How to Dissolve a Business in California

If you are operating a business and decide that you want your company to close, you need to go through some specific legal steps. The exact process of dissolving your business is going to vary depending upon what form your company has taken. Dissolving a sole proprietorship, for example, is much simpler and easier than dissolving a corporation. out of business

An experienced San Diego business lawyer can help you to dissolve a business in California. Your lawyer will make sure that you comply with all legal requirements so you do not face problems down the road as a result of a failure to close your business properly. Contact Sepahi Law Group, APC if you have decided that you are ready to close your company.

The Steps to Dissolve a Business in California

The first step to dissolve a business in California is for the owners to decide they no longer wish to operate the company. A sole proprietor can make this decision on his own. For a partnership, the business may be dissolved by agreement of the partners or if either partner dies or decides to leave the business. For a corporation, a vote of owners or shareholders may be necessary in order to determine that the business should cease operations.

Once the decision has been made to dissolve a business in California, the next step is to take care of your tax obligations. You will need to file any delinquent tax returns that may have gone un-filed in prior years. You will also need to file a current tax return for the year in which you have been operating. You should check the box that is labeled “Final Return” on the tax forms and also write the word “FINAL” at the top of the page. Nonprofit organizations that have 3-year gross receipts averaging $25,000 or less are not required to complete this step unless the nonprofit has non-member income; unrelated business income; or is a private foundation.  When forms are filed, all tax balances including penalties, fees and interest must be paid.

In addition to taking care of the taxes, it is also essential to file forms with the Secretary of State within 12 months of the time when the final tax return is filed. These forms may include dissolution, surrender or cancellation forms depending upon the type of business that is being closed. The website of the Secretary of State ( provides detailed information on the specific forms you need. A San Diego business lawyer can also help you to complete the required paperwork.

Creditors to whom you owe money need to be notified that the business is closing and delinquent balances should be paid from the money and assets that the corporation or company owns. Any money or other assets owned by the corporation may also need to be divided among partners, owners or shareholders as part of the process of winding up the company’s affairs.

The San Diego business lawyers at Sepahi Law Group understand the requirements for shutting down your business and can provide you with assistance at every step as you try to dissolve a business in California. Call today to schedule a consultation and learn more about how we can help you to close your business.


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