The cost to dissolve an LLC in California starts at $0 in state filing fees and usually lands somewhere between $800 and a few thousand dollars once the Franchise Tax Board is paid. The Secretary of State charges nothing to accept your cancellation paperwork.1California Secretary of State. Limited Liability Companies – California The real bill is the $800 annual franchise tax, which keeps running until the LLC is officially canceled, plus any back taxes, income-based fees, or penalties the LLC has accumulated. Timing the dissolution correctly can save you an entire year of tax; getting it wrong can add thousands.
State Filing Fees
The California Secretary of State charges no fee to file either the Certificate of Dissolution (Form LLC-3) or the Certificate of Cancellation (Form LLC-4/7). An LLC formed in California within the last 12 months that never conducted business can use the Short Form Cancellation Certificate (Form LLC-4/8) by itself, also at no cost.2California Secretary of State. Certificate of Dissolution and Cancellation Forms
You can file online through the bizfile portal or submit paper forms by mail or in person in Sacramento.3California Secretary of State. File Online Online terminations are currently processed within about one business day, and mail submissions run roughly a week behind.4California Secretary of State. Current Processing Dates
Expedited Processing
If you need the cancellation processed faster, the Secretary of State offers two paid tiers:
- 24-hour service: $350, with a guaranteed response within one business day.
- Same-day service: $750, with a response by 4:00 p.m. the same day if your filing arrives by 9:30 a.m.5California Secretary of State. Service Options
Standard online processing is already fast, so most owners skip the paid tiers. They’re mainly useful if you’re racing to beat a tax deadline or closing a transaction that needs proof of cancellation by a specific date.
The $800 Annual Franchise Tax
The biggest cost of dissolving a California LLC is the $800 annual franchise tax owed to the Franchise Tax Board. Every LLC organized or doing business in California owes this tax every year it exists, whether or not it earns any revenue, and the obligation continues until the LLC is officially canceled.6Franchise Tax Board. Limited Liability Company A dormant LLC you forgot about can rack up thousands in unpaid tax before you get around to dissolving it.
How to Avoid the Tax in the Final Year
You can avoid the $800 tax for the year you file cancellation paperwork, but only if you meet all three of these conditions:
- File the final Form 568 for the preceding taxable year by its due date, including any extension.
- Stop all business activity in California after the last day of that preceding taxable year.
- Submit the dissolution and cancellation forms to the Secretary of State within 12 months of the filing date of the final tax return.7Franchise Tax Board. FTB Publication 1038 Guide to Dissolve, Surrender, or Cancel a California Business Entity
If your LLC stopped operating at the end of 2025, you file your final 2025 Form 568 on time in 2026, and you cancel with the Secretary of State within 12 months of that filing, you won’t owe the $800 for 2026. Miss any one of the three requirements and you’re on the hook for the full $800 in the cancellation year.
LLCs Canceled Within the First Year
If your LLC was formed in California and you cancel it within one year of organizing by filing the Short Form Cancellation (Form LLC-4/8), you won’t owe the $800 for the first tax year.6Franchise Tax Board. Limited Liability Company This is a separate rule from the general final-year avoidance test, and it’s worth knowing if you formed an LLC but never got the business off the ground.
The Income-Based LLC Fee
On top of the $800 annual tax, California imposes a separate fee on LLCs with total California income above $250,000. If your LLC earned above the threshold in its final year of operation, you owe the fee on the final return:
- $250,000 to $499,999: $900
- $500,000 to $999,999: $2,500
- $1,000,000 to $4,999,999: $6,000
- $5,000,000 or more: $11,7906Franchise Tax Board. Limited Liability Company
The fee uses “total income” rather than net profit, so an LLC with $300,000 in gross receipts and barely any profit still owes the $900. Unpaid LLC fees from prior years also have to be settled before the FTB clears your dissolution.
Suspended or Forfeited LLCs Cost Much More
If the Franchise Tax Board has suspended or forfeited your LLC for unpaid taxes or unfiled returns, you cannot legally dissolve it until you bring it back to good standing.8Franchise Tax Board. My Business Is Suspended A suspended LLC can’t file cancellation papers, enter into contracts, or defend itself in a lawsuit.
Reviving the LLC requires:
- Filing every past-due Form 568.
- Paying all back taxes — $800 for every year the LLC existed, plus any income-based LLC fees owed.
