Guide to Canceling a California Corporation

1. Resolve to Dissolve.

Once you have decided to close your corporation, you will have to hold a formal meeting of the Board of Directors requesting to dissolve the corporation. Once the vote to dissolve has been approved, it must then be authorized by a majority of the corporation’s shareholders (if there are any). A written agreement approving the corporate dissolution must be signed by all corporate owners and completed before filing for dissolution with the CA Secretary of State. ** Please note that a CA corporation must be in active status with the Secretary of State to be dissolved.

2. Filing a Certificate of Dissolution with the CA Secretary of State:

1. For Profit Corporations: To dissolve a California corporation, you must file a Certificate of Election to Wind Up and Dissolve (Form ELEC STK) and a Certificate of Dissolution (Form DISS STK) together, unless the vote to dissolve is unanimous, in which case only the Certificate of Dissolution (Form DISS STK) is required.

• Form ELEC STK and Form DISS STK:http://bpd.cdn.sos.ca.gov/corp/pdf/dissolutions/corp_stkdiss.pdf

In lieu of the above-mentioned certificates, a corporation can file a Short Form Certificate of Dissolution (Form DSF STK) if the following requirements are met:

• The Short Form Certificate of Dissolution is being filed within 12 months from the date the Articles of Incorporation were filed
• The corporation has no debts and liabilities (other than tax liability)
• The tax liability will be satisfied on a taxes paid basis or the tax liability will be assumed
• The final tax return has been or will be filed with the Franchise Tax Board.
• The corporation has not conducted any business
• The corporation has not issued shares, and if the corporation has received payments for shares from investors, those payments have been returned to those investors
• The majority of the directors (or incorporators, if directors were not named and none have been elected) authorized the dissolution and elected to dissolve the corporation
• The assets have been distributed to the persons entitled thereto or no assets have been acquired.
• Form DSF STK: http://bpd.cdn.sos.ca.gov/corp/pdf/dissolutions/corp_stkdiss.pdf

2. Non-Profit Corporations: If the dissolving corporation is a nonprofit public benefit or religious corporation, the Certificate of Election to Wind Up and Dissolve (Form ELEC NP) and a Certificate of Dissolution (Form DISS NP) together, unless the vote to dissolve is unanimous, in which case only the Certificate of Dissolution (Form DISS NP) is required.

• Form Elec NP and Form DISS NP:http://bpd.cdn.sos.ca.gov/corp/pdf/dissolutions/corp_npdiss.pdf

In lieu of the above-mentioned certificates, a corporation can file a Short Form Certificate of Dissolution (Form DSF NP) if the following requirements are met:

• The Short Form Certificate of Dissolution is being filed within 24 months from the date the Articles of Incorporation were filed
• The corporation has no debts and liabilities (other than tax liability)
• The tax liability will be satisfied on a taxes paid basis or the tax liability will be assumed
• The final tax return has been or will be filed with the Franchise Tax Board
• The corporation was created in error
• The corporation has not issued memberships, and if the corporation has received payments for memberships, those payments have been returned to those making payments
• The majority of the directors (or incorporators, if directors were not named and none have been elected) authorized the dissolution and elected to dissolve the corporation
• The assets have been distributed to the persons entitled thereto or no assets have been acquired.
• Form DSF NP: http://bpd.cdn.sos.ca.gov/corp/pdf/dissolutions/corp_npdiss.pdf

3. Foreign Corporations: If the corporation is a Foreign Corporation, meaning that it was formed in any state or country other than CA, use the form:

• Certificate of Surrender of Right to Transact Interstate Business in California: http://bpd.cdn.sos.ca.gov/corp/pdf/foreign/corp-surr.pdf

3. Settle Financial Matters.

You can start the process for dissolution in California as long as you state as a part of your filing that a final tax return has been or will be filed with the California Franchise Tax Board. As a reminder, you must file an annual return for the year you go out of business. If you have employees, you must file the final employment tax returns, in addition to making final federal tax deposits of these taxes. For the tax year in which your business closes, make sure you indicate that this tax return is a final return.

The Secretary of State will accept your filing for dissolution, however before you can be formally dissolved, a tax clearance, consent to dissolution, or verification of good standing from the Franchise Tax Board is recommended, but not required. This document confirms to the Secretary of State that all taxes owed have been paid and all debts settled.

4. Cancel Licenses and Fictitious Business Names.

To protect your finances and reputation, ensure that all licenses and permits that are no longer needed are cancelled. Also, be sure to contact your insurance to cancel business liability and workman's compensation insurance, and notify your employee-based health care provider about the closure. Likewise, if you have registered under a fictitious business name, make sure to cancel that business name registration with the county recorders office.

5. Notify Creditors, Employees, and Customers.

Make sure to notify anyone else involved with the company of your impending closure. This includes employees, customers, suppliers, service providers, banks, lenders, and landlords.