Avoid costly mistakes when dissolving a corporation.

• Position: FTB News - Brief Article

While the decision to close a business can be challenging, the path toward dissolution can likewise be difficult. The FTB recently issued tips on the dissolution of a corporation, looking to correct some common errors and misconceptions.

The first tip? Make your client aware that simply checking the final return box on their next tax return does not officially dissolve anything.

A careful study of the Secretary of State's procedures for the dissolution of a corporation would follow. You can find these in the California Corporations Code, or by visiting the Secretary of States website at www.ss.ca.gov.

Next, the FTB stresses, pay attention to the timing of the filing, and complete each document as much as possible. Until the Secretary of State establishes the date of dissolution, a corporation still exists.

Next, any dissolving corporation must submit Form FTB 3555, Request for Tax Clearance Certificate--Corporations. Pending issuance of the certificate, the corporation's dissolution is considered conditional.

The FTB says it often receives...