If you want to know how to dissolve an LLC in California, what it means to fill form 3522, and other essential facts that reveal how to close an LLC in California, you’re on the right page.
If you’ve decided you want to close your LLC in California or if you’re no longer using your LLC, remember that the California Secretary of State will still assess annual franchise taxes (minimum of $800) as long as the LLC is registered in California, even if you aren’t operating or conducting any business from the LLC.
Therefore, if you’re not using your LLC anymore or you’re possibly closing your doors permanently, its time to know about how to close an LLC in California. In this situation, you should make sure that you cancel or dissolve LLC Califorina business 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 LLC in California and I can definitely help you find out how to close an LLC in California according to the California LLC dissolution checklist.
If you’d like to close your LLC in California but don’t know what form 3522 is and other procedures that help to dissolve LLC California , email me at email@example.com so I can tell you how to close an LLC in California.
I’m happy to work with you through the California LLC dissolution process to make sure that notice is properly given to creditors and investors and the form 3522 and other necessary forms are submitted to dissolve your LLC.
There is still enough time before December 31 to use regular processing for the forms for a reduced fee, so email me at firstname.lastname@example.org if you’d like to know how to dissolve an LLC in California.
How to Dissolve an LLC in California
Here are the initial requirements, or you can say, California LLC dissolution checklist you need to know if you want to find out how to close an LLC in California:
- File all delinquent tax returns and pay all state tax balances, including any penalties, fees, and interest to the California Franchise Tax Board
- File the final/current year tax return
- Must cease doing or transacting business in California after the final taxable year
- Complete and file the required filings with the California Secretary of State (see below)
However, if all the members vote to dissolve LLC California, only Form LLC-4/7 is required.
To cancel the Application for Registration of a registered foreign LLC, the foreign LLC must file a Certificate of Cancellation (Form LLC-4/7).
With the above requirements in mind, a California LLC can file a Short Form Certificate of Cancellation (Form LLC-4/8) if the following requirements are met:
- Form LLC-4/8 is being filed within twelve (12) months from the date the Articles of Organization were filed with the Secretary of State;
- The domestic LLC has no debts or other liabilities (other than tax liability);
- The known assets of the domestic LLC remaining after payment of, or adequately providing for, known debts and liabilities have been distributed to the persons entitled thereto or no known assets have been acquired;
- The final tax return or a final annual tax return has been or will be filed with the Franchise Tax Board;
- The domestic LLC has not conducted any business from the time of the filing of the Articles of Organization;
- A majority of the managers or members, or if there are no managers or members, the person or a majority of the persons who signed the Articles of Organization, voted to dissolve the domestic LLC; and
- If the domestic LLC received payments for interests from investors, those payments have been returned to those investors.
Upon the effective date of the Certificate of Cancellation (Form LLC-4/7) or Short Form Certificate of Cancellation (Form LLC-4/8) by the Secretary of State, the Articles of Organization or Application for Registration of the LLC will be cancelled and the powers, rights and privileges of the LLC 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
While ensuring that you’ve ticked all the points the California LLC dissolution checklist comprises of, it’s also recommend by the California Secretary of State for proof of submittal that if the documents are mailed to the Secretary of State, they be sent by Certified Mail with Return Receipt Requested.
Also note, to file cancellation documents and dissolve LLC California, the status of the LLC must be “active” on the records of the California Secretary of State.
To check the status of the LLC while knowing how to close an LLC in California, go to https://businesssearch.sos.ca.gov
California Minimum Franchise or Annual Tax
Your LLC may avoid the minimum franchise or annual tax for current and subsequent taxable years if you meet all of the following requirements:
- Timely file your final franchise or annual tax return, including extension, for the preceding taxable year.
- Must cease doing or transacting business in California after the last day of the preceding taxable year.
- File the appropriate documents with the SOS within 12 months of the filing date of your final tax return.
Suspended or Forfeited LLC California
California Secretary of State does not accept termination documents if the California Franchise Tax Board (FTB) has suspended or forfeited the LLC. That’s why it’s so crucial to know how to close an LLC in California. You must complete all of the following FTB requirements before you submit your termination documents to SOS:
- Pay all outstanding balances due.
- File all delinquent tax returns.
- File FTB 3557 BC, Application for Certificate of Revivor, (Banks and Corporations), FTB 3557 LLC, Application for Certificate of Revivor, (LLCs), or FTB 3557 E, Application for Certificate of Revivor, (Tax-Exempt Corporations).
For more information regarding the revival process before knowing about what form 3522 is and how to close an LLC in California, go to ftb.ca.gov and search for revive my entity or call 800-852-5711.
How to Close an LLC in California
If your LLC is no longer doing business in California, either because it has ceased operating or it has moved to another state, you should know all details about how to dissolve an LLC in California so that you can easily consider dissolving the LLC or cancelling its California registration before the end of the year while making sure that you have met all the requirements present in the California LLC dissolution checklist.
California Franchise taxes are assessed on January 1 of each year for all LLCs 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 cancelled before the end of the year.
What’s the California State Tax for Having an LLC?
Every LLC that is doing business in California is subject to an $800 annual tax.
A new LLC formed in California has 4 months from the formation date to pay the tax. To avoid possible late fees, you should make sure you’re taking the right steps in filing CA Form 3522.
