How to Dissolve an LLC in Delaware – LLC Cancellation 2024


Steve Bennett
Steve Bennett
Business Formation Expert
Steve runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

All Posts by Steve →
Business Formation Expert  |   Fact Checked by Editorial Staff
Last updated: 
LLCBuddy™ offers informative content for educational purposes only, not as a substitute for professional legal or tax advice. We may earn commissions if you use the services we recommend on this site.
At LLCBuddy, we don't just offer information; we provide a curated experience backed by extensive research and expertise. Led by Steve, a seasoned expert in the LLC formation sector, our platform is built on years of hands-on experience and a deep understanding of the nuances involved in establishing and running an LLC. We've navigated the intricacies of the industry, sifted through the complexities, and packaged our knowledge into a comprehensive, user-friendly guide. Our commitment is to empower you with reliable, up-to-date, and actionable insights, ensuring you make informed decisions. With LLCBuddy, you're not just getting a tutorial; you're gaining a trustworthy partner for your entrepreneurial journey.
dissolve an LLC

Dissolving a business often involves complex procedures. However, for a limited liability company in Delaware, dissolving it takes a handful of paperwork. When an LLC is formed in Delaware, the owner(s) draft the operating agreement. If the owner(s) decide to dissolve the business, the dissolution takes place following the articles mentioned in the operating agreement.

In this article, LLCBuddy editors shared the ins and outs of dissolving an LLC in Delaware. LLCs must file the Articles of Dissolution with the Delaware Secretary of State like the formation certificate was filed at the time of forming an LLC in Delaware. It takes a few days to process and a handful of fees to be paid to the SOS. Many people hire a professional service to do the paperwork to process it hassle-free.

How to Dissolve an LLC in Delaware

At the time of forming an LLC, an operating agreement draft must be written. Generally, the process of dissolution takes place following the operating agreement (read: Delaware LLC operating agreement). Before the dissolution process, there are a few things to consider in the LLC.

First, make sure all the members of the LLC agree 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.

Dissolution of Delaware LLC requires three broad procedural steps. Having a Delaware LLC Operating Agreement, closing all the tax accounts, and finally submitting the Articles of Dissolution form to the Delaware Secretary of State.

Step 1: Follow the LLC Operating Agreement in Delaware

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 in Delaware.

Get a Professional Agent Service

When it comes to a limited liability company dissolution, it is important to get professional help. 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 close your various tax accounts without any hassle. Below are the best LLC services in Delaware that we strongly recommend for you.

LLC Service

Our Rating & Pricing

Top Features

Learn More

#1 TOP PICK

$0 + State Fees

  • 100% accuracy guarantee

  • Worry-free service

  • Great customer support

$0 + State Fees

  • Free LLC Formation

  • Affordable Add-on services

  • Other business solutions

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 accounts, 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 by the date you have decided to dissolve. All the taxes must be paid in advance so that you don’t face any issues in the process of shutting down your LLC.

tax

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.

Tax clearance

While dissolving the Delaware LLC, the owner is not required 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 LLCs that are classified as partnerships is Form 1065, and those LLCs who have registered themselves as corporate should check IRS Form 1120.

BOI Reporting

If you’re going to dissolve your LLC this year, make sure to update your BOI reporting. From January 1, 2024, the Financial Crimes Enforcement Network (FinCEN) implied a rule to all businesses, including LLCs in Delaware to file the BOI Report. The Beneficial Ownership Information (BOI) in Delaware is a report that states about in and out of the company. This report must be up-to-date and submitted to the FinCEN before you proceed to the dissolution.

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 Certificate of Formation. The dissolution procedure and filing the articles of dissolution form is very easy and is discussed below.

articles of organization
  • First of all, the LLC owner(s) has to file the Article of Dissolution. There are multiple methods of filing available, such as filing by mail, in-person drop, or/and online filing.
  • You can follow the filing instructions on the official portal so that the steps for dissolution will be easier to complete.
  • For offline filing, LLCs must download the form and submit it to the Delaware Secretary of State physical office along with the state filing fee.
  • If you want to dissolve Delaware Foreign LLC then look for the Foreign LLC Dissolution process.
  • 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.
FilingForms and Details
Online ApplicationsNot Applicable
Offline ApplicationsArticles of Dissolution
SOS Contact (if offline application is available)Delaware Division of Corporations, 401 Federal Street, Suite 4 Dover, DE 19901
Filing Time2-3 weeks in standard filing. It can be expedited to 1-hour, 2-hour, 24-hour, or same day.
Filing Fee$200

The LLC you own 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 whether he accepts your expedited dissolutions or not.


