When a business entity closes and no longer does business in California they must terminate their legal existence by dissolving, surrendering, or canceling their business. When closing your current business it is important to keep in mind that this will require you to close out your affiliated state and local accounts or registration filings.
Dissolution, Surrender, Cancellation Forms
Franchise Tax Board
The California Franchise Tax Board (FTB) administers personal and corporate income and franchise taxes for the State of California. All businesses are required to submit an annual Business Income Tax Statement to the FTB. File the final current year tax return. Check the applicable Final Return box on the first page of the return, and write “Final” across the top of the form. View Closing a Business Entity for more information.
Secretary of State’s Office
A domestic (California) or foreign (out–of–state or out–of–country) business entity can dissolve, surrender, or cancel by filing the applicable form(s) with the California Secretary of State (SOS). File the appropriate form(s) with the SOS within 12 months of filing your business’ final tax return.
Sellers Permit – Discontinue a Business with the CA Department of Tax and Fee Administration
California Department of Tax and Fee Administration
When you sell or lease merchandise, vehicles, or other tangible personal property in California, even temporarily, you are generally required to register with the California Department of Tax and Fee Administration (CDTFA) (Formerly the Board of Equalization) and to pay sales tax on your taxable sales. When you register, the CDTFA will issue you a seller’s permit. Whenever you buy, sell, or discontinue a business, you need to contact CDTFA. If you are buying a business, you may need to obtain a seller’s permit, as permits are not transferable. If you are selling or discontinuing a business, you will need to close out your account. Visit CDTFA for more information.
Deactivating Employer Accounts
Employment Development Department
If you close your business, and you have or had employees, you should have registered with California Employment Development Department (EDD) for state income tax withholding and employment taxes. For the EDD to close your employer account, you are required to file the following:
Final Payroll Tax Deposit (DE 88) with payment
Quarterly Contribution Return and Report of Wages (DE 9) (must complete Box “B” and “B1”)
Quarterly Contribution Return and Report of Wages Continuation (DE 9C)
All forms should be filed within 10 days of quitting business, regardless of the normal due dates. Employers may inactivate their account online using the EDD’s e-Services for Business. View the EDD’s Changes to Your Business for more information.
Local City and County Offices
Contact your local city and county that you previously filed your business with (i.e. County Clerk’s office to change the “Doing Business As” name and the City Finance Department to change the “Business License/Tax Certificate” records) to inform them of the business closure. Check with any other regulating entities that you filed with to determine the process involved in updating or obtaining new business licenses and permits.
Use CalGOLD, our online permit assistance tool, to help identify local, state, and federal regulating agencies that you may have obtained permits from to update records and renew your permits with them. Once in CalGOLD, enter your city and type of business. If your business is not listed, select “General Business Information.”
Federal Close of Business Requirements
Internal Revenue Services
You must file an annual return with the Internal Revenue Service (IRS) 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. Consult the IRS Closing a Business Checklist.
Use CalGOLD, our online permit assistance tool, to help in identifying local, state, and federal regulating agencies that you may have obtained permits from to update records and renew your permits with them. Once in CalGOLD, input your city and type of business. If your business is not listed you can select “General Business Information.”
There are typical actions that are taken when closing a business. 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. Also attach a statement to your return showing the name of the person keeping the payroll records and the address where those records will be kept.
The annual tax return for a partnership, corporation, S corporation, limited liability company or trust includes check boxes near the top front page just below the entity information. For the tax year in which your business ceases to exist, check the box that indicates this tax return is a final return. If there are Schedule K-1s, repeat the same procedure on the Schedule K-1.
You will also need to file returns to report disposing of business property, reporting the exchange of like-kind property, and/or changing the form of your business. If you do not have a pre-printed envelope in which to send your taxes, refer to the Where To File page for a list of addresses. Below is a list of typical actions to take when closing a business, depending on your type of business structure: