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There are many reasons that you may have decided to end your Limited Liability Company. Some businesses launch with a close date in mind, right from the start. Perhaps you’ve completed your business’ purpose or maybe a strong disagreement exists between your governing members.

Whatever the case may be, California State has guidelines on how to properly terminate your LLC. Depending on your circumstances, you may either need to dissolve your LLC, followed by a final cancellation, or you may be able to file one form to cancel the LLC without the need for dissolution.

Review Governing Documents

Before choosing between dissolution and cancellation, first review your LLC’s governing documents, such as the Operating Agreement and Articles of Organization. These documents typically spell out the steps for termination.

If these documents do not explicitly give direction on how to end the LLC, then refer to the California Corporations Code which outlines the requirements for dissolution or cancellation.

Cancellation Forms

The simplest way to terminate your LLC is by filing a one-page Form LLC-4/8, commonly referred to as a “Short Form Cancellation Certificate”. Although this is the most straightforward way to terminate, you must meet specific requirements to apply. The statements set forth in California Corporations Code 17707.02 must all be true for your business:

  1. The LLC filed the form within 12 months from the date the Articles of Organization were filed with the Secretary of State.
  2. The LLC has not yet conducted business.
  3. The LLC must have no debts or liabilities.

If these statements do not apply to you, but 100% of the LLC’s members voted in favor of Cancellation, you can instead file Form LLC-4/7, also known as a “Certificate of Cancellation,” instead. Keep in mind that Box 3 for “Dissolution” must be checked prior to filing for this form to be accepted for your LLC’s termination.

When Dissolution Comes Into Play

If you don’t meet any of the requirements for a direct cancellation or you did not attain a unanimous vote to cancel, then you must first go through the process of formal dissolution. File for dissolution using Form LLC-3 commonly referred to as a “Certificate of Dissolution.”  This form legally puts the State and public on notice that the LLC is in the process of winding up its affairs. Ultimately, you must also file the “Certificate of Cancellation” Form LLC-4/7; this form can either be filed after or along with the filing of Form LLC-3.

Of course, when you make the decision to end your LLC there are many other factors that you must consider aside from which forms to file to properly wind up. Other tasks including disbursing assets, wrapping up contracts, canceling leases, and settling debts are crucial “wind up” measures. Planning for dissolution can be complicated. If you need the guidance of an experienced healthcare attorney focused on making the process streamlined and worry-free, contact us today to see how we can help you with this process.