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Employment Development Department
Employment Development Department

Changes to Your Business

Registered employers must report any change in business status (e.g., any change in business name, address, or legal entity, such as a change from partnership, or limited liability company to corporation). Employers or their authorized representatives may report changes to an employer payroll tax account using e-Services for Business. It’s fast, easy, and secure.

The EDD actively pursues and prosecutes employers who participate in SUTA dumping and UI rate manipulation.

The forms and publications listed in the sections below may be completed online through e-Services for Business, or downloaded or ordered through Online Forms and Publications.

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If you will not be reporting wages in any future quarter (even if you are not closing your business) you will need to submit your final forms and payments, and close your employer payroll tax account.

You may go to e-Services for Business to complete these forms and submit payment online, and then close your employer payroll tax account by selecting “Close My Business” from the “I WANT TO” menu.

You must submit the following final forms to the EDD:

Be sure to check Box B “Out of Business/No Employees” and fill in B1 “Out of Business Date” on the DE 9.

Household Employers: If you pay state payroll taxes quarterly, follow the business instructions above. If you pay state payroll taxes annually, you must submit the following final forms to the EDD:

Be sure to check the "No Longer Have Household Employees (Date)" box and provide the date you last paid wages.

If you no longer have employees because you are using a temporary services or employee leasing agency, please see our Information Sheet: Temporary Services and Employee Leasing Industries (DE 231F) or call our Taxpayer Assistance Center at 1-888-745-3886 to determine if this change in employee status is valid.

The following information is for California employers who are closing their business.

Worker Adjustment and Retraining Notification (WARN) Act for Plant Closures and Mass Layoffs

Please review the WARN Act information.

Unemployment Insurance Benefits

California employers are required to provide information about claims for benefits to workers who become unemployed. The EDD publication, For Your Benefit - California’s Programs for the Unemployed (DE 2320) meets this requirement.

The DE 2320 (available in English, Spanish, Chinese, and Vietnamese) can be:

Payroll Taxes

If you will not be reporting wages in any future quarter, you will need to submit your final forms and payments and close your employer payroll tax account. You must submit these documents within 10 days of closing your business, regardless of the normal due date.

You may go to e-Services for Business to complete these forms and submit payment online, and then close your employer payroll tax account by selecting “Close My Business” from the “I WANT TO” menu.

You must submit the following final forms to the EDD:

Be sure to check Box B “Out of Business/No Employees” and fill in B1 “Out of Business Date” on the DE 9.

Household Employers: If you pay state payroll taxes quarterly, follow the business instructions above. If you pay state payroll taxes annually, you must submit the following final forms to the EDD:

Be sure to check the "No Longer Have Household Employees (Date)" box and provide the date you last paid wages.

You may request to re-open your employer payroll tax account if you resume paying wages in excess of $100 in a calendar quarter (or $750 for household employers).

If your employer payroll tax account was previously closed, but you recently paid wages in excess of $100 in a calendar quarter (or $750 for household employers), you may submit an online request to re-open your account.

  • Log into e-Services for Business.
  • Select the closed account number (in grey).
  • Select “Re-Open my Business” on the “I WANT TO” menu.
  • Complete the online registration application.

Please allow three business days for processing, then log back into e-Services for Business to check the status of your request.

To access e-Services for Business, you must first enroll in Employer Services Online to obtain a username and password.

Note: If you are an agent, you must first add access to the account.

If you purchase a business with employees (or that previously had employees), you may be held liable for the previous owner’s EDD liability if a Certificate of Release of Buyer (DE 2220) is not obtained. See Selling Your Business for information on obtaining the DE 2220. For your protection, escrow funds should not be disbursed until the DE 2220 has been issued. The DE 2220 is issued after the seller pays all amounts owed to the EDD. Once the DE 2220 is issued, you cannot be held liable for any of the seller’s unpaid state payroll taxes.

If you acquire all or part of another employer’s business, you may receive all or part of the seller’s reserve account balance by completing an Application for Transfer of Reserve Account (DE 4453). The transfer may immediately reduce or increase your unemployment insurance tax rate. For more information on reserve account transfers, refer to the Information Sheet: California System of Experience Rating (DE 231Z) or contact our Contribution Rate Group at 916-653-7795. (There are time limits to qualify for a reserve account transfer - apply for the transfer immediately after you purchase a business.)

The EDD actively pursues and prosecutes employers who participate in SUTA dumping and UI rate manipulation.

If you acquire an ongoing business and employ any of the former owner’s workers, these employees are considered new hires and should be reported to the New Employee Registry. However, if immediately after the acquisition you employ any of the former owner’s workers, the wages paid to these employees during the same calendar year are considered as having been paid by you. Therefore, wages paid by the former owner in the current calendar year are applied to the taxable wage limits for Unemployment Insurance (UI), Employment Training Tax (ETT), and State Disability Insurance (SDI).

Example: Employees A and B worked for the former owner, and you continued to employ them when you purchased the business.

Employee A:
The former owner paid $6,000 in wages during the current calendar year. For the rest of the year, pay UI and ETT on Employee A’s next $1,000 in wages ($6,000 + $1,000 = $7,000 UI taxable wage limit) and withhold SDI on the next $89,585 in wages ($6,000 + $89,585 = $95,585 SDI taxable wage limit)

Employee B:
The former owner paid $45,000 in wages during the current calendar year. You do not owe UI and ETT because Employee B has reached the $7,000 UI taxable wage limit. For the rest of the year, withhold SDI on Employee B’s next $50,585 in wages ($45,000 + $50,585 = $95,585 SDI taxable wage limit).

See Obtaining Tax Forms and Publications to get any forms you may need.

For assistance, call our toll-free number 1-888-745-3886 or visit your local Employment Tax Office.

You must send final forms and payment to the EDD within 10 days of quitting business, regardless of the normal due date. You may complete the final documents online through e-Services for Business as well as request for the transfer of the reserve account. You must submit the following final forms to the EDD:

Be sure to check Box B “Out of Business/No Employees” and fill in B1 “Out of Business Date” on the DE 9.

The buyer should ask you for a Certificate of Release of Buyer (DE 2220). See our Requirements for Obtaining Certificate of Release of Buyer When a Business Is Sold (DE 3409A), and complete a Release of Buyer Request Form (DE 2220R) to receive the DE 2220. Until the DE 2220 is issued, the buyer must hold in escrow an amount sufficient to cover all amounts that you owe to the EDD, up to the purchase price of the business. The DE 2220 will be issued to you after you pay the EDD in full. Payment must be made by cash, cashier’s check, money order, or escrow check.

The buyer may ask the EDD to transfer your business’s reserve account to the new ownership by completing an Application for Transfer of Reserve Account (DE 4453). If you are selling only a portion of your business, the buyer may apply for a partial reserve account transfer. For more information about reserve account transfers, as well as the disposition of reserve accounts that are not transferred, refer to the Information Sheet: California System of Experience Rating (DE 231Z) or contact the Contribution Rate Group at 916-653-7795.

The EDD actively pursues and prosecutes employers who participate in SUTA dumping and UI rate manipulation.