Sometimes people open an LLC in Delaware and later realize they should have opened an LLC in a different state. Or maybe you want to shut down your business, and need to close your Delaware LLC. This page helps you navigate the process of dissolving a Delaware LLC.
The 3 steps to closing a Delaware LLC
(click the links above to jump to a section)
Many websites mistakenly use the terms Dissolution and Cancellation synonymously, however, they are two separate things in Delaware.
Dissolution
Dissolution is when the LLC Members agree to start the process of closing down the company.
Once the LLC has decided to dissolve, the LLC can no longer engage in regular business activities. The only activities the LLC can engage in are those that help the LLC “wind up” its affairs.
In Delaware, LLCs don’t need to file a Dissolution form with the state, however, it’s best to place the decision to dissolve in writing. We provide a Members’ Consent to Dissolution form below that you can use. This form doesn’t need to be sent to the state. You can just keep it with your business records.
Tip: Think of Dissolution as “getting the ball rolling” for closing the company.
Winding Up
Winding Up is the process of closing accounts, filing final tax returns, paying off company debt and creditors, and distributing any remaining property, cash, and/or assets to the LLC Members.
Tip: It’s easier to think of Winding Up as “winding down”.
Cancellation
Cancellation is the final step, taken only after the LLC has completed the Winding Up of its affairs.
In Delaware, an LLC must file a Certificate of Cancellation and it must be approved by the Division of Corporations before the LLC is cancelled.
Tip: Think of Cancellation as the final “death” of the LLC. While an LLC still exists during Dissolution and Winding Up, the LLC no longer exists after it’s been Cancelled by the state.
Below are instructions for Delaware LLC Dissolution, Winding Up, and Cancellation.
1. Members agree to Dissolution
The LLC Members must agree to the Dissolution of their company.
Dissolution is the first step to “get the ball rolling” for the closing of the LLC.
Review your LLC Operating Agreement
You’ll first want to review your Delaware LLC Operating Agreement for any special rules or instructions regarding Dissolution.
If your LLC doesn’t have an Operating Agreement or the Operating Agreement is silent regarding the terms of Dissolution, then the Delaware LLC Act will apply.
As per Section 18-801, the agreement to Dissolve an LLC must be made by Member(s) who collectively own more than two-thirds (66.67%) of the LLC, assuming ownership percentages are proportionate to voting rights.
If you have a Single-Member LLC, you don’t need to worry about this. Your single vote and agreement with yourself is all that is required.
What happens in a disagreement (“deadlock”)?
If an LLC comes to a “deadlock” regarding Dissolution and the LLC Members cannot come to an agreement, then the LLC cannot be dissolved until the Members reach such an agreement. If the LLC Members don’t come to an agreement and the LLC Operating Agreement is silent on deadlocks, then an LLC Member can bring the issue to court in a process known as Judicial Dissolution.
Putting the public on notice regarding Dissolution
Some states require putting the public “on notice” that the LLC has begun Dissolution.
This is typically done by filing a “Notice of Dissolution” or “Articles of Dissolution”, however, Delaware has no such requirement for LLCs.
However, it’s best to memorialize (put in writing) the decision to Dissolve by having the LLC Member(s) sign a Consent to Dissolution. We provide a free template you can download below.
Members Consent to Delaware LLC Dissolution (form)
Here is a free template you can use:
Delaware LLC Member’s Consent to Dissolution (Word)
2. Winding Up your Delaware LLC’s affairs
Winding Up is the process of closing things down, paying off debts and creditors, closing accounts, filing final tax returns, and distributing any remaining property, cash, and/or assets to the LLC Members.
