If you have a limited liability company (LLC) in Delaware, you may need to shut down the business at some point. Maybe you’ve started another company or decided to relocate to another state— whatever the reason, you’ll need to follow the somewhat complicated LLC dissolution process.
If done incorrectly, you’ll still be responsible for annual reports and fees and could face penalties down the line. But, lucky for you, this handy guide explains how to dissolve an LLC in Delaware.
Properly shutting down an LLC involves several crucial steps, as detailed below.
1. Vote for Dissolution
LLC owners, known as members, must vote to dissolve the LLC. Hopefully, you have an operating agreement that details the process. If not, Delaware law requires you to gain majority consent of members who own more than two-thirds of the LLC. Once you do so, you’ll need to draft a resolution to dissolve the LLC.
2. Cancel Business Licenses and Permits
If you were required to get licenses and permits for your business, you’d need to contact the issuing agencies to cancel them so that you’re not charged renewal fees. If you have any outstanding fees, you’ll likely need to pay them before you are allowed to cancel.
3. Notify Creditors
If you owe money to any creditors, you should notify them in writing of the dissolution and give them detailed instructions on filing any claims for the outstanding debt.
In Delaware, you are responsible for any claims for the next ten years after your dissolution and are expected to set aside provisions to cover any claims that might arise.
4. Notify Tax Departments
Notify any relevant tax authorities of the dissolution and pay any outstanding taxes due. You can do this through Delaware’s eCorp website or by including a check to the “Delaware Secretary of State” with your dissolution documents.
You can file for a Certificate of Cancellation if all your taxes are paid.
5. Cancel Contracts and Settle Financial Obligations
If you have contracts with vendors, lessors, or any other outstanding financial obligations, you’ll need to ensure all your obligations are fulfilled and all contracts are canceled.
6. Distribute Assets to Members
If the LLC has any assets remaining in any form after all financial obligations have been settled, they must be distributed to members based on LLC ownership percentages. If the assets are equipment, property, or other non-cash assets, they’ll need to be sold first so distributions can be made in cash.
7. File the Dissolution Papers with Delaware
In Delaware, the Division of Corporations processes your dissolution. To get started, head to their Dissolutions and Cancellations page and scroll down to the section for LLCs. Because we’re filing for a domestic LLC, click the regular “Cancellation” link to download the PDF.
Fill out the form and save it as a PDF.
From here, you can either file it online or physically.
You can upload your document through Delaware’s eCorp Business Services.
Click on Document Upload. On the next page, “Document Filing and Certificate Request,” select your document priority, fill out your information, upload your document, and choose a method of return.
Review your information and continue to checkout.
The fee for filing your Certificate of Cancellation is $200, plus any expediting fees. You can pay by credit card or ACH account.
Click “Submit Your Request” to finish filing. Be aware that the fee won’t be charged until your order is processed.
If you’re filing physically, print out your Certificate of Cancellation from earlier. You’ll also have to fill out and print a Filing Cover Memo.
Include a check payable to the “Delaware Secretary of State” covering the $200 filing fee, any due taxes, and expediting fees. Do NOT staple your papers together.
In-person filing at the Division of Corporations is by appointment only. Call 302-739-3077 to make an appointment.
Otherwise, you can file by mail to:
Delaware Division of Corporations
401 Federal Street – Suite 4
Dover, DE 19901
Regardless of the reason, LLC dissolution must be done right to avoid legal issues and financial penalties. Therefore, it’s highly recommended that you employ the services of an attorney to ensure everything is done correctly and all bases are covered.
How much does it cost to dissolve an LLC in Delaware?
It costs a base fee of $200 to file your Certificate of Cancellation. If you have series LLCs under your LLC that you’d like to dissolve, you’ll pay an additional $50 per series LLC.
How long does it take to dissolve a Delaware LLC?
Because of COVID-19 and staffing shortages, it will take Delaware approximately three to four weeks to process your Certificate of Cancellation filing. However, you can pay an additional $100 for 24-hour service or $200 for same-day service.
Should I close an unused LLC in Delaware?
If you’re not using your Delaware LLC, you should close it to avoid unnecessary fees, filings, and taxes. Even if you’re not conducting business, you’ll still have to pay a $300 annual tax, for instance.
What happens if I don't dissolve my LLC in Delaware?
If you don’t dissolve your LLC, your LLC will continue to exist perpetually, but you’ll still be liable for any taxes, filings, and claims associated with your LLC.
What is the difference between the dissolution and termination of an LLC in Delaware?
In Delaware, a dissolution is when your LLC decides to shut down. Until it’s final, your LLC can operate on a limited scale to end operations, settle suits, and make provisions for future claims. Once all these affairs have been settled, you must officially file the Certificate of Termination to close your LLC.