(818) 986-0968

Dissolution of a Business

Just as partnerships, LLCs, S-Corps, and corporations are formed by starting a business, so too must these entities be dissolved through a process when it becomes clear the business entity can no longer effectively conduct business operations.

Each business entity possesses its own set of rules for a proper dissolution.


There are three steps that must be followed in order to cease a partnership: 1) Dissolve the partnership, 2) Wind up the partnership, and 3) Terminate the partnership. The four reasons under which a partnership is dissolved are:

1) The term stated in the partnership agreement expires.

2) Continuation of the partnership would be prohibited by law.

3)A stated agreement for dissolution in the partnership agreement is in place.

4) A court orders the dissolution.

Upon dissolution, the partnership may still remain in existence for the purposes of settling its obligations.


Legally dissolving an LLC requires compliance with state codes. There are three ways to dissolve an LLC:

1) The operating agreement specifically permits such dissolution.

2) A successful vote by a specific percentage of its members occurs as specified in the operating agreement.

3) A court orders the dissolution.

A dissolved LLC will still remain in existence until all of its obligations have been satisfied. Upon conclusion of the satisfaction of the obligations, a certificate of cancellation must be filed with the state.

Corporation and S-Corp

A California corporation or S-Corp may be dissolved in one of three ways. It may be dissolved through voluntary proceedings validated by the voting power of at least 50% of the shareholders; involuntary proceedings initiated by a complaint filed in a state court; or through proceedings initiated by the state in the event that the corporation or S-Corp fails to pays its taxes.

Comments are closed.