Winding Up includes, but is not limited to:
- notify customers, clients, and vendors
- pay outstanding bills
- pay off debts
- pay creditors
- file final tax returns (federal and state)
- issue final paychecks to employees (if applicable)
- file final payroll and employment tax returns (federal, state, and local; if applicable)
- cancel business licenses (if applicable)
- cancel DBA, Assumed Name, or Fictitious Name filings (if applicable)
- pay off business credit cards
- cancel business credit cards
- pay final and outstanding balance of Delaware LLC franchise tax
- close the LLC bank account
- distribute remaining assets to the LLC members
Creditors and outstanding debts
As per Section 18-804 of the Delaware LLC Act, an LLC must distribute its assets in the following order:
- To creditors
- To Members if a distribution is required as per the LLC Operating Agreement
- To Members for their return of total contributions (money they put in the LLC)
- To Members for their share of profits (proportionate to their ownership percentage in the LLC)
Your Delaware LLC must pay off its creditors before distributing property, cash, and/or assets to its Member(s).
Not doing so can leave the LLC Members accountable, even after the LLC is cancelled.
If a Delaware LLC does not distribute assets in the proper order (creditors before Members), courts have the power to reverse the LLC Cancellation, bring the LLC back to life, and allow the creditors to file claims against the LLC and the Members who wrongfully and knowingly distributed money (see Paul Weiss: Recovery of Non-Permitted Distributions). In some instances, Members may need to put their distributions back into the LLC. This can occur up to 10 years after the Delaware LLC has been cancelled if the Members knew about claims or potential claims that could arise.
Funds set aside for 10 years
If you and/or the other LLC Members or Managers have knowledge that your LLC may face a claim from a creditor within the next 10 years (from the date of dissolution), adequate funds need to be set aside in a reasonable manner. For example, the LLC Members or Managers can hold the funds in a separate account.
Not doing so may cause the cancellation of your LLC to be revoked. Meaning, the court can bring your LLC “back to life” so the LLC can properly settle its debts.
This also happened in Capone v. LDH Management Holdings LLC. The Delaware Court of Chancery determined that the LLC owners knew about potential claims and did not set aside adequate funds. The court then revoked the LLC’s Cancellation so that the creditors could file their claims against the LLC.
Pay any remaining Delaware LLC Franchise Tax
Your Delaware LLC must be up to date on its Delaware LLC Franchise Tax.
The Delaware Division of Corporations will not approve a Certificate of Cancellation for an LLC that owes any franchise tax.
How can I pay my LLC’s franchise tax?
You can pay your LLC’s franchise tax by mail or online, however, it’s much easier to do it online.
How is Delaware franchise tax calculated?
The Delaware Annual Franchise Tax is $300 per year.
It’s due every year by June 1st. The payment due on June 1st is a payment “in arrears“, meaning, the payment pays for the prior tax year (not the current year).
For example: The payment due June 1, 2024 pays for the 2023 tax year (1/1/2023 – 12/31/2023).
This information doesn’t make too much sense by itself, so let’s look at another example:
Let’s say you’re Cancelling your Delaware LLC on May 1, 2024. You will owe a $300 payment for the 2023 tax year and you also owe a $300 payment for the 2024 tax year. That’s $600 total.
Even if you’re Cancelling your Delaware LLC on January 10, 2024, you will still owe $300 for the 2024 tax year (even though the LLC existed for 10 days in 2021).
Pay Delaware LLC franchise tax online:
First, you need to find your Delaware LLC’s File Number. You can find your LLC’s File Number by searching your LLC name on the Delaware Division of Corporations: Business Entity Search page.
Then visit the Delaware Corporations Information System (DCIS): DCIS eCorp: File Number Entry and search your LLC by its File Number.
You’ll see your LLC’s outstanding balance and any penalties and interest, if applicable.
Click “Pay Taxes” and make your payment with a credit card or bank information.
You can save the payment confirmation for your records, however, you don’t need to send it to the state with your Certificate of Cancellation. The state will check your LLC’s franchise tax records when they receive your Certificate of Cancellation.
Questions: If you have any questions about your LLC’s franchise tax, you can contact Delaware Franchise Tax Section at 302-739-3073, Option 3 (8am to 4:30pm, Monday – Friday) or by email at DOSDOC_Ftax@delaware.gov.
