Closing an LLC is more than stopping the business. The state still lists the company, and the IRS still has an open account under its EIN. To close the LLC properly, you need to finish a short list of steps, and the order matters. This guide walks you through each step, from the first decision to the last cancellation.
The steps are the same in most states. The names of the forms and the fees change from state to state. For the differences in wording, see dissolution vs. cancellation vs. termination.
Step 1: Get the members to approve the dissolution
An LLC is closed by its owners, called members. Your operating agreement usually says how the members decide to dissolve. It may need a majority vote, or every member to agree.
If you are the only member, you simply decide. Still, write it down. A short written consent, signed and dated, is a good record that the LLC decided to dissolve and when