To dissolve a limited liability company one has to take up a set of required steps. In Delaware, if you and the members of the LLC want to discontinue business, then it is necessary to dissolve their business legally to avoid any administrative and legal consequences. To dissolve an LLC in Delaware, you are required to submit a complete Article of Dissolution to the Secretary of State. Before submitting the Article of Dissolution, one must follow the operating agreement.
If you have a Delaware LLC (domestic or foreign) you must have an operating agreement. The first step towards the dissolution of Delaware LLC is to follow the operating agreement. There are some points to be noted before proceeding with the official paperwork. At first, make sure all the members of the LLC are agreed to dissolve the business. Once all the members are ready, their consent should be recorded via voting. After casting their vote in favor of the dissolution, the legal process must be started. Here are the steps to address for dissolving Delaware LLC.
On this page, you’ll learn about the following:
- How to Dissolve an LLC in Delaware
- After Dissolving Your LLC
- Reasons Behind Dissolving Delaware LLC!
- Delaware LLC Dissolution Review
How to Dissolve an LLC in Delaware
Dissolution of Delaware LLC requires three broad procedural steps. Having a Delaware LLC Operating agreement, close all the tax accounts, and finally submit the Articles of Dissolution form to the Delaware Secretary of State.
Step 1: Follow Your Delaware LLC Operating Agreement
When you have started an LLC as a business entity, then there is an operating agreement that is formed. There are complete details of how the company will function and grow in that operating agreement, which acts as a comprehensive guide. There is also a dissolution process, which is added to your agreement. The common dissolution steps that almost every LLC follows are:-
First of all, the dissolution vote will take place among the LLC members in the dissolution meeting. If the majority is with the YES, then the process goes into legal proceedings.
- All the dissolution votes will be noted down and recorded with the minutes of the meeting or a consent form.
- After that, a formal date for dissolving the LLC will be decided.
- The next step is counting the LLC assets and dividing them among the stakeholders and members accordingly.
- Finally, the creditors of the business are notified, and the debts of the business are settled.
This is a general process. However, it is strongly recommended to seek professional help to avoid any complications when it comes to terminating an LLC.
Get a Professional Agent Service
When it comes to a limited liability company dissolution, it is important to get professional help. The Delaware registered agent will guide you with everything you need to close your limited liability company. While choosing a registered agent make sure they have a physical street address in the state. A professional service provider helps you to file the Article of Dissolution and closing your various tax accounts without any hassle. Below are the best LLC services we strongly recommend for you.
Step 2: Close All Tax Accounts
Every action that an official business takes is legally bound to some minimum business taxes. For that, various accounts, especially business entity tax account, are maintained by the state government with the help of various departments. You should consider all the taxes that you have paid for your LLC’s duration and make a list of them.
You must contact all government entities and clear the amount of outstanding taxes due until the date you have decided for dissolution. All the taxes must be paid in advance so that you don’t face any issues in the further process of shutting down your LLC.
Some of the common taxes that limited liability companies have to pay are:
- Unemployment insurance tax
- Employee withholding tax if your LLC has employees.
- If your LLC is engaged in selling taxable goods then they are liable to pay the sales and use tax.
Most of these taxes are normally filed, but some departments require official paperwork, without which it is impossible for the business to close their accounts. Apart from business taxes, federal taxes, personal income taxes, and franchise taxes are to be considered. For the franchise taxes, a franchise tax form is required.
That is why the LLC owner should go through the sales tax guide and hire an accounting service. If you want to do the accounting yourself or make accounting easy, try FreshBooks.
While dissolving the Delaware LLC, the owner does not require to obtain a tax clearance certificate. However, if you have filed federal taxes, then you must go through the final return option on your IRS form.
The IRS form for the LLC that are classified as partnerships is form 1065, and those LLC’s who have registered themselves as corporate should check IRS form 1120.
Step 3: File Articles of Dissolution
There is a list of dissolution documents that you, as an LLC owner, have to file. Once these articles are filed, the legal existence of the LLC will be over. Like a Delaware Certificate of Formation, one has to file Delaware LLC Articles of Dissolution. The dissolution procedure and filing the articles of dissolution form is very easy and is discussed below.
