To dissolve an LLC in Delaware, you need a member vote authorizing dissolution, a winding-up period to pay creditors and distribute what’s left, payment of any outstanding franchise taxes, a Certificate of Cancellation filed with the Division of Corporations for a $220 fee, and final federal and state tax returns. Skip any of these and you can stay on the hook for the $300 annual franchise tax, IRS penalties, and personal exposure long after you’ve stopped doing business.
Get Member Approval to Dissolve
Start with your Operating Agreement. It may set its own voting threshold, notice requirements, or events that trigger dissolution automatically. If the agreement is silent, Delaware law requires consent from members holding more than two-thirds of the current profit interests in the LLC.1Justia. Delaware Code Title 6 Section 18-801 – Dissolution That’s two-thirds of the economic stake, not a two-thirds headcount, which matters when members hold unequal shares.
Put the vote in writing. A signed resolution creates a clean record of when dissolution was authorized and by whom, which you’ll want if anyone later disputes whether the LLC was properly closed.
Wind Up the Business
Once dissolution is approved, the LLC enters a winding-up period. The company still legally exists, but its activities are limited to closing out business rather than taking on new work. A manager typically runs the wind-up; if there’s no manager, members holding more than 50% of the profit interests do. They can settle debts, sell assets, defend lawsuits, and make final distributions.2Justia. Delaware Code Title 6 Section 18-803 – Winding Up
Delaware law sets the order for paying out. Creditors come first. Members then receive a return of their capital contributions, and anything left is split according to each member’s share of distributions under the Operating Agreement.3Justia. Delaware Code Title 6 Section 18-804 – Distribution of Assets If the agreement doesn’t address this, the default statutory rules apply.
Don’t file the Certificate of Cancellation until the wind-up is actually finished. The statute contemplates settling liabilities and distributing assets first, then canceling. Filing while creditors remain unpaid can create personal exposure for the people who signed off.
Pay Outstanding Franchise Taxes
Every Delaware LLC owes a $300 annual franchise tax, due by June 1.4Division of Revenue. Franchise Taxes The Division of Corporations will not process your Certificate of Cancellation while any franchise tax balance is outstanding. This is where most people get stuck.
The tax isn’t prorated. If your LLC was active at any point during a calendar year, you owe the full $300 for that year.5Delaware Division of Corporations. LLC/LP/GP Franchise Tax Instructions Dissolving in February doesn’t save you from that year’s bill. Late payment adds a $200 penalty plus 1.5% monthly interest on the unpaid balance.4Division of Revenue. Franchise Taxes
Before you file the cancellation, check your account status with the Division of Corporations and confirm the tax history is clear. An LLC that hasn’t paid for several years will owe back taxes, penalties, and interest for every year it stayed on the books, and all of that must be paid before the state will accept the cancellation.
File the Certificate of Cancellation
The Certificate of Cancellation officially ends the LLC’s existence in Delaware. The form is on the Division of Corporations website.6Delaware Division of Corporations. Certificate of Cancellation of a Limited Liability Company
What Goes on the Form
The statute calls for straightforward information:7Justia. Delaware Code Title 6 Section 18-203 – Cancellation of Certificate
- The LLC’s exact legal name, matching the Division’s records. Verify it on the state’s entity search tool first, because a missing comma or “LLC” versus “L.L.C.” can cause rejection.
- The date the Certificate of Formation was originally filed with the state.
- Names of any registered series that haven’t already been canceled.
- A future effective date, if you want cancellation to take effect on a specific day rather than immediately.
An authorized person must sign.
Fee and Submission
The base filing fee is $220.6Delaware Division of Corporations. Certificate of Cancellation of a Limited Liability Company You can file by mail with a check or money order payable to the “Delaware Secretary of State,” through the Division’s online portal, or through a registered agent. Standard processing takes several weeks depending on volume. Expedited tiers run from next-day down to one-hour turnaround at additional cost; current fees are on the Division’s site, or call (302) 739-3073.8Delaware Division of Corporations. Expedited Services Once processed, the Division returns a file-stamped copy confirming cancellation.
Handle the IRS Side
Canceling with Delaware closes the state file. The IRS has its own checklist, and missing it is one of the most expensive mistakes people make when closing an LLC.
File Final Returns
File a final federal return for the year the LLC closes, with the “final return” box checked. The form depends on tax classification: a multi-member LLC taxed as a partnership files a final Form 1065; one taxed as a corporation files a final Form 1120; a single-member LLC reports final activity on Schedule C of the owner’s Form 1040.9Internal Revenue Service. Closing a Business
LLCs taxed as corporations must also file Form 966, Corporate Dissolution or Liquidation, after adopting a plan of dissolution. It’s in addition to the final Form 1120.10Internal Revenue Service. About Form 966, Corporate Dissolution or Liquidation
Late Form 1065 penalties add up fast: $255 per partner for each month or partial month the return is late, up to 12 months.11Internal Revenue Service. Instructions for Form 1065 (2025) A four-member LLC that files six months late owes $6,120. The IRS assesses it automatically.
Deactivate the EIN
The IRS doesn’t cancel EINs, but it will deactivate one so it can’t be used for future filings. Send a letter with the LLC’s EIN, legal name, address, and reason for closing to IRS, MS 6055, Kansas City, MO 64108, or IRS, MS 6273, Ogden, UT 84201. All outstanding returns must be filed and taxes paid before the IRS will process the deactivation.12Internal Revenue Service. If You No Longer Need Your EIN
Close Accounts and Keep Records
After cancellation is confirmed and final returns are filed, close every bank account and credit line in the LLC’s name. An open business account invites unauthorized charges and confusion about whether the entity is still operating. Cancel local business licenses and any industry-specific permits so you aren’t billed for renewals.
Notify your Delaware registered agent and terminate the service agreement in writing. Registered agents typically charge annual fees and will keep billing until you formally cancel. Some charge a small fee to process a resignation filing; check your agreement.
Hold onto records. The IRS recommends keeping tax records at least three years from the date the return was filed, longer in specific situations, and indefinitely for any year in which no return was filed. Employment tax records should be kept at least four years after the tax was due or paid, whichever comes later.13Internal Revenue Service. How Long Should I Keep Records Beyond IRS rules, keep the Operating Agreement, the dissolution resolution, the file-stamped Certificate of Cancellation, and any contracts or settlement agreements. Former partners, creditors, and insurers may need them long after the LLC is gone.
What Happens If You Just Walk Away
If you stop operating but never file the Certificate of Cancellation, Delaware still treats your LLC as active. The $300 franchise tax keeps accruing every year, along with the $200 late penalty and 1.5% monthly interest.14Delaware Division of Corporations. Frequently Asked Tax Questions An LLC dormant for five years can owe well over $2,000 in back taxes and penalties before you can even file to cancel, because the Division won’t accept the cancellation while taxes are outstanding.
The state may eventually void the LLC for non-payment, but voiding is not the same as cancellation. A voided LLC can be revived with back taxes and fees, and during the voided period you may lose the ability to defend lawsuits in the company’s name or rely on certain legal protections. Filing the Certificate of Cancellation while you’re current on taxes is far cheaper than letting the balance grow.