Continue reading on what FTB Form 3522 is, who needs to file the CA Form 3522, when to file it, and how to file it.
Also known as CA Form 3522, Form 3522 is a Tax Voucher used to pay the annual LLC tax of $800 for taxable year 2017.
In most cases, if you have an LLC in California, you will need to fill out Form 3522. Only if you have gross receipts of $250,000 or over for the year, you are required to report a fee on the Form 568 in addition to the $800 annual tax.
Also, if your company has members who are not residents of California, it also must file Form FTB 3832.
A California LLC should use Form 3522 if any of the following apply:
- The LLC has articles of organization accepted by the California Secretary of State.
- The LLC has a certificate of registration issued by the California Secretary of State.
- The LLC is doing business in California.
Who Needs Form 3522
Every LLC doing business in California or has Articles of Organization filed by the California Secretary of State of State is subject to the $800 annual tax.
The tax must be paid for each taxable year until a certificate of cancellation of registration is filed with the Secretary of State.
The California Franchise Tax Board makes the distinction between an annual tax and an LLC fee. The annual tax of $800 is included on line 3 of the Form 568, but you also get a credit for that $800 on line 6 of the Form 568. Only if you have gross receipts of $250,000 or over for the year, you need to incur the fee also in addition to the annual tax.
When to Pay the Annual LLC Tax?
The annual LLC tax is due and payable by the 15th day of the 4th month after the beginning of the LLC’s taxable year (fiscal year) or April 15, 2017 (calendar year).
When the due date falls on a weekend or holiday, the deadline to file and pay without penalty is extended to the next business day. Also, tax returns filed and payments mailed or submitted on April 18, 2017, would have been considered timely.
The first taxable year of an LLC begins when the LLC files its Articles of Organization with the Secretary of State. The first taxable year of a foreign LLC doing business in California begins when the LLC is organized in another state.
If the 15th day of the 4th month of an existing foreign LLC’s taxable year has passed before the foreign LLC starts business in California or registers with the SOS, the annual LLC tax should be paid immediately after starting business or registering with the Secretary of State.
For example, if you form an LLC in Delaware on June 1, 2017 and you register your LLC with the California Secretary of State on August 13, 2017, and you begin doing business in California on August 14, 2017, because your LLC’s initial taxable year begins on June 1, 2017, the annual tax is due by September 15, 2017 (the 15th day of the 4th month of the short-period taxable year).
The LLC’s short-period (June 1, 2018 to December 31, 2018) tax return is due by April 15, 2019. The annual tax payment for taxable year 2019, with Form 3522, is also due by April 15, 2019.
How to Fill Out CA Form 3522
Filling out the CA Form 3522 is one of the most essential parts of making sure you know how to dissolve an LLC in California.
Not sure what exactly Form 3522 contains?
The Form 3522 must contain the following information:
- Term of fiscal year
- Name of LLC
- Full address and phone number
- Secretary of State file number
- Employer Identification Number (EIN)
- Amount of payment
Where to File Form 3522
Once you have filled out Form 3522, you should make a check or money order payable to the “Franchise Tax Board.”
Then write the California Secretary of State file number, along with the Employer Identification Number (EIN), and “2017 FTB 3522” on the check or money order.
Detach the payment voucher from the bottom of the page. Enclose, but do not staple, your payment with the voucher and mail to:
Franchise Tax Board P.O. Box 942857 Sacramento, CA 94257-0531
Note: If no payment is due or if you make the payment online, you do not need to mail Form 3522.
How Can I Make the Payment for Annual LLC Taxes Online?
You can make a immediate payment online for your Annual California LLC Taxes here.
What Happens If I Do Not Pay the LLC Annual Tax?
If you do not make the payment for the LLC annual tax by the 15th day of the 4th month after the beginning of the taxable year, a late payment penalty plus interest will be assessed for failure to pay the annual LLC tax by the due date.
The penalty and interest is calculated from the due date of the tax to the date of payment.
If a prior year LLC tax of $800 was not paid by the 15th day of the 4th month after the beginning of the taxable year, the tax should be paid as soon as possible, using the appropriate taxable year form FTB 3522.
Form 3522 Extension
According to the Franchise Tax Board, your extension to file Form 3522 will depend on your business type.
Corporations are allowed an automatic seven month paperless extension of time to file their returns if:
- They are in good standing with both Franchise Tax Board and the California Secretary of State on the original due date of the return, and
- They file their returns on or before the extended due date of the return.
Limited liability companies (LLCs) are allowed an automatic paperless extension for six months from the original due date. The automatic extension does not extend the time to pay.
If the LLC has not paid its LLC fee or non-consenting members tax by the original due date of the return, the partnership should use Payment Voucher for Limited Liability Companies (FTB 3537).
For more information about extensions related to filing Form 3522, see this page.
Wrapping Up: What Else Should You Know About FTB 3522?
Is your business no longer active? Do you need to know how to dissolve your LLC in California?
If you’re no longer using your LLC, you should definitely dissolve LLC California and know more about CA Form 3522 along with finding out details about how to close an LLC in California.
By dissolving your LLC, you may avoid paying another round of state taxes in California.
Email me at email@example.com to dissolve your LLC in California