Sell or Close Your Business
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 Finalacross 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.
Transfer of Ownership
A change in ownership occurs when cumulatively more than 50 percent of the original co-owner’s interests in the legal entity are transferred; original co-owner status is created when a transfer of property is excluded from reassessment under R&TC section 62(a)(2) in a prior transaction. If a legal entity has undergone a change in ownership, then only the interest in real property* that was previously excluded from reassessment under R&TC section 62(a)(2) is subject to reassessment as of the date of the change in ownership. If, however, a legal entity has also undergone a change in control under R&TC section 64(c) and there has been a transfer of cumulatively more than 50 percent of the original co-owners’ interests, then all interests in real property* located in California and owned by the legal entity (or any legal entity(ies) under its ownership control) as of the date of the change in control is subject to reassessment.
*Interests in real propertyΓÇöFor change in control and change in ownership purposes, interest in real property includes any of the following:
- Land, improvements (i.e., buildings and structures), or fixtures OWNED;
- Land, improvements (i.e., buildings and structures), or fixtures HELD UNDER LEASE from a private owner if the remaining term of the lease, including written renewal options, exceeds 35 years;
- Land, improvements (i.e., buildings and structures), or fixtures HELD UNDER LEASE from a public owner (i.e., any agency of local, state, or federal government) for any term; or
- Mineral rights, including working interest in oil, gas and geothermal steam-producing properties owned or held on lease for any term, whether in production or not.
Note: It does not include personal property owned, such as personal computers or office equipment.
Review the California State Board of Equalization – State of Change in Control and Ownership of Legal Entities and Instructions.
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 Band 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 Asname and the City Finance Department to change the Business License/Tax Certificaterecords) 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.
Small Business Association Resources
U.S. Small Business Administration
The U.S. Small Business Administration has the Steps to Closing a Business guide available online.