How to Dissolve an LLC in Delaware? (2026 Updated Guide)

Published by Delina Chantel Yasmeh | Author

Last updated: December 29, 2025

FACT CHECKED by Lou Viveros, Growth & Transition Advisor

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Starting a business is exciting, but the reality is that not every venture succeeds. According to the SBA Office of Advocacy, 32.1% of new businesses fail within their first two years, and only 49.2% survive to see their fifth year [1].

So while you plan for success, it's just as important to know how to dissolve your LLC if needed. Together with my team of legal experts and attorneys, I have helped many business owners to do this smoothly and without additional charges.

To help you do the same, we have created this guide with a special focus on why business owners might choose to dissolve a Delaware limited liability company and what happens in both voluntary and involuntary dissolution cases.

Quick Summary

• To dissolve an LLC in Delaware, all members must accept a resolution to dissolve the business, deal with federal tax returns, and file a Certificate of Cancellation with the Delaware Secretary of State.
• It costs $220 to file the Certificate of Cancellation to dissolve a legal entity in Delaware by mail, with expedited options available.
• Plan to dissolve before December 31 to avoid having to pay taxes (the $300 Delaware Franchise Tax) for an additional year.

Definition and Importance of Dissolving a Delaware LLC

Dissolving a Delaware LLC is a formal process that involves terminating the limited liability company’s existence and winding up its business operations.

This process is essential for any Delaware business that is no longer in operation or has fulfilled its purpose. Properly dissolving a Delaware LLC is crucial for several reasons:

• Avoid Further Business Activities and Liabilities: Once an LLC is dissolved, it ceases all business operations, preventing any further liabilities or obligations from arising.
• Prevent Accumulation of Unnecessary Taxes and Fees: Dissolving the LLC ensures that it no longer incurs state taxes, franchise taxes, or other fees associated with maintaining an active business entity.
• Formally Close the Business: It allows LLC members to officially close the business, distribute any remaining assets, and move on to other ventures without lingering legal or financial issues.
• Maintain a Good Business Reputation: Proper dissolution helps maintain a good business reputation by ensuring that the LLC is closed in compliance with Delaware law, avoiding potential legal complications or penalties.

By understanding the importance of dissolving a Delaware LLC, business owners can ensure they take the necessary steps to properly wind up their business operations and avoid future complications.

Pre-Dissolution Requirements

Before dissolving a Delaware LLC, several pre-dissolution requirements must be met to ensure a smooth and legally compliant process.

These requirements include:

• Reviewing the LLC Operating Agreement: This document, created when the LLC registered with Delaware, often outlines the specific procedures for dissolution, including the required vote of the LLC members and the process for distributing assets.
• Obtaining Necessary Approvals: Obtaining the necessary approvals from the LLC members is essential. This typically involves a formal vote to dissolve the LLC, as specified in the Operating Agreement, or by default Delaware law if not specified.
• Settling Outstanding Debts and Liabilities: All outstanding debts and liabilities must be settled before the LLC can be dissolved. This includes paying off creditors and ensuring that all financial obligations, such as vendor invoices and loan balances, are met.
• Distributing Remaining Assets: Any remaining assets must be distributed to the LLC members according to the terms outlined in the Operating Agreement or, if not specified, according to Delaware law.
• Setting Aside Funds for Future Claims: If you or other members know of potential claims that could arise within 10 years of dissolution, you must set aside adequate funds in a reasonable manner, such as holding them in a separate account.

The Delaware Court of Chancery addressed the last requirement in Capone v. LDH Management Holdings LLC, where the court revoked an LLC's cancellation because owners failed to reserve adequate funds for known potential claims.

By meeting these pre-dissolution requirements, Delaware LLCs can ensure that the dissolution process is conducted smoothly and in compliance with legal standards.

Reviewing LLC Documents

Reviewing the LLC Operating Agreement will help you determine the procedure for dissolution, including the required vote of the LLC members and the distribution of assets.

Delaware law provides default rules for LLCs if the Operating Agreement does not specify the procedure. In addition to the Operating Agreement, the LLC’s articles of organization and other formation documents should also be reviewed to ensure that all necessary steps are taken to properly dissolve the LLC.

These documents provide a legal framework for the dissolution process and help ensure that all actions taken comply with Delaware law.

By following these pre-dissolution requirements and reviewing the necessary LLC documents, Delaware LLCs can ensure a smooth and proper dissolution process.

This careful review helps avoid potential legal issues and ensures that all members agree with the steps taken to wind up the business.

6 Steps to Dissolving an LLC in Delaware

The Secretary of State allows LLCs to dissolve after members have completed the following required procedures [2].

This guide will help you understand the process of dissolving a Delaware company.

Step 1: LLC Members Vote to Dissolve the LLC

Common reasons an LLC might choose to dissolve voluntarily include retirement, unprofitability, or a change in business purpose.

Delaware LLC dissolution starts by looking into specific provisions in your LLC agreement. If your agreement is silent on this matter, members who collectively own more than two-thirds (66.67%) of the LLC must agree to dissolve, assuming ownership percentages are proportionate to voting rights.

For single-member LLCs, this is straightforward. Your decision to dissolve is sufficient. For multi-member LLCs, you should hold a formal vote and document the outcome in a written Members' Consent to Dissolution.

In our case, our LLC was dissolving voluntarily hence we as LLC owners needed to follow the provisions in the operating agreement about how to wind up the company's affairs.

This might include selling off company assets, paying creditors, and distributing any remaining assets or LLC property among LLC members.

If you can't find specific instructions in your LLC agreement, you'll need to contact a Delaware lawyer for help.

The process will usually require that the LLC members vote to dissolve the company and then work with the state to terminate its existence properly and the right to conduct business.

Step 2: Notify Creditors About Your LLC's Dissolution

When dissolving a Delaware LLC, it's important to inform creditors, banks, clients, suppliers, and government agencies connected to the LLC's liabilities or potential future liabilities. Business owners must notify creditors during this process to ensure all obligations are addressed.

This can be done by sending advance notices as required by the LLC agreement or fulfilling your duties as an LLC liquidation manager or member. Some notices, such as those to suppliers, may be a courtesy, while others, such as IRS notifications, must be formal.

You should also notify your registered agent that the LLC is being dissolved.

Step 3: File Final Tax Returns and Obtain Tax Clearance

First step is to settle your federal and state tax obligations. File a final tax return with the IRS and check the "final return" box if it's on your form. Keep copies of all filed returns for your records.

You must pay your taxes, including the Delaware Franchise Tax. This is a flat fee that is not based on the company's income or business conducted. If the LLC has generated no income, it still must pay an annual franchise tax.

The easiest way to pay taxes owed to Delaware is online through the state's e-gov portal in their franchise tax section. You can also mail a check or money order payable to "The Delaware Secretary of State, Delaware Division of Corporations" [3].

If you have trouble calculating your franchise tax and filing fees, we recommend seeking legal or tax advice from a professional.

For our Delaware LLC, we also informed the IRS and State Division of Revenue of the dissolution with a final return, stating the LLC's full name, employer identification number, address, effective dissolution date, and reasons.

Single-member LLCs report on Schedule C Form 1040, while multi-member LLCs file their tax return as the final return for tax purposes.

"Dissolving an LLC requires adhering to legal procedures, communicating with stakeholders, and properly managing assets. Legal consultation is key to navigate these complexities and avoid potential risks."
- Jon Morgan, CEO, Co-Founder and Editor-in-Chief of Venture Smarter

Step 4: File Articles or Certificate of Dissolution

The next step in the dissolution process is filing the Certificate of Cancellation with the Delaware Division of Corporations.

This document certifies that the Delaware LLC has been dissolved and confirms all of the steps that were taken to complete the process. Cancellation filing can be done online or by mail.

The LLC Certificate of Cancellation must contain the following information:

• The LLC's name and state of formation
• A statement that the LLC has been dissolved
• The signatures of all of the LLC's members or managers (or the registered agent authorized to act on behalf of the LLC)

The Certificate of Cancellation can be downloaded from the Delaware Corporation Division website. There is a \$220 filing fee for both online filing and mail submissions [4]. Optional expedited services include 24-hour processing for \$100 and same-day processing for \$200.

In our case, we submitted this document online and paid for a 24-hour expedited service processing. Once the Certificate of Cancellation is filed with the State, the dissolution process is complete. The LLC will no longer exist, and all of its assets and liabilities will be transferred to its members (or other entities).

Step 5: Distribute Assets

Once all acknowledged claims are settled and necessary deadlines have passed, any remaining assets can be allocated to the LLC shareholders.

Generally, per state laws asset distribution to shareholders is based on their shareholdings; for instance, a shareholder with 15% of the LLC assets would receive 15% of the remaining assets.

Delaware law establishes a strict order for distributing LLC assets. Under Section 18-804 of the Delaware LLC Act, you must pay creditors first, then make distributions required by your Operating Agreement, return members' capital contributions, and finally distribute remaining profits based on ownership percentages [5].

The distribution of our LLC's assets was done following the operating agreement terms.

Step 6: Close All Accounts and Cancel Licenses and Permits

In the last step, you must ensure that all corporate bank accounts, credit lines, and financial services are closed. This step is crucial to prevent any future financial liabilities or unauthorized transactions.

Deactivate your LLC's Employer Identification Number (EIN) with the IRS. This prevents potential fraud or misuse of the number in the future. Send a letter to the IRS requesting EIN cancellation, including your LLC's name, EIN, address, and a copy of your Certificate of Cancellation.

During our dissolution, we terminated all service accounts that were in the corporation's name. Ensure all final bills are paid and services are formally discontinued.

Actively cancel any business licenses, permits, or registrations that the corporation held. This might include state or local business licenses, professional licenses, or any other permits specific to the corporation’s operations.

FAQs

References:

1. https://advocacy.sba.gov/wp-content/uploads/2024/12/Frequently-Asked-Questions-About-Small-Business_2024-508.pdf
2. https://corp.delaware.gov/disso09/
3. https://corp.delaware.gov
4. https://corpfiles.delaware.gov/webllc-can09.pdf
5. https://delcode.delaware.gov/title6/c018/sc08/