How to Close a Business in California: 6 State Filings After the Final Sale

If you sell the business, the sale alone does not close the company. The seller has a legal duty to do six other things, to close out the state records as well:

• The final FTB return,
• Secretary of State dissolution,
• CDTFA seller’s permit closing,
• EDD final payroll report,
• election to wind up if not all the owners agree,
• and fictitious name abandonment if you had a DBA.

Also, the order you do these six in affects the $800 minimum tax.

You can’t dissolve a business that is not in good standing, and the sale alone does not update the standing. The best practice is to check the status first at bizfile, and then do any revival or delinquency clear-up work that’s needed, so that the business has good standing. In California, a business entity that is inactive may qualify for voluntary administrative dissolution through the FTB. To qualify, the LLC or corporation must have been registered in California for over 12 months, have no assets, and have stopped doing business here.

The Close-out Work

The state payroll agency, the EDD, is the fastest clock to watch. The final EDD requirements are a final payroll tax return, a wage and withholdings report, full payment of the required payroll tax, and closing out the account. After a sale, this must all be done within 10 days of the sale, unless there are employees working for you afterward. If the sale includes employees who you’ll let go when you hand over the business, pay attention to those final wages, including the accrued vacation pay. Final wages are generally due immediately in California upon discharge, so the usual payroll run next week may be too late. There are some exceptions that allow you to wait longer.

Moving on to the seller’s permit closing, you won’t need the permit anymore after the business is sold, so the best practice is to fill out form CDTFA-65 or notify the CDTFA online and close the permit, and note the date when you did it. The other half of the sales tax picture is to list the sale of any fixtures, equipment or leftover inventory on the final sales and use tax return. California businesses that file annual tax returns still owe a final quarterly filing for the quarter they closed in. For them, it’s the usual quarterly due date for the quarter in which they did the closing (e.g. January to March is due by April 30).

The buyer’s tax clearance is on form CDTFA-471, and it can take the agency 60 days or more to answer. It can be a relief for a buyer, to know they won’t have to pay any sales taxes that you left unpaid, but it doesn’t protect you. If a buyer doesn’t hold back part of the price and also doesn’t get the clearance, they take on personal responsibility for your unpaid sales tax. The buyer then becomes liable for up to the purchase price.

For the final corporation franchise tax return, you need to fill in the Final Return box on Page 1 and write the word “Final” across the top of that page. A C corporation would fill out a Form 100 (or Form 100W) and the regular annual federal 1120. An S corporation files Form 100S, the federal 1120-S, and adds the final Schedule K-1s for shareholders. The due dates in California are different for S corps and C corps. An S corporation has to file its final state return by the 15th day of the third month after the year-end, and a C corp’s final return deadline is in the fourth month after the year-end. If it’s extended, it’s just the filing that gets extended, not the payment.

The final California FTB return, filed on time, starts a 12-month clock. To stop paying the minimum tax, the Secretary of State’s dissolution paperwork must reach them within that year. Also, the corporation must not “do business” in California after the final tax year. If it makes a sale or hires anyone here, it hasn’t ended “doing business.”

The real ending for a California corporation is the Certificate of Dissolution filing, with the Secretary of State. The Secretary of State filing that verifies the dissolution is form DISS-STK, and it can be filed through bizfile online at no fee. Sometimes a Certificate of Election to Wind Up and Dissolve is filed with the Secretary of State, to let everyone know how the decision went. California requires this extra step when a business has more than one owner, and they weren’t all in agreement about closing the business. Then when the winding up is finished, a Certificate of Dissolution is filed. In the limited liability company version, the Certificate of Dissolution LLC-3 and the Certificate of Cancellation LLC-4/7 are both free. Online filings on this typically take less than five days to process. Since July 1 of 2026, the new rule is that the filings must go through bizfile online. You’ll need Full Access to the entity.

The final piece of shutting down is the fictitious business name. If you had a fictitious business name statement filed anytime in the last five years, to close it out you need a Statement of Abandonment of Use of Fictitious Business Name with the county clerk, and a newspaper notice in a local newspaper once a week for four straight weeks.

After you sell the business, the close-out work is in a set order that’s all on a deadline.

• First go to the EDD if you’re letting employees go, within 10 days of the sale.
• Next, list any leftover inventory or equipment on your final CDTFA return.
• Then do the final franchise tax return on time.

The Old Debts the Company Had

Remember that just by selling the business, you aren’t doing anything about the old debts the company had when you owned it. Filing the dissolution does not forgive what the company owes. If the money from the sale is not enough to pay all the old creditors, you should get legal advice before paying any owner, and before deciding which creditors to pay.

A dissolved business does still exist, for limited purposes, such as for handling claims. Lawsuits already filed, for example, do not end because the company has closed out. If you move forward with dissolution, be sure to keep the records, in case something does come up later, and ask your insurer about coverage during this time.