How to Close a California LLC and Stop the $800 Annual Tax

Written byPatrick Moumiet

Stopping work is not the same as closing your California LLC. The $800 tax continues until the LLC is cancelled.

Key takeaways:

  • FTB says the $800 annual tax is owed until the LLC cancels.
  • Form LLC-4/8 applies only to LLCs under 12 months old that never did business and have no debts.
  • Most operating LLCs file Form LLC-4/7; LLC-3 is for non-unanimous dissolution votes.
  • Settle taxes, contracts, IP, and records before you file.

California LLC cancellation forms

1. Why closing matters

FTB says every California LLC owes the $800 annual tax until it cancels. Wolters Kluwer adds that an LLC that stops operating without completing the closing steps still owes the annual tax, and missed Statements of Information can bring penalties. Doing nothing is not a way to close an LLC.

Related: California LLC annual tax and fee.

2. Two cancellation forms

Short Form LLC-4/8 is for LLCs formed within the last 12 months with no business and no debts; most operating LLCs use Form LLC-4/7, and the $800 tax continues until cancellation is processed

  • Form LLC-4/7 (Certificate of Cancellation) ends the LLC’s legal existence. Most operating LLCs use it.
  • Form LLC-4/8 (Short Form Cancellation) applies only if the LLC was formed within the last 12 months, never conducted business, and has no debts or liabilities. FTB says an LLC cancelled within a year of organizing can use it to avoid the first-year tax.
  • Form LLC-3 (Certificate of Dissolution) is needed only if the vote to dissolve was not unanimous.

3. The steps

Steps to close an LLC: decide, wind down contracts and accounts, file cancellation with the state, pay any taxes owed, keep records

According to Wolters Kluwer, the sequence includes checking your operating agreement for the required vote, notifying known creditors and distributing assets, handling FTB requirements (file delinquent returns, pay balances, file a final return marked final), filing the cancellation form with the Secretary of State, and keeping paying the $800 until cancellation is processed.

4. Loose ends

Cancel licenses and permits, cancel any DBA, file withdrawals in other states where the LLC registered, close bank accounts after final payments clear, and keep business records since the FTB and IRS can audit prior returns for several years.

5. Seven checks before you file

Seven checks before closing an LLC: contracts finished, bank accounts settled, taxes filed, owners in agreement, IP assigned, customers notified, records kept

Check your operating agreement first, and confirm who owns the IP before the entity disappears. See also confidentiality and IP assignment agreements.

Where DoubleCheck fits

DoubleCheck is built for businesses that start legal work with AI. Bring your question or draft, use an AI-first workflow to understand and verify it, and when professional advice is warranted, you can connect with an independent attorney. Attorneys on DoubleCheck are independent professionals; an attorney-client relationship forms only if an attorney accepts your engagement.

Sources: FTB: Limited liability company; Wolters Kluwer: How to dissolve an LLC in California.

FAQ

Do I owe the $800 if my LLC is inactive?

Yes. FTB says LLCs owe it until they cancel.

What is Form LLC-4/8?

A short-form cancellation for LLCs formed within the last 12 months that never conducted business and have no debts or liabilities.

What form do most LLCs use to cancel?

Form LLC-4/7, the Certificate of Cancellation, with Form LLC-3 only if the dissolution vote was not unanimous.

Do I need to file a final tax return?

Wolters Kluwer’s guidance includes filing a final return marked as final with FTB and paying any balances.

General information only. This article is not legal, tax, investment, or accounting advice.