3. File a Certificate of Cancellation and Cover Letter and pay the $200 filing fee
After the LLC has finished Winding Up, the final step to closing your Delaware LLC is to file a Certificate of Cancellation and Cover Letter with the Delaware Division of Corporations.
How much does the Certificate of Cancellation cost?
The filing fee for the Delaware LLC Certificate of Cancellation is $200 (this is a one-time fee). There is no cost associated with the Cover Letter.
Methods of filing the Certificate of Cancellation and Cover Letter
You need to send the state a Certificate of Cancellation and Cover Letter and pay the $200 filing fee.
You can file the Certificate of Cancellation and Cover Letter by mail or online. The fee is the same for both filing methods.
Note: The state used to have fax filings, but as of 2020, this is no longer an option.
If you file by mail, you’ll need to complete a Certificate of Cancellation and a Cover Letter and send them to the state.
If you file online, you’ll just need to complete the Certificate of Cancellation. You’ll then upload it to the state’s website. You don’t need to include a Cover Letter. Instead, you’ll manually input the information being asked in the Cover Letter on the state’s website.
We recommend filing online as it’s much easier and it speeds up the processing time by a few days.
Need to save time? You can hire a company to file your Delaware Certificate of Cancellation and Cover Letter. We recommend Click Dissolve ($95 + state fees)
How to complete the Certificate of Cancellation
(for both mail filing and online filing)
First, download the Certificate of Cancellation:
Delaware Division of Corporations: Certificate of Cancellation (PDF)
LLC name:
Enter your Delaware LLC name.
File date:
To find the date your LLC was filed, search your LLC name on the Business Entity Search page, click on your LLC name, and look for “Incorporation Date/Formation Date“.
In witness whereof:
Enter the day (ex: 5th), month, and year you are filing the Certificate of Cancellation.
The Certificate of Cancellation must be signed by an Authorized Person. This will either be yourself or someone else you give permission to.
If you are filing the Certificate of Cancellation yourself, you can sign as the Authorized Person and enter your name below the signature.
How to complete the Cover Letter
(for mail filing only)
First, download the Cover Letter:
Delaware Division of Corporations: Cover Letter
Note: this form only needs to be completed if you are filing by mail. You can skip this section if you are filing online.
Priority:
Choose and “shade in” your desired Priority at the top. Think of it like coloring; fill in the entire box, and try not to go outside of the lines.
- Priority 7: This is for regular filings where you don’t pay anything extra. Typically, filings are processed in 7-10 business days, however, due to the current situation, filings are taking 5-6 weeks to be processed. Select this option to just pay the $200 and not pay any extra for faster processing.
- Priority 4: This costs $100 extra ($300 total). Your filing will be processed within 24 hours if it’s received before 7pm Eastern.
- Priority 3: This costs $200 extra ($400 total). Your filing will be processed the same day if it’s received before 2pm Eastern.
- Priority 2: This costs $500 extra ($700 total). Your filing will be processed within 2 hours if it’s received before 7pm Eastern.
- Priority 1: This costs $1,000 extra ($1,200) total. Your filing will be processed within 1 hour if it’s received before 9pm Eastern.
Note: For Priority 1, 2, 3, and 4, the processing time is only applicable if the filing is submitted Monday through Friday.
LLC University recommendation: Most people don’t need to expedite their Certificate of Cancellation filing. We generally just recommend Priority 7 (regular filing), however, if you need your filing processed faster, we think Priority 4 is the most reasonable. We can’t really see why anyone would want to pay $500 or $1,000 extra for Priority 1 or Priority 2.
Submitter’s Information:
Note: The Cover Sheet is private information. It doesn’t go on public record. Anything you enter here or anywhere on the Cover Sheet will not go on public record.
Company/Firm or Individual’s Name: Enter your name. Don’t enter your LLC name.
Attention: Leave this blank.
Return Address: Enter the street address where you’d like your documents returned to.
City-State-Zip: Enter the city, state, and zip or postal code.