Points to Be Noted When Dissolving an LLC in Delaware

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.

Winding Up

Some purposes of LLC 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 the 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 costs in Delaware include 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 in the articles of dissolution filing form. Following are the ways to pay for the dissolution,

  • You can select a payment pick-up option.
  • There is an option for 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 the state will make.

After Dissolving Your LLC

After you dissolve an LLC in Delaware, you can reinstate or revive the same within a given time. In Delaware, the LLC name will be available up to the time till SOS dissolves the LLC completely. After this, the name will be available to other LLCs. Besides, you might revive or reinstate the LLC in Delaware if that is available. According to the Delaware SOS, you can revive your LLC anytime as there is no time limit for reinstatement.

Reasons Behind Dissolving an LLC in Delaware

People always think they can leave the company without any notice and there will be no issue. But if you have an LLC that you created with a legal obligation, it needs to be ended that way. Yes, if someone will dissolve an LLC in Delaware, they will have to do it while taking care of the government. For dissolving the company, there is always a reason. The reason can be voluntary or involuntary too. Let’s get to know about the involuntary reasons,

  • If the company was caught doing illegal business.
  • If the company’s member died due to some reason or went bankrupt.
  • The dissolution will be mandatory if the assets of the business are used unwisely.
  • If the time being of the company was already determined in the will, then the company will go into dissolution at that time.

Top Businesses in Delaware

With the population of 1,017,551, Delaware is one of the favorable places to start an LLC. According to several reports, starting an LLC for Retail can be profitable as various places in the state showed steady growth in this business over the past few years. On the other side, based on the city or region you’re going to start your LLC, you can decide the type of business to start. Following are the top 5 businesses you can start in Delaware.

  • Retail
  • Agribusiness
  • Online Business Services
  • Educational Services
  • Travel and Hospitality

Delaware LLC Dissolution Review – A Quick Recap

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 details.

  • 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 Certificate of Formation: File the article of dissolution to make it known to the state where your LLC operates that you are indeed no longer in business.

