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Closing a Business Entity

When a business entity closes and no longer does business in California they must terminate their legal existence here by dissolving, surrendering, or canceling their business. For complete information, get FTB Publication 1038, Guide to Dissolve, Surrender, or Cancel a Business Entity.

Watch this video Close Business Entity in California (2:21).

How do I dissolve, surrender, or cancel my business entity?

There are two steps, one with the Franchise Tax Board and one with the California Secretary of State (SOS).

Requirements for Franchise Tax Board

All business entities must:

  • File the final current year tax return. Check the applicable Final Return box on the first page of the return, and write "final" across the top.
  • Do not conduct business in California after the final taxable year.

All tax returns remain subject to audit until the statute of limitations expires.

Requirements for Entities Registered with the California Secretary of State (SOS)

File the appropriate dissolution, surrender, or Cancelation forms with the SOS within 12 months of filing your final tax return. To get the applicable forms, go to the SOS website at sos.ca.gov, and search for terminate entity, or call 916.657.5448.

If the above information is not applicable to your business entity, the following may apply.

Beginning January 1, 2019, FTB has the authority to abate, upon written request by a qualified entity (domestic corporation or domestic limited liability company), the unpaid qualified taxes, interest and penalties for the taxable years in which the entity certifies, under penalty of perjury, that it was not doing business within the meaning of subdivision (a) of sections 23101, has ceased doing business, and does not have any remaining assets in the business.  A qualified entity shall establish that it has ceased all business operations and has no remaining assets at the time of filing the request for abatement pursuant to this section. A qualified entity must file with the California Secretary of State (CA SOS) to dissolve/cancel the entity for qualified taxes to be abated.

Qualified Domestic Corporation or Limited Liability Company

Who can request a Voluntary Administrative Dissolution/Cancelation?

A qualified domestic corporation or a domestic limited liability company that is:

  • Registered more than 12 months with the California Secretary of State (SOS), and
  • Ceased doing business or never conducted business in California, and
  • Has no assets

Note: If the entity is registered less than 12 months, get FTB Publication 1038, Guide to Dissolve, Surrender or Cancel a Business Entity. The entity does not need to be suspended to request a Voluntary Administrative Dissolution/Cancelation.  

The qualified domestic corporation may file a FTB 3715, Domestic Corporation Request for Voluntary Administrative Dissolution. See the FTB 3715 Instructions for information.

The qualified domestic limited liability company may file FTB 3716, Domestic Limited Liability Company Request for Voluntary Administrative Cancelation. See the FTB 3716 Instructions for information.

This form is used to assist FTB to determine whether the qualified entity has established that it has ceased all business operations and has no remaining assets at the time of filing the request for abatement. The following items must be completed in order to be considered for Voluntary Administrative Dissolution/Cancelation:

  • Submit a completed and signed request for a Voluntary Administrative Dissolution/Cancelation form; and
  • All tax returns filed up to the date the entity ceased business; and
  • All taxes, penalties, and interest paid up to the date the entity ceased doing business.

Note: FTB will review the entity’s account and other available information to determine if all tax returns have been filed and all taxes, penalties, and interest have been paid up to the date the entity ceased doing business. It is not a requirement to have the above items completed in order to request a Voluntary Administrative Dissolution/Cancelation; however, it will be a requirement to be approved for Voluntary Administrative Dissolution/Cancelation. In addition, file a Certificate of Dissolution or Certificate of Cancelation with the California Secretary of State.

Mailing Instructions

If you write to us, be sure to include the California corporation number or federal employer identification number (FEIN) and your daytime and evening phone numbers.

Mail or Fax the completed and signed FTB 3715 (Corp) or FTB 3716 (LLC) to:

Mail: BUSINESS ENTITY CORRESPONDENCE
         FRANCHISE TAX BOARD
         PO BOX 942857
         SACRAMENTO CA 94257-4040

Fax 916.855.5519

Upon receipt of the completed form, we will review your request and contact you.

For questions regarding Voluntary Administrative Dissolution/Cancelation contact us at 916.845.7700.

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Last Updated: 01.17.2019

 

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