California is the only large state where dissolving an LLC is free and keeping one is expensive. The Secretary of State charges nothing for the Certificate of Dissolution or the Certificate of Cancellation; the Franchise Tax Board charges $800 for every tax year the LLC exists on paper. That inverts the usual logic of putting off a filing. Every month an unused California LLC is left alone is a month closer to another $800, and the FTB does not forget. This page covers the two-form (sometimes one-form) Secretary of State process, the Short Form Cancellation that lets a young LLC escape the first year's $800 entirely, what the FTB needs, and the change that took effect on 1 July 2026: terminations are now online-only and require Full Access to the entity in bizfile Online.
Which forms: LLC-3, LLC-4/7 or LLC-4/8
California splits dissolution into two documents and offers a third that replaces both. The Certificate of Dissolution (Form LLC-3) records the decision to dissolve; the FTB's guidance is that the Secretary of State requires it unless the dissolution is made by vote of all the members. The Certificate of Cancellation (Form LLC-4/7) ends the LLC's existence and is always required. If all members voted to dissolve, the LLC-4/7 can be filed alone. Both are free — the Secretary of State's fee table lists 'Termination — Certificate of Dissolution, Certificate of Cancellation, Short Form Cancellation Certificate' at no fee.
The third document, the Short Form Cancellation Certificate (Form LLC-4/8), is for LLCs that never got going. It can be filed only if the LLC:
- was formed in California within the last 12 months;
- has no debts or other liabilities (other than LLC tax liabilities);
- has filed, or states it will file, a timely final annual LLC tax return;
- has distributed all its known assets to the persons entitled to them, or had no known assets;
- has not conducted any business since it filed its Articles of Organization.
The form must include a statement that all of these are true (except the final return, which can follow). If the Secretary of State files the LLC-4/8, the FTB's rule is unambiguous: the LLC will not be subject to the annual $800 tax for its first tax year. The one catch, also from the FTB: any $800 already paid is not refunded. So an LLC formed for a deal that fell through should file the LLC-4/8 before its first $800 comes due — the 15th day of the fourth month after formation — rather than pay and then cancel.
Since 1 July 2026: online only, Full Access required
The Secretary of State's fee table now carries a warning on the termination line: terminations must be filed online and require Full Access to your entity within bizfile Online. In practice that means creating a bizfile account, requesting Full Access to the LLC's record (the state verifies you are entitled to act for it), and only then filing. Paper LLC-3, LLC-4/7 and LLC-4/8 forms are no longer accepted. Do the access request first; it is the slow step, and the filing itself is minutes once it is granted.
The Franchise Tax Board side
The FTB is where a California dissolution is won or lost. The rule, from FTB Publication 3556, is that an LLC stops owing the $800 for tax years after the year of its final return if it does all of the following:
- files a timely final California return (Form 568) with the Final Return box checked;
- pays the $800 annual tax for the tax year of that final return;
- conducts no business in California after the last day of that tax year; and
- files the Certificate of Cancellation with the Secretary of State within 12 months of filing the final return.
Miss the 12-month window and the LLC is back to owing $800 for each year it still exists on the Secretary of State's records. The order therefore matters: final return first (or at least the final year's tax paid), cancellation within a year of it. An LLC that owed the gross-receipts fee in its final year — $900 to $11,790 depending on California income — owes that too. Once the cancellation is filed and the final return processed, the FTB account closes; there is no separate clearance certificate to request.
What it costs, all in
| Item | Fee | Notes |
|---|---|---|
| Certificate of Dissolution (LLC-3) | $0 | Skip if all members voted to dissolve |
| Certificate of Cancellation (LLC-4/7) | $0 | Always required (unless LLC-4/8 applies) |
| Short Form Cancellation (LLC-4/8) | $0 | Under 12 months old, no debts, no business, assets distributed |
| $800 annual tax, final year | $800 | Owed for the year of the final return — waived only under LLC-4/8 |
| Certified copy of the filing | $5 | Optional, per document |
| Preclearance / expedite | varies | Secretary of State special-handling fees; not needed for a routine online filing |
For most owners the total is $800 — the final year's tax — and nothing else. For an LLC young enough for the short form, it is nothing at all. What California never offers is a way out that skips the final return: the FTB's suspension of a delinquent LLC does not end its existence, and a suspended LLC can neither enforce its contracts nor be cancelled until it is revived and every year's $800 paid.
The federal side: final return and the EIN
The state filing ends the LLC as a legal entity; it does nothing at the IRS. Two things close the federal account. First, a final tax return for the year the business closes: a single-member LLC reports on Schedule C of the owner's 1040 as usual; a multi-member LLC files Form 1065 with the final return box checked (near the top of the front page) and the final K-1 box checked on each partner's Schedule K-1. If the LLC paid any contractor $600 or more that year, the 1099-NECs are still due. Second, the EIN. The IRS is explicit that an EIN is never cancelled — it is the entity's permanent number — but the business account can be deactivated by letter once every return is filed and every balance paid. The letter needs the EIN, the legal name, the address and the reason, ideally with a copy of the original EIN assignment notice; the IRS's current EIN page lists mail stops in Kansas City and Ogden (irs.gov). Keep employment-tax records for at least four years after closing.
Sources
Secretary of State LLC fee table (termination: no fee; online-only with Full Access from 1 July 2026); FTB Publication 3556 (cancellation conditions, LLC-4/8 conditions, no refund of tax already paid); FTB LLC page (short form cancellation; first-year exemption limited to tax years 2021–2023); irs.gov closing-a-business and EIN pages. All fetched 12 September 2026. Related: what a California LLC costs and the California registered agent guide.