FAQs

How do I dissolve an LLC in Delaware?
To dissolve an LLC in Delaware, you must file a Certificate of Dissolution with the Delaware Division of Corporations.
What is required to dissolve an LLC in Delaware?
In order to dissolve an LLC in Delaware, you must have the approval of a majority of the LLC members and file the necessary paperwork with the state.
Can I dissolve my Delaware LLC online?
Yes, you can file the Certificate of Dissolution online through the Delaware Division of Corporations website.
What is the fee to dissolve an LLC in Delaware?
The fee to dissolve an LLC in Delaware is $200.
Are there any specific requirements for dissolving an LLC in Delaware?
Yes, in Delaware, you must be up to date on all state tax obligations before dissolving your LLC.
How long does it take to dissolve an LLC in Delaware?
It typically takes about 7-10 business days for the Delaware Division of Corporations to process the dissolution paperwork.
Do I need to notify creditors before dissolving my Delaware LLC?
Yes, under Delaware law, you must provide notice to known creditors and publish notice in a local newspaper if you have unknown creditors.
What happens to the assets of a dissolved LLC in Delaware?
Once all debts and obligations are settled, any remaining assets of a dissolved LLC in Delaware are distributed among the members according to their ownership interests.
Can I reinstate a dissolved LLC in Delaware?
Yes, you can file for reinstatement of a dissolved LLC in Delaware within three years of the date of dissolution by filing a Certificate of Reinstatement.
What is the tax implication of dissolving an LLC in Delaware?
When you dissolve an LLC in Delaware, you are still responsible for any outstanding state taxes and must file a final tax return.
Can I dissolve my Delaware LLC if there are pending lawsuits?
Before dissolving your Delaware LLC, you should settle any pending lawsuits or legal matters to avoid any future liabilities.
Do I need to notify the Delaware Secretary of State when dissolving my LLC?
Yes, as part of the dissolution process, you must notify the Delaware Secretary of State by filing the Certificate of Dissolution.
Can I dissolve my Delaware LLC without the consent of all members?
No, in Delaware, you typically need the approval of a majority of the LLC members to dissolve the company.
What is the deadline for filing the Certificate of Dissolution in Delaware?
There is no specific deadline for filing the Certificate of Dissolution in Delaware, but you should do so as soon as possible after deciding to dissolve the LLC.
Are there any annual fees associated with dissolving an LLC in Delaware?
Once you dissolve your LLC in Delaware, you will no longer be required to pay annual franchise taxes or file annual reports.
What should I do if I want to dissolve my Delaware LLC but have outstanding debts?
Before dissolving your Delaware LLC, you should settle all outstanding debts and obligations to avoid creditors coming after you personally.
Can I dissolve my Delaware LLC if it is in good standing with the state?
Yes, you can dissolve your Delaware LLC even if it is in good standing with the state as long as you follow the proper procedures for dissolution.
What happens if I fail to file the necessary paperwork to dissolve my Delaware LLC?
If you fail to file the necessary paperwork to dissolve your Delaware LLC, the state may continue to consider the LLC active, and you may still be responsible for annual maintenance fees.
Is there a difference between dissolution and cancellation of an LLC in Delaware?
Yes, dissolution is the process of terminating the business operations of an LLC, while cancellation refers to withdrawing the LLC’s registration with the state.
Can I dissolve my Delaware LLC if it is involved in pending administrative proceedings?
Before dissolving your Delaware LLC, you should resolve any pending administrative proceedings or disputes to ensure a clean dissolution.
Can I dissolve my Delaware LLC if it has outstanding mortgage or lease obligations?
Yes, but before dissolving your Delaware LLC, you should make arrangements to settle any outstanding mortgage or lease obligations to avoid default.
What documents do I need to submit when dissolving my Delaware LLC?
When dissolving your Delaware LLC, you will need to submit a completed Certificate of Dissolution and pay the required filing fee.
Can I dissolve my Delaware LLC if it is involved in bankruptcy proceedings?
If your Delaware LLC is involved in bankruptcy proceedings, you may need to seek approval from the bankruptcy court before dissolving the company.
Do I need to notify the IRS when dissolving my Delaware LLC?
Yes, you should notify the IRS of the dissolution of your Delaware LLC by filing a final tax return and indicating that it will be the last return filed for the company.
Can I dissolve my Delaware LLC if it has outstanding vendor debts?
Yes, you can dissolve your Delaware LLC even if it has outstanding vendor debts, but you should settle those debts before distributing any remaining assets to members.
Am I still liable for the debts of a dissolved LLC in Delaware?
In most cases, once an LLC is dissolved in Delaware, the members are not personally liable for the debts of the company, unless they have personally guaranteed the debts.
Can I dissolve my Delaware LLC if it has assets or liabilities in different states?
Yes, you can dissolve your Delaware LLC regardless of whether it has assets or liabilities in other states, but you must comply with the dissolution requirements of each state.
Can I transfer the assets of a dissolved Delaware LLC to another entity?
Yes, you can transfer the assets of a dissolved Delaware LLC to another entity as long as you follow the proper procedures for transferring ownership.
Are there any restrictions on dissolving an LLC in Delaware if it is a subsidiary of another company?
If your Delaware LLC is a subsidiary of another company, you will need approval from the parent company before you can dissolve the LLC.
Can I dissolve my LLC in Delaware?
Yes, you can dissolve your LLC in Delaware.

Also Read

In Conclusion

Dissolving a business is not an easy task as a lot of homework is involved with the process. The official process might have only a few steps, however, before and after dissolving the LLC, there might be a lot of other tasks. In this case, it is highly recommended to get a professional service. If you are looking to file an LLC at $0, then ZenBusiness is your answer.

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. This article shared the general steps. Let us know if you have any queries.

Leave a Comment