
• Priority Mail Delivery of all documents
• Unlimited Customer Support

We also offer these California Corporation Dissolution services separately as explained below.

If there are Foreign Corporations in states other than California that are tied to the Domestic California Corporation then each of those Foreign Corporations must be Dissolved before the California Corporation can be legally Dissolved.

A California Corporation company name becomes available for anyone to use when the California Corporation is Dissolved by the California Secretary of State. There are no Corporation company name protections in California once a California Corporation has been Dissolved by the California Secretary of State.

There are no state of California requirements for the publication of a Notice of Dissolution of a California Corporation.

While the California Secretary of State does not legally require the publication of a Notice of Dissolution of a California Corporation, publication is a good way to notify anyone who might have a claim against the California Corporation.  Evidence of publication might prove useful down the line if someone makes a claim against the CA Corporation after the California Corporation has been dissolved.