- Submitting FTB Form 3557 LLC (Application for Certificate of Revivor).8Franchise Tax Board. My Business Is Suspended
On top of the back taxes, the Secretary of State may impose a $250 penalty for the suspension, and the FTB can assess a $2,000 penalty per tax year if you failed to file returns within 60 days of receiving a written demand. For an LLC suspended for five years, revival alone could exceed $5,000 before dissolution even begins. This is the most common reason the cost of dissolving an LLC turns out to be far higher than expected.
Final Tax Returns and Federal Costs
The LLC must file a final Form 568 with the Franchise Tax Board, with the “Final Return” box checked and each member’s Schedule K-1 marked as final.9Franchise Tax Board. 2025 Instructions for Form 568 Limited Liability Company Return of Income All outstanding balances, including accumulated penalties, interest, and unpaid LLC fees, must be cleared before the FTB will consider your account settled.6Franchise Tax Board. Limited Liability Company Unresolved tax issues will hold up your cancellation at the Secretary of State.
Multi-member LLCs treated as partnerships for federal tax purposes also file a final Form 1065 with the IRS. Late filing carries a penalty of $255 per partner for every month the return is overdue, up to 12 months.10Internal Revenue Service. Failure to File Penalty For a four-member LLC, that’s $1,020 per month. An LLC that elected corporate tax treatment may also need to file Form 966 after adopting a resolution to dissolve.11Internal Revenue Service. About Form 966, Corporate Dissolution or Liquidation Single-member LLCs report on Schedule C of the owner’s individual return and have no separate partnership filing.
Costs Tied to Employees
If the LLC has employees, closing triggers additional costs. California requires employees who are discharged to be paid all wages due at the time of termination.12California Department of Industrial Relations. Final Pay An employer that willfully misses this deadline faces a waiting-time penalty of up to 30 days’ wages per affected employee.
Larger employers also face federal WARN Act notice requirements (100 or more full-time workers, 50 or more job losses, 60 days’ notice), a stricter California version (Cal-WARN) with a lower threshold, and COBRA continuation coverage notices for employers with 20 or more employees who sponsor a group health plan.13U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage for Workers Final payroll reports also go to the California Employment Development Department.
Professional Fees
For an LLC with clean books, no debt, and a single member, you can realistically handle the dissolution yourself and pay nothing beyond the final tax. The forms are straightforward and the online filing system is self-explanatory.
A CPA is worth hiring if the LLC has significant assets, multiple members, or any history of estimated tax payments and income-based LLC fees. Accurately preparing the final Form 568, especially the disposition of assets and the interplay between the franchise tax and the LLC fee, is where mistakes happen. CPA rates for this kind of work generally run $150 to $400 per hour, and a final return for a moderately complex LLC can take several hours.
An attorney becomes important when the LLC has unresolved creditor disputes, ongoing contracts, pending litigation, or a complicated operating agreement that governs how assets get divided. Legal fees follow similar hourly ranges. For an LLC with multiple members, significant assets, and outstanding debt, total professional fees can reach several thousand dollars.
Third-party filing services that handle the paperwork but not the tax returns typically charge $100 to $800. They’re useful if you want someone to manage the forms and follow up with the Secretary of State, but they don’t replace a CPA or attorney for complex situations.
What the Total Bill Usually Looks Like
Adding it all up:
- State filing fees: $0 for standard processing. $350 for 24-hour service, $750 for same-day.5California Secretary of State. Service Options
- Final-year franchise tax: $800 unless you meet all three conditions in FTB Publication 1038.7Franchise Tax Board. FTB Publication 1038 Guide to Dissolve, Surrender, or Cancel a California Business Entity
- Income-based LLC fee: $900 to $11,790, only if total California income exceeded $250,000.6Franchise Tax Board. Limited Liability Company
- Back taxes for a suspended LLC: $800 per year, plus a possible $250 SOS penalty and up to $2,000 per year in FTB penalties.8Franchise Tax Board. My Business Is Suspended
- Professional fees: $0 for a simple DIY dissolution; several thousand dollars when a CPA and attorney are both involved.
The simplest case, a single-member LLC in good standing that times the dissolution correctly, walks away for nothing beyond the final return. The worst case, a multi-member LLC that’s been suspended for years with unresolved debts, easily runs into five figures. The difference almost always comes down to how quickly you act once you decide to close.