Delaware LLC dissolution compliance

Confirm authority to dissolve - Review the LLC’s operating agreement for dissolution rules and voting thresholds; if silent, Delaware law default rules apply (member agreement by owners holding at least two-thirds ownership under Section 18-801). Document the member vote/consent in writing. 2) Wind up the LLC’s affairs (don’t file cancellation until winding up is complete) - Stop ordinary business, but continue actions necessary to wind up (collect receivables, complete contracts that assist winding up). - Pay creditors and settle claims first (Delaware priority rules for distributions). Notify creditors and vendors as a best practice even though Delaware does not require a public notice. - Collect and liquidate assets, close business bank accounts, cancel business credit cards, and cancel licenses/permits and assumed names/DBAs in jurisdictions where registered. 3) Tax and payroll finalization - File final federal tax returns and mark them as “final.” Close payroll accounts and file final employment tax returns (federal and state), marking them final as required. - File any required Delaware state tax returns and pay outstanding business taxes. - Delaware franchise tax for LLCs is a flat annual fee (commonly cited as $300/year); outstanding franchise taxes and penalties must be paid before a Certificate of Cancellation will be approved. - After final federal returns, consider notifying the IRS to close out the EIN (per IRS guidance) to avoid future misuse. 4) File Certificate of Cancellation with Delaware Division of Corporations - Prepare and file the Delaware Certificate of Cancellation (form available from the Division of Corporations). The form must be signed by an authorized person. The state will not approve cancellation if franchise taxes are owed. - Certificate of Cancellation filing fee — sources used in the research list the fee at $220. (Confirm current fee on the Delaware Division of Corporations site at time of filing.) - If filing by mail, include the required cover letter per Division of Corporations instructions; online filing is available in many cases. 5) After cancellation and record retention - Keep corporate/LLC records, tax records, payroll records, and transaction documents for the retention period required by tax and employment law (commonly 3–7 years or more for tax records; follow your accountant/legal counsel guidance). - Monitor for any late claims. If creditor claims surface, address under applicable law — members could face exposure if distributions were made before paying creditors. 6) Practical checklist & contacts (quick reference) - Review operating agreement and vote/consent to dissolve. - Complete winding up: pay creditors, liquidate assets, close accounts, cancel permits. - File final federal & state tax returns; mark final payroll returns; pay Delaware franchise taxes. - File Certificate of Cancellation with Delaware Division of Corporations (pay filing fee). - Deactivate EIN with IRS (if applicable) and cancel state registrations/licenses. - Retain records and confirm closure of all accounts and registrations. Caveats & next steps: - Fees, exact form names, and procedural details may change — always confirm current Certificate of Cancellation form and fee, franchise tax rate, and filing process on the official Delaware Division of Corporations site and consult a Delaware attorney or CPA for complex matters (e.g., judicial or administrative dissolution, unresolved litigation, substantial creditor claims, multi-state tax nexus).

Enjoyed this article?