- First of all, the LLC owner(s) has to file the Article of Dissolution. There are multiple methods of filing available, such as file by mail, in-person drop, or/and online filing. To get the application form you need to visit the Secretary of State Website of Delaware state.
- You can follow the filing instruction on the official portal so that the steps for dissolution will be easier to complete.
- In that particular SOS website, the LLC owner has to look for the Domestic LLC Articles of Dissolution page.
- If you want to dissolve Delaware Foreign LLC then look for the Foreign LLC Dissolution process.
- There is a form available on this page, which is the article of dissolution you are looking for. You have to download that pdf form and start filling it.
- You must fill in all the important and legal information in the form, so you should be extra careful.
- After filling in all the important information, you must choose the mode of payment you want to use to pay the LLC dissolution filing fees.
- After filling in every detail, one should submit the form through an official mail address and make a payment.
- It takes 3-5 business days after filing of articles of dissolution if you are filing it by mail or in-person. For the online filing, one can upload the pdf files on their official portal.
Mail to or In-person Drop,
Delaware Division of Corporations
401 Federal Street – Suite 4
Dover, DE 19901
Online FIling: Delaware Online LLC Dissolution
Filing Fee: $200
The LLC you owned is dissolved, and you are free from all the liabilities linked with the LLC and its taxes. A copy of both original articles and recorded articles should be submitted in front of the probate judge. Now it’s his call that he accepts your expedited dissolutions or not.
Points to Be Noted When Dissolving Delaware LLC
Apart from these three steps, no major dissolution rules are there in Delaware. However, there are some other tasks one has to keep in mind while dissolving an LLC legally.
There are some purposes of LLC that require some attention even after dissolution, known as winding up. The task of winding up includes.
- For a certain period, the property of a business requires preservation.
- If there is any civil case against the LLC, then the owner needs to finish them.
- Settle all the existing disputes of LLC.
- Transfer all the property of LLC to the names of partners.
- Release all the liabilities that the LLC owes to others.
- Rightful distribution of all the assets among members, according to their percentage of partnerships.
Cost of Dissolving LLC
LLC cost in Delaware includes the formation as well as dissolution fees. To dissolve an LLC in Delaware, LLCs have to file an Article of Dissolution. The filing fee is $200. The details are mentioned on the second page of the article dissolution filing form. Following are the ways to pay for the dissolution,
- You can select a payment pick-up option.
- There is an option of direct account transfer through your prepaid accounts.
- LLC owners can also use their Credit cards, providing their complete details and types. Along with that, an original signature is required to authorize the transaction state will make.
After Dissolving Your LLC
After you formally dissolve your LLC, your business name will not be reserved anymore. Any other business entity will be eligible to use your Delaware LLC name immediately after 120 days of dissolving your LLC. On the other hand, if you have a foreign LLC in other states, then you must comply with the SOS of the state after the dissolution of your LLC in Delaware. A registered agent can help you do the needful.
Reasons Behind Dissolving Delaware LLC!
People always go for a business they see the potential in. but it is not always true that it will all work out. So that is why they come to an extent where they have to dissolve the company. If anyone wants to dissolve an LLC in Delaware, they have to do it properly. There are many reasons why they can come to that point. Let’s take a look at some of them,
- There can be a disagreement between the staff or the owners of the LLC.
- The less inflow of cash in the business can lead to a voluntary dissolution of the company.
- The goal of the company may be accomplished, and there is no more need.
- The death of any partner can also be a reason for the deed of dissolution.
- The debt that the company is not being able to pay is such a significant factor. So if the company wants to get over that, they can dissolve the company.
Top Businesses to Look For in Delaware!
It is all about how someone gets to increase the economy of the state. It is not done by the typical businesses too much, but with the help of the main sectors of the state. It is all about how someone wants to start an LLC in Delaware and make more money. So just like that, there are some sectors of the state that help it grow. Here they are,
- Agriculture: Being the primary sector, Agriculture has been the largest industry in Delaware. The contribution to the annual GDP is 35.9% from the Agricultural sector on average.
