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How to Dissolve a Delaware LLC
How to form an LLC in Delaware
This Quick Start Guide is a brief overview of how to form an LLC in Delaware.
Delaware LLC costs:
LLC formation cost: $90 (one-time fee)
Annual franchise tax: $300 (every year)
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To dissolve a Delaware LLC means to close down the LLC.
In order to dissolve an LLC in Delaware, you need to:
- Have the LLC Members (owners) agree to dissolve the LLC
- Wind up the affairs of the LLC
- Get clearance from the Delaware Franchise Tax Section (by paying any outstanding franchise tax)
- File the Certificate of Cancellation ($200 filing fee) and a Cover Letter with the Delaware Division of Corporations
Get Clearance from the Delaware Franchise Tax Section
The first thing you need to do is contact the Franchise Tax Section and see if your Delaware LLC owes any outstanding franchise tax.
You can contact them by phone or email, but the phone is faster for getting an answer right away.
Delaware Franchise Tax Section Contact Info
Phone: 302-739-3073 (option 3)
Hours: 8am to 4:30pm, Monday through Friday
Email: [email protected]
The Delaware Annual Franchise Tax is $300 per year and is due every year by June 1st. The payment due on June 1st is a payment in arrears (not a payment in advance), meaning, the payment pays for the prior tax year. For example, the payment due June 1st 2019 pays for the 2018 tax year (1/1/2018 – 12/31/2018).
This information doesn’t make too much sense by itself, so let’s look at an example:
Let’s say you’re dissolving your Delaware LLC on May 1st 2019. You will owe a $300 payment for the 2018 tax year and you also owe a $300 payment for the 2019 tax year. That’s $600 total. And even if you’re dissolving your Delaware LLC on January 5th 2019, you will still owe $300 for the 2019 tax year (even though the LLC existed for 5 days in 2019).
Either way, it’s best to call the state and check what the total franchise tax owed is.
Once the representative tells you the total amount, there will be three ways you can pay your Delaware LLC’s outstanding franchise tax.
- Online via credit card
- By mail via check
- By mail via credit card
1. Online via credit card:
You need to enter your Delaware LLC’s Business Entity File Number.
You can find that by searching your LLC name on the Entity Search page.
After making payment, make sure to save and/or print your receipt. You’ll need to include it with your Certificate of Cancellation.
2. By mail via check:
Prepare a check made payable to “Delaware Secretary of State” for the amount due.
You’ll mail your check in along with your Certificate of Cancellation. The mailing address is listed below.
3. By mail via credit card:
Enter your credit card information on the Cover Letter.
In the “Comments/Filing Instructions” area, write the following:
“I authorize you to charge any outstanding franchise tax to the credit card.”
If any of your Delaware LLC’s Annual Franchise Tax payments were late or were missed, you’ll need to pay off everything. That means any outstanding balances in addition to any penalties and interest.
Delaware Certificate of Cancellation & Cover Letter
You’ll need to send the state a Cover Letter (also called Filing Memo) along with your Certificate of Cancellation and the $200 dissolution filing fee.
Let’s discuss the Cover Letter (Filing Memo) first.
Delaware Cover Letter/Filing Memo Instructions
Download the Cover Letter: http://corp.delaware.gov/filingmemo.pdf
At the top, place an “X” or checkmark in Priority Box 7, which is in the upper right corner.
This is for regular processing time, meaning your Certificate of Cancellation will be processed and returned to you in approximately 3 weeks.
If you want your Certificate of Cancellation processed within 24 hours, you can pay an extra $100 and check off Priority Box 4 instead.
Tip: Delaware does not have a Priority 5 or Priority 6… just in case you were curious. They just have 1, 2, 3, 4, and 7. Weird, right? ;)
In the “Submitter’s Information” box, enter your name, address (doesn’t have to be in Delaware), phone number, and email address.
If you have a fax number, enter it. If not, you can leave it blank, but, if you leave the fax number blank, you must include an email address.
You don’t have to fill anything in for “Account Number”. You can leave it blank.
And because you listed your name at the top (instead of a company name), you can also leave the “Attention” line blank.
Document Filing Request Information:
You can leave this section blank.
Other Document Filing Information:
You can leave this section blank as well.
