How to dissolve an LLC with an overdue annual report or fees

Many LLC owners decide to close their company only after it has been sitting unused for a while. By then, an annual report may have been missed, or a fee or franchise tax left unpaid. If that is your situation, you can still dissolve the LLC properly. In most states, though, the overdue items have to be dealt with first. This guide explains why, what usually has to happen, and how we handle it.

Why most states want good standing first

To dissolve an LLC voluntarily, the LLC files the state's dissolution document with the Secretary of State. Most states only accept that filing if the LLC is in good standing. Good standing usually means:

• All annual reports (or periodic reports) have been filed.
• All annual fees have been paid.
• Any state franchise tax or similar LLC tax has been paid.

The reason is simple. The state does not want an LLC to dissolve and leave unpaid amounts behind. So before it accepts the dissolution, it wants the record to be clean.

Rules differ by state. Some states are stricter than others, and some ask for extra steps. Wyoming, for example, requires the LLC to be active and in good standing. Some states also ask for a tax clearance from their tax department. If you are not sure what your state asks for, check with the state or ask us.

Delaware: the annual LLC tax

Delaware is a common case. Every Delaware LLC owes an annual LLC tax of $300. Delaware only accepts a Certificate of Cancellation once that tax has been paid for every year, including the year of cancellation. So if your Delaware LLC skipped two years, those years have to be paid, and the current year as well, before the cancellation goes through. Late penalties and interest can also apply.

This surprises many owners who expected to close the LLC early in the year to "save" the current year. In Delaware, the current year is still due.

What typically has to happen first

The exact steps depend on the state, but the usual order looks like this:

1. Check the LLC's status with the state. Find out whether it is active, in good standing, or already marked as inactive, delinquent, revoked or administratively dissolved.
2. Find out what is owed. Which reports are missing, which fees or taxes are unpaid, and whether penalties have been added.
3. File the missing reports and pay what is due. In some states, the final annual report and the dissolution can be handled close together. In others, the overdue items must be fully processed first.
4. If the LLC was administratively dissolved, it may need reinstatement first. Many states allow reinstatement if everything owed is paid. Some states may let you file the dissolution without it. Check with the state.
5. File the dissolution document. Once the state is satisfied, the LLC files its dissolution, and the state confirms it.

Is the LLC already "dissolved" because you stopped paying?

Possibly, but not in the way you want. When an LLC misses annual reports or fees, many states eventually dissolve it on their own, or mark it as inactive, revoked or forfeited. This is called administrative dissolution. It is not the same as closing the LLC yourself:

• Fees and penalties can keep building up.
• The state can still pursue what is owed.
• Many states allow the LLC to be reinstated, with everything owed.
• The IRS is not told anything, so the EIN business account stays open.

Read more in our guide on administrative dissolution. If your LLC has not been active for a long time, our page on closing an unused LLC may also help.

Do not forget the IRS

Overdue state items are only half of the picture. The IRS keeps its own records. If the LLC missed federal returns, the IRS will usually want them filed before it closes the EIN business account. For a foreign-owned single-member LLC, a missed Form 5472 can carry a penalty of $25,000 per form, per year. See our guides on closing the EIN business account and Form 5472 in the final year.

We do not prepare or file tax returns. If returns are missing, you or your accountant files them.

How we handle an overdue LLC

Overdue state amounts are not part of our packages, because they are different for every LLC. But they do not stop you from ordering. This is how it works:

1. You order the Dissolution package ($349 plus state fee) or the Dissolution and EIN closure package ($449 plus state fee). At checkout you pay our package price and the standard state fee for the dissolution.
2. We check the LLC's standing with the state before we file anything.
3. If the state requires an overdue report, fee or tax first, we get back to you about it, with what the state charges, before anything is paid.
4. Once the LLC can be dissolved, we file the state's dissolution document and send you the state's confirmation.
5. With the EIN closure package, we also prepare the IRS letter for one signature, and send it.

Nothing is paid to the state for overdue amounts without your approval. You decide how to proceed once you know the numbers.

States we cover

These are the states we dissolve LLCs in, with the name of the dissolution document and the standard state fee for it. Overdue amounts come on top, if any.

LLC formed in another state? Email us at contact@closellcnow.com.

For the full process, see how to dissolve an LLC and the cost to dissolve an LLC.

Last updated October 29, 2026. This guide is general information, not legal or tax advice. CloseLLCNow is not a law firm or a CPA firm.