Dear Bob,
It’s gotten easier than it used to. A little.
All you need to do is prepare the final tax return, fill out a few
forms
and send them in. Someone needs to take responsibility for any
potential liabilities and you're all set.
Although it doesn't seem to actually say it anywhere in the
instructions,
there's only one thing you need to ensure - FINISH all the filings
before
January 15th, or the Franchise Tax Board will charge you the $800
minimum
annual tax for next year. To be safe, get it all in before 12/31.
You’ll find an overview of the process here. Read the instructions
through carefully
http://www.ss.ca.gov/business/corp/corp_stkdissinfo.htm
Or, just take these 5 steps (print this out and use it as a
checklist):
1) Prepare the final tax return for the corporation. Form 100S
http://www.ftb.ca.gov/forms/01_forms/01_100Sbk.pdf
(The 2002 forms aren’t out yet. So just white out the ‘1’ in 2001 and
write in ‘2’so the form reads 2002. Don’t worry. They’ll accept it..)
a) On page 1, Box A, near the top right, Check the Final Return box
‘dissolved.’
b) On page 4, Schedule L, column (d) draw a diagonal line across it to
indicate no balances. (Do make sure that you distribute all the assets
and liabilities properly. You may want to have your tax pro look this
over.)
2) Prepare a Request for Tax Clearance Certificate, Form 3555
http://www.ftb.ca.gov/forms/01_forms/01_3555.pdf
Do it slowly so you don’t miss anything. Don’t leave anything blank.
Fill in N/A (not applicable) on any numbered lines for which you have
no amounts.
a) Fill in pages 1-3 only.
b) On page 1, disregard the ‘Supplemental Information’ section, unless
You’ve sold the corporation and they will continue operations.
c) On page 2, fill in Section A only.
d) Page 3 is important. Be truthful. No one will check on it unless a
problem arises or a lawsuit is filed against the corporation, and
then…
watch out if you’ve lied.
This form is where you let the State of California know if the
corporation
owes any creditors money or unpaid payroll taxes. It also tells the
state
who to go after to pay any outstanding debts or suits that arise. If
you
know you’re all clear, you won’t have to worry about filling in this
information.
3) Sign the 100S and the Form 3555. Send them in with any tax balance
due.
If you haven’t paid the $800 minimum, you owe it. (And to answer the
question everyone asks, No, you don’t get to pro-rate the minimum tax
because you weren’t in business for the whole year. But, good try. )
While you’re at it, fill in IRS’s Form 1120S. You don’t need to send
any
money with that. Remember to check the final return box.
http://www.irs.gov/pub/irs-pdf/f1120s.pdf
By the way, if you incorporated more than a year or two ago, you
deposited
$800 with the Secretary of State. Several months after you shut down,
they’ll send it back to you. Nice little windfall most people don't
expect.
Once you’ve sent in your forms, it should take 3-4 weeks to get that
Tax Clearance Certificate back. Be sure to mark your calendar. If you
don’t
get it back within 4 weeks, call the FTB at 800-852-5711 and follow
up
on it.
4) While you’re waiting for that Tax Clearance Certificate to come
back, prepare the Certificate of Election to Wind up and Dissolve.
See page
7 of this booklet for a sample you can print out and retype:
http://www.ss.ca.gov/business/corp/pdf/dissolutions/corp_stkdiss.pdf
On item 3 on that certificate, fill the blank with ‘100% of the’ (as
an
S-Corporation, you must have issued shares).
Make at least three copies and sign them all. (I know, they only ask
for
one original and two copies, but…it doesn’t hurt to send them all
signed originals.)
5) Send in the three Certificates to Wind up and Dissolve, along with
an
extra copy of the Form 3555 Tax Clearance Certificate. (This way, you
cover that clearance issue on both ends.) Sign all of them.
The Secretary of State's office will send the Tax Clearance
Certificate
to the FTB and get it back more quickly than you will. (I like to do
send it to both agencies. It seems to speed up the process.)
You don’t need to send any money to the Secretary of State, unless you
want more than two signed copies of the Certificate to Wind up and
Dissolve.
(If you want extra, stamped copies, send in $8.00 for each one.)
Mail them to:
Business Programs Division
1500 11th Street, Room 390
Sacramento, CA 95814
The Secretary of State’s business Program’s phone number is (916)
653-2318.
They are very helpful when you call, so don’t hesitate to call them if
you have questions. You won’t believe how patient they are.
If I you're overwhelmed, take a deep breath and ask me.
I'll be happy to clarify it for you. Please don’t hesitate to ask.
Sincerely,
Your TaxMama-ga
-----
My Search:
Since I never remember the URL for the Secretary of State,
I started the search at the State of California website
http://www.ca.gov/state/portal/myca_homepage.jsp
Knowing I was looking for the Secretary of State's site, I clicked on
the 'Government' link and followed that to the "The Governor and other
Statewide Officials" link. That takes me straight to the SOS site:
http://www.ss.ca.gov/
Clicking on the California Business Portal picture leads us here:
http://www.ss.ca.gov/business/business.htm
Next, click on "corporations" and voila! Go to Frequently Asked
Questions
and we find the word 'Dissolution.' Select the stock (business)
corporation
option - and you've arrived -
http://www.ss.ca.gov/business/corp/corp_stkdissinfo.htm
Then I tried a Google search for “corporate dissolution California”
On the first page, there it was, the 2 site was the link to
http://www.ss.ca.gov/business/corp/corp_stkdissinfo.htm
Wow, searching Google was much faster than going directly to the main
site. |