Country: Enter the country.
Phone: Enter your phone number.
Fax: Enter your fax number (optional).
Email address: Enter your email address. If the fax number is blank, an email address must be entered.
Account number: Leave this blank.
Document Filing Request Information:
Name of Company/Entity: Enter your LLC name.
File Number: Enter your LLC’s File Number. You can find your LLC’s File Number by searching your LLC name on the Business Entity Search page.
Reservation Number: Leave this blank.
Document Type: Enter “Certificate of Cancellation”.
Other Document Filing Information:
Leave this section blank. It’s not applicable.
Method of Return:
Most people check off “Regular Mail” which is the standard method of return.
Alternatively, if you have a prepaid account with FedEX or UPS, you can check off the applicable box and then enter your account number.
Comments/Filing Instructions:
You can leave this section blank.
Instructions for mailing the Certificate of Cancellation and Cover Letter
Prepare payment:
When filing by mail, you can pay by check or money order. Make it payable to “Delaware Secretary of State”.
The filing fee is $200. If you are paying extra for expedited processing, make sure to add that amount to the $200 and include the correct payment total.
Mail documents:
Mail your Certificate of Cancellation, Cover Letter, and check or money order to:
Delaware Division of Corporations
401 Federal Street, Suite 4
Dover, DE 19901
Approval time (mail filing):
Your Certificate of Cancellation’s processing time will depend on the Priority method you chose.
After the state processes your filing, you’ll receive a copy of your filed Certificate of Cancellation in the mail. It will be sent to the address you listed in the Cover Letter.
Instructions for filing the Certificate of Cancellation and Cover Letter (online filing)
Have your signed and scanned Certificate of Cancellation ready:
You’ll need to have completed the Certificate of Cancellation, signed it, scanned it, and have it saved in PDF format on your computer.
You’ll be uploading that signed and scanned PDF on the state’s website.
DocUpload hours
You can only use DocUpload:
- Monday through Thursday from 7:45am to 11:59pm (Eastern Time)
- Friday from 7:45am to 10:30pm (Eastern Time)
(DocUpload is not available on Saturdays, Sundays, State holidays, or during unexpected closures, such as for bad weather).
Get started with DocUpload:
- Visit eCorp Business Services
- Click “Document Upload”
- A pop-up will appear telling you not to upload a Cover Letter; click “Close”
Document Priority:
Select how quickly you want your LLC Certificate of Cancellation to be processed. See the processing times above.
Submitter Info:
Note: The Submitter Information is private information. Anything you enter here will not be listed on public record.
Account number: Leave this blank.
Submitter name: Enter your name. Don’t enter your LLC name.
Attention line: Leave this blank.
Address 1: Enter the street address where you’d like the LLC documents returned.
Address 2 and Address 3: If your street address has a unit or suite number, enter that in Address 2. Continue onto Address 3 only if applicable.
City, State, and Postal Code: Enter the city, state, and zip or postal code for the address.
Country: If your mailing address is outside of the USA, check off the “Non US Country” box.
Email address: Enter your email address.
Phone number: Enter your phone number.
Fax: Enter your fax number (optional). If you don’t have a fax number, just leave this blank.
Document Request Type:
From the drop down menu, select “Document Filing Request“. Then Click the “Select files” button and upload your Certificate of Cancellation.
Again, don’t upload a Cover Letter when using DocUpload.
Document Filing:
Corporation Name: Enter your LLC name.
Corporation Number: Enter your LLC’s File Number. You can find your LLC’s File Number by searching your LLC name on the Business Entity Search page.
Reservation Number: Leave this blank.
Document Type: Enter “Certificate of Cancellation”.
Other Document Filing Information:
Leave this blank. This section is not applicable.
Method of Return:
Select how you want your LLC approval documents returned. Most people select “Regular Mail” from the drop down menu.
Alternatively, if you have a prepaid account with FedEX or UPS, you can list that account number here.
Comments:
You can leave this blank.