Method of Return:
Most people check off “Regular Mail” which is the standard method of return. If you have a pre-paid account with FedEX or UPS, you can list that account number if you’d like.
Credit Card Information:
If you’re not paying by check, and instead, paying by credit card, fill in this section.
If you’re paying by check, leave this section blank.
If you’re paying outstanding franchise tax with your credit card, enter “I authorize you to charge any outstanding franchise tax to the credit card.”
If you’re paying online, or if you’re paying by check, you can leave this section blank.
Delaware Certificate of Cancellation Instructions
Delaware LLC dissolution fee:
The filing fee for the Certificate of Cancellation is $200. This is in addition to any franchise tax payments that are owed. You can pay the franchise tax separately, or you can pay the franchise tax along with the $200 Certificate of Cancellation fee in the same check (if you’re paying by check).
Download the Delaware Certificate of Cancellation:
1. The name of the limited liability company is:
Enter the exact and full name of your Delaware LLC, including the proper designator (LLC, L.L.C., etc.)
2. The Certificate of Formation of the limited liability company was filed on:
Enter the date your Certificate of Formation was filed with the Delaware Division of Corporations.
Use the “stamped” date on your approved Certificate of Formation, or search for your LLC on the Delaware Entity Search page. Look for the “Incorporation Date / Formation Date”.
3. Date and Sign:
Enter the date you are submitting this Certificate of Cancellation. Enter the day (ex: “5th”), month, and then year.
Then sign your name on the “Authorized Persons” line and print your full name below on the “Name” line.
Mail or Fax the Delaware Certificate of Cancellation & Cover Letter
• If filing by mail, submit your Cover Letter, Certificate of Cancellation, $200 filing fee, and Franchise Tax payment(s) to:
Delaware Division of Corporations
401 Federal Street – Suite 4
Dover, DE 19901
• If filing by fax, send your Cover Letter, Certificate of Cancellation, $200 filing fee, and Franchise Tax payment(s) to:
302-739-3812 (fax number)
Note: You cannot pay by check if filing by fax. Instead, you must pay by credit card via the Cover Letter.
Approval Time for Delaware LLC Dissolution
If you chose regular filing (“Priority 7”), the Division of Corporations will process your filing within 3 weeks.
Then they will mail you a stamped and approved copy of your Certificate of Cancellation.
If they’re not busy though, it can sometimes be as quick as 2 weeks.
If you chose expedited filing ($100 extra for “Priority 4”), the Division of Corporations will process your filing within 24 hours.
Then they will mail you a stamped and approved copy of your Certificate of Cancellation.
Accounting for mail time, it’ll likely arrive within 2-4 business days.
Delaware LLC Dissolution FAQs
Q: How long does it take for my Certificate of Cancellation to be “approved”?
– Regular processing time (unless you pay extra for expedited) is approximately 3 weeks. If you pay $100 extra for “Priority 4 Expedited”, it’ll be processed within 1 business day.
Q: Does the Delaware Certificate of Cancellation need to be notarized?
– No, the Delaware Certificate of Cancellation doesn’t need to be notarized.
Q: Are original ink signatures needed on the Delaware Certificate of Cancellation?
– No, original signatures are not required. Scanned or photocopied signatures are acceptable.
Q: Is a tax clearance certificate needed from the Delaware Division of Revenue, Department of Finance?
– No, you don’t need a tax clearance certificate from the Department of Finance. However, don’t confuse this with Annual Franchise Tax payments. Any outstanding Delaware Franchise Tax payments must be paid up-to-date. Please see above for more details.
Q: Can I still operate my Delaware LLC after filing for dissolution?
– No, all “winding up” affairs need to be completed before the Certificate of Cancellation is filed with the Delaware Division of Corporations..
Speak to (or hire) an Accountant
Dissolving a Delaware LLC doesn’t relieve you from tax obligations. If your Delaware LLC operated/conducted business in the state, you likely need to file a final return. See Delaware’s business tax forms.
If your Delaware LLC is taxed as a C-Corp or S-Corp, you also likely need to file a final state-level income return.
Regardless of how your LLC is taxed, you’ll need to file a final return (usually on a Schedule C) for your federal taxes.
And if your LLC is doing business in Delaware, you may also need to file a final local return (on the county or city level).
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.
Delaware LLC Dissolution Statute
Delaware Limited Liability Company Act, Section 18-801: