In today's economy, business dissolution is all too common. Whether your business is dissolving because of a partnership dispute or financial problems, a business lawyer can help you properly dissolve your business and handle any liability issues.
Dissolving a business is a complex process. Not only must you gain approval from shareholders, members or partners for the business dissolution, but you must also take steps to make the dissolution official. In many cases, bylaws or operating agreements may outline an exit strategy to follow.
Outside of the exit strategy, there are legal requirements to meet, including contacting the IRS about the business dissolution, notifying creditors and paying debts, valuing and distributing business assets, and filing for dissolution with the California Secretary of State (detailed below).
Because there are so many moving parts in a business dissolution, it is important to involve the right professionals, which may include accountants, tax advisors and business lawyers.
Dissolution Documents to File With the Secretary of State
Each business entity must file separate documents to terminate the business. In most cases, your California business must file the following document(s):
- Corporation: Certificate of Election to Wind Up and Dissolve (Form ELEC STK) and Certificate of Dissolution (Form DISS STK)
- Limited Liability Company: Certificate of Dissolution (Form LLC-3) and Certificate of Cancellation (Form LLC-4/7)
- General Partnership: Certificate of Dissolution (Form GP-4)
- Limited Partnership: Certificate of Cancellation (Form LP-4/7)
- Limited Liability Partnership: Notice of Change of Status (Form LLP-4)
Unfortunately, the Secretary of State often returns documents because they have errors, misstatements or omissions. Legal counsel can help you meet the minimum filing requirements under the California Corporations Code.
Source: California Secretary of State, Frequently Asked Questions, "How Do I Terminate (Dissolve, Surrender or Cancel) My Business Entity?"