Continue
Click “Continue” to proceed to the next step.
A “Review Your Submission” pop-up box will appear. The state is just saying make sure you double-checked your information. To review your filing information one more time, click “Review/Edit”. To proceed, click “Proceed”.
Prepare Payment:
Note: All the information entered here is private. It is not listed on public record.
Select “ACH” or “Credit card” from the drop down menu.
Enter your payment information, contact information, and billing information.
Then click “Submit Your Request” and complete the online payment.
Congratulations, your Delaware LLC Certificate of Cancellation has been filed for processing.
Now you just need to wait for your LLC filing to be processed and returned.
Approval time (online filing):
Your Certificate of Cancellation processing time will depend on the Priority method you chose.
After the state processes your filing, you’ll receive a copy of your filed Certificate of Cancellation in the mail. It will be sent to the address you listed in the Cover Letter.
Final tax returns, EIN, and accountant
Dissolving a Delaware LLC doesn’t relieve you or your LLC from tax obligations.
We recommend working with an accountant to file your final state and federal tax returns.
Final state tax returns
Please see:
- Delaware Division of Revenue: Business Tax Forms
- Delaware Division of Revenue: Personal Income Tax Forms
Note: If your Delaware LLC did business in another state, it may need to file a final return in that state.
Final federal tax returns
You’ll also need to file a final federal return with the IRS.
If your LLC has any payroll/employment returns, they should also be marked final or you’ll need to contact the IRS and state agency regarding how to properly close these filing requirements.
Deactivate the LLC’s EIN Number
After your final federal returns are filed, you can also deactivate/cancel your LLC EIN Number. This can help prevent any fraud or misuse of the EIN in the future.
Speak with an accountant
We recommend that you speak to (or hire) an accountant prior to, and during the Dissolution of your Delaware LLC.
Delaware Division of Corporations Contact Info
If you have any questions, you can contact the Delaware Division of Corporations at 302-739-3073. Their hours are 8:00am to 4:30pm, Monday through Friday (Eastern Time).
References
Delaware Division of Revenue: Franchise Taxes
Delaware Division of Revenue: Business Tax Forms
Delaware Division of Corporations: Contact Information
Delaware Division of Corporations: Dissolutions and Cancellations
Delaware Division of Corporations: Annual Report and Tax Information
Delaware Code: Subchapter VIII (Dissolution) of Chapter 18 of the LLC Act
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.
Hi
I am in the process of cancellation of my LLC in Delaware.
I have paid all my franchise taxes online and I also want to pay 2023, However it does not show on the Delaware online payments site. If I just wait until after June 1st, will it then appear?
Thanks
Hi Mads, I’d call the Franchise Tax Section to check on this.
If a Delaware C Corporation has been administratively dissolved, how do you notify the IRS not to expect any future filings? Can IRS Form 966 still be filed or EIN cancelled in this fact pattern? Or does the C Corporation need to be put into Good Standing again, pay franchise taxes, before it can be dissolved and EIN cancelled.
Hi Trevor, can’t comment specifically on this as we’re not a tax firm. Pretty sure the C-Corp needs to file a final return with the IRS. EIN should only be cancelled after that. However, we recommend speaking an accountant.
This was the most cohesive, well-written, all-inclusive post on dissolving an LLC I have come across on the internet. I wasted a bunch of time trying to piece together this process over the last 3 months. I followed this guide step-by-step, spoke with a Delaware tax assistant when filing my taxes for the 2021 year (already filed for 2020, but it’s in “arrears” as stated so that was an extra $300 even though it’s only February), and sent the certificate of cancellation, all in ~25 minutes just by following this guide. Insanely helpful. Thanks Matt and whoever else helped to write this.
Damani, thank you so much! I’m so happy to hear that :) Unfortunately, most information about Delaware LLC dissolution and cancellation is vague or not comprehensive enough (or worse, flat-out wrong). Thank you again for your kind words!