- Mining: When it comes to energy, mining, oil extraction, and quarrying are the primary sources of Delaware. With the help of this whole industry, the state could contribute 19.2% to the annual GDP.
- Manufacturing: The manufacturing industry is another growing sector in Delaware. This industry gave 12.5% to the annual GDP of the state and is getting many greater aspects.
Delaware LLC Dissolution Review
Time needed: 5 minutes.
Here’s a recap of the steps you must follow when dissolving your Delaware LLC. Click on the steps in this list if you want to read the full detail.
- Follow Your Delaware LLC Operating Agreement
Remember that when you started, you created an operating agreement. Use this agreement as a guide in proceeding with the dissolution of your LLC.
- Close All Tax Accounts
Make sure you close all your tax accounts to avoid incurring further costs.
- File Articles of Dissolution
File the article of dissolution to make it known to the state where your LLC operates that you are indeed no longer in business.
What is the Cost to Dissolve an LLC in Delaware
To dissolve an LLC in Delaware you need to file the Certificate of Cancellation with the Delaware Division of Corporations by mail, in-person or online and pay a filing fee of $200.
The cost to dissolve an LLC in Delaware depends on the complexity of the business and the filing fees associated with dissolution. Generally, the dissolution process involves filing Articles of Dissolution with the Delaware Secretary of State, and the cost of filing this document is $90. Depending on the complexity of the business, additional costs may apply, such as attorney fees, accountant fees, and other associated costs.
The first step in the dissolution process is to wind up the LLC. This involves collecting any outstanding debts, transferring assets, and closing accounts. Once all of these steps have been completed, the LLC can file its Articles of Dissolution with the Delaware Secretary of State. The filing fee for this document is $90. The Articles of Dissolution must include the LLC’s name, its formation date, and the name and address of the LLC’s registered agent.
In some cases, an LLC may need to obtain a tax clearance certificate from the Delaware Division of Revenue before filing its Articles of Dissolution. This document states that all taxes and fees due to the state of Delaware have been paid in full. The cost of obtaining a tax clearance certificate is $50.
In addition to the filing fees, there may be additional costs associated with dissolving an LLC, such as attorney fees and accountant fees. An attorney can help the LLC file its Articles of Dissolution properly, and can also help the LLC with any other legal matters, such as closing accounts or transferring assets. An accountant can assist the LLC with filing its final tax returns. The cost of these services will vary depending on the complexity of the business and the services required.
When dissolving an LLC, it is important to remember that the dissolution process is not complete until the Secretary of State has approved the Articles of Dissolution. Once the Articles of Dissolution have been approved, the LLC is officially dissolved and no longer exists.
In summary, the cost to dissolve an LLC in Delaware depends on the complexity of the business and the associated filing fees. Generally, the filing fee for the Articles of Dissolution is $90, and a tax clearance certificate may be required, which costs $50. Depending on the complexity of the business, additional costs may apply, such as attorney fees, accountant fees, and other associated costs. It is important to remember that the dissolution process is not complete until the Secretary of State has approved the Articles of Dissolution, at which point the LLC is officially dissolved and no longer exists.
Yes, in Delaware, there is a fee of $200 to be paid for filing the Articles of Dissolution. Articles of Dissolution must be submitted to the Delaware SOS.
No, there is no requirement of revenue department clearance till the time the SOS of Delaware accepts the dissolution form.
The name will also get deregistered with the dissolution of the LLC. But the name will not be allotted for the next 120 days. After that, if some business wants to name their LLC after the name chosen by you, then it is their choice.
If you have not dissolved your LLC, you are liable for business privilege tax, and if it is not paid on time, you are leveraged with 10% of the amount of tax or $50. After that, the additional penalties will increase by $1 per month. If it goes unpaid for a longer duration, then the chances of seizing your property can also recover the tax.
If you are dissolving your LLC, you have to pay some amount to the probate judge who was also present during your LLC formation in the probate office. The minimum fee of the judge is $50, which can vary.
Limited liability companies reduce owners’ personal liability. Having an LLC is quite cost-effective. However, if it is required to close down the business, then the dissolution process should be done legally. Get a professional service to get everything done. We hope this article helps you to close your LLC in Delaware. If you have any query do let us know in the comment box.