Have you decided to stop transacting business with your Delaware limited liability company? The state of Delaware legally requires all business entities to go through a formal dissolution process.
What does this process entail, and how does it differ for domestic and foreign entities? In this guide, we’ll answer all the tough questions about dissolving an LLC in the state of Delaware.
Guru Tip: If you'd like help dissolving an LLC, the same services that form an LLC can also take care of the dissolution logistics and paperwork with the state.
What Does It Mean to Dissolve an LLC?
Dissolving a company is an official means of permanently closing your business. While filing the dissolution documentation with the state of Delaware is certainly an important part of the process, it’s not the only step. You should also liquidate your business assets, settle any liabilities, and send legal notifications to anyone that had an interest in your company.
Keep in mind that if you fail to complete these steps, you as a business owner could be held personally liable for any outstanding debts or liabilities of your limited liability company. Now that we’ve discussed what exactly dissolving an LLC is, let’s dive into the details of how this process is carried out in the state of Delaware.
How to Dissolve a Domestic Delaware LLC
Any LLC that was formed in the state of Delaware will need to file the Certificate of Cancellation with the Secretary of State’s office in order to dissolve. You will also need to include a Filing Cover Memo with some of your contact information. The Certificate of Cancellation is very simple, and only requires the following information:
- LLC name
- Date of formation
- Date of dissolution
- Signature of authorized representative
When you have completed this form, you must include a check for $200 made payable to the “Delaware Secretary of State.” It is also recommended that you contact the Franchise Tax Section to ensure that all taxes have been paid. If your business still owes taxes, you will need to include an additional check for the correct amount with your Certificate of Cancellation. You can mail your form and check(s) to the following address:
Delaware Division of Corporations
401 Federal Street – Suite 4
Dover, DE 19901
It usually takes 2-3 weeks for the state to process the paperwork, and you will receive confirmation that your dissolution has been filed once the process is finished. However, you can pay various fees to expedite the filing, up to $1,000 (in addition to the filing fee) for one-hour processing.
How to Dissolve a Foreign LLC in Delaware
Do you need to dissolve a limited liability company based outside of Delaware, but qualified to transact business within this state?
The process for dissolving a foreign LLC is very similar to the process for dissolving a domestic one, as you will need to file a variant of the same form. You must file the Certificate of Cancellation for a Foreign Limited Liability Company, and it must also include the Filing Cover Memo. This form requires the following information:
- LLC name
- Date of registration as a foreign entity in Delaware
- Effective date of cancellation
- Mailing address (for service of process)
- Signature of authorized person
Just like the Certificate of Cancellation for domestic LLCs, this process requires a $200 filing fee. The check should be made payable to the “Delaware Secretary of State,” and you must send the paperwork to this address:
Delaware Division of Corporations
401 Federal Street – Suite 4
Dover, DE 19901
You can also expect to receive confirmation between 2-3 weeks from the date of filing.
What Else Do I Need to Know About LLC Dissolutions in Delaware?
Once your business is dissolved, anyone can begin using your business name. This is why it is very important that you only file for dissolution if you have no plans to continue conducting business in Delaware in the future.
In addition to voluntary dissolution, it is also possible for the state to initiate administrative dissolution. If you fail to file a Certificate of Cancellation, your business will continue to accumulate annual franchise taxes. The state can choose to dissolve your business if these taxes go unpaid for an extended period of time. However, you can revive an administratively dissolved business by filing the Certificate of Revival (which requires a $200 processing fee), as well as paying any remaining taxes and penalties.
This reinstatement process can be expensive, so it is recommended that you only file the Certificate of Cancellation if you do not want to continue doing business in the state of Delaware.
Conclusion
Whether you’re dissolving a domestic or foreign limited liability company, the process isn’t complicated.
The filing process is virtually the same for both domestic and foreign LLCs.
Our final note in this guide is that you should make certain each step of the process outlined in this guide is followed closely, to avoid any unforeseen snags with your dissolution. We hope this article helped you to better understand the dissolution process for a Delaware LLC!