I didn’t use the LLC and have no bank account. When filling the final tax form to the IRS, beside checking the box “Final Return”, do we also need to add anything else? Like the Cover Letter or Delaware Certificate of Cancellation? Thank you
Hi Andrei, if filing a final tax return with the IRS, no, you don’t have to include any of the Delaware LLC paperwork showing the dissolution. Hope that helps.
Hello, if we choose the way of that “Delaware LLC will be cancelled after 3 years of franchise taxes not being paid” are they keeping the debt and penalty history for future collection? (company established in 05/2020 and never done a business or opened a bank account).
Hi Emrah, the state does, however, it’s only against the LLC. It’s not against you personally.
Hello. I’m filing my certificate of cancellation (Nov. 2020) and I currently owe no taxes. However, I will owe for 2020, it is just not payable yet. Do I prepay the taxes when I send in my cancellation paperwork or do I wait for a bill from the state of Delaware when the taxes become due in 2021?
Hello, you can contact the Franchise Tax Section for clearance/closing out the account. This is a part of the LLC dissolution process. We have instructions above on the page. Hope that helps.
What if the Delaware LLC was formed and filing fees paid at time of formation but annual franchise tax nor any other fees were paid since. Also operations of LLC never commenced so it’s just a shell. I assume the state of Delaware would not allow dissolution of LLC until past fees are paid – but what if I never dissolve the LLC and just let it run forever – are the filing fees a liability of the LLC or me the filer? I.e. if I do nothing will there be no consequences or can I be prevented from opening another Delaware LLC e.g.?
Hi Joe, correct, you can’t dissolve the LLC until franchise taxes are paid. You’ll want to confirm this with the state and/or an attorney, but the debts of the Delaware LLC usually remain the debts of the LLC. They are not personal debts. However, that’s a simplified answer. You’ll want to make sure there are no activities that would constitute “successor liability”, for example. The Delaware LLC will be cancelled after 3 years of franchise taxes not being paid. Hope that helps.
If I moved my registration of my LLC to IL effective 5/1/18 do I have to pay fees to dissolve the LLC in DE. I was just sent an invoice from a service company asking me to pay a renewal. I am not dissolving the LLC, just merely moved it back to IL.
Thanks
Hey Kevin, there’s some ambiguity to your question. “Moving” an LLC usually means a domestication or conversion. Or you could be referring to cancelling your foreign LLC’s authority in Delaware. Can we back up a bit… What did you file to “move” your LLC? And in what state did you form your LLC originally? And is it registered as a foreign LLC in any other states? Or maybe you just formed a Delaware LLC and now want to “move” your LLC to Illinois. Thanks.
What about the registered agent in DE. How do you end that? I’m dissolving in DE and forming in CT. I know I need a new agent in CT.
Hi Ambar, each Registered Agent company works differently. Just reach out to them and ask them how to cancel their services. Here’s info for Connecticut: Connecticut LLC Registered Agent. Hope that helps.
I have a credit card and checking account in LLC name. Can I use either to pay dissolution fees since they may get processed after Delaware dissolution. Example: I pay with credit card and get bill 25 days later and then pay credit card with company check which is after the dissolution.
Hi John, yes, you can use either one for dissolution fees. Doing so is a part of the winding up affairs.
Hi,
My partner formed an LLC in Delaware and we both live in New York. He misused business credit cards and now as a 50/50 partner, I will take him to small claims and also dissolve the LLC. What is the best way to go about it since he formed the LLC, but we have an Operating Agreement
Hi Julie, we are unable to comment on items like this. It’s best to discuss the details with an attorney. Thank you for your understanding.
You may want to update this — Delaware’s priority 4 fee is now $100 for cancellation of an LLC.
Hey Stacey, thank you for your comment. You’re correct. It was a typo on our part. Priority 4 (24-hour processing) when forming an LLC in Delaware and filing the Certificate of Formation is $50, but when dissolving a Delaware LLC and filing the Certificate of Cancellation, it’s $100. We have the lesson updated now. Thanks again!