How to Dissolve a Corporation in 2021 (Step-by-Step Guide)

If you’re looking to dissolve your Corporation in California you’re on the right page…

If you’ve decided to stop operating your Corporation in California or if you’re no longer using your Corporation, remember that the California Secretary of State will still assess annual franchise taxes (minimum of $800) as long as the Corporation is registered in California, even if you aren’t operating or conducting any business from the Corporation.

Therefore, if you are not using your Corporation anymore or you’re possibly closing your doors permanently, make sure that you cancel or dissolve your California Corporation with the California Secretary of State, plus close other permits and licenses, such as your city business license so that taxes and fees are no longer assessed.

As a business lawyer, I’ve assisted hundreds of clients just like you dissolve their Corporation in California and I can help you with yours.

If you’d like to dissolve your Corporation in California, email me at sam@mollaeilaw.com

I’m happy to work with you through the California Corporation dissolution process to make sure that notice is properly given to creditors and investors and the correct forms are submitted to dissolve your corporation.

There is still enough time before December 31 to use regular processing for the forms for a reduced fee, email me at sam@mollaeilaw.com soon if you’d like to dissolve or close or cancel your Corporation in California.

How to Dissolve a Corporation in California

Here are the initial requirements for dissolving a Corporation in California:

1. File all delinquent tax returns and pay all state tax balances, including any penalties, fees, and interest to the California Franchise Tax Board
2. File the final/current year tax return
3. Must cease doing or transacting business in California after the final taxable year
4. Complete and file the required filings with the California Secretary of State (see below)

To dissolve Corporation in California, file one or more of the following forms:

• Certificate of Election to Wind Up and Dissolve (Form ELEC STK)
• Certificate of Dissolution (Form DISS STK)
• Short Form Certificate of Dissolution (Form DSF STK). You must meet specific requirements to file this form.

Upon the effective date of the Certificate of Election to Wind Up and Dissolve or Certificate of Dissolution or Short Form Certificate of Dissolution by the Secretary of State, the Articles of Incorporation of the Corporation will be canceled and the powers, rights, and privileges of the Corporation will stop in California.

Completed forms can be mailed to:

Secretary of State
Document Filing Support Unit
P.O. Box 944228
Sacramento, CA 94244-2280

It’s also recommended by the California Secretary of State for proof of submittal that if the documents are mailed to the Secretary of State, they are sent by Certified Mail with Return Receipt Requested.

Also note, to file cancellation documents, the status of the Corporation must be “active” on the records of the California Secretary of State.

To check the status of the Corporation, go to https://businesssearch.sos.ca.gov

Close Corporation California

Corporations doing or transacting business in California or registered with the California Secretary of State (SOS) can dissolve, surrender, or cancel when they cease operations in California and need to terminate their legal existence here.

If your Corporation is no longer doing business in California, either because it has ceased operating or it has moved to another state, you should consider dissolving the Corporation or canceling its California registration before the end of the year.

California Franchise taxes are assessed on January 1 of each year for all Corporations that are registered in California, even if they are not operating.

To avoid such taxes ($800 in California and at least $400 in Delaware) the entity needs to be dissolved or registration needs to be canceled before the end of the year.

Conclusion

Is your business no longer active? Do you need to dissolve your Corporation?

If you’re no longer using your Corporation, you should dissolve your Corporation in California.

By dissolving your Corporation, you may avoid paying another round of state taxes in California.

Email me at sam@mollaeilaw.com to dissolve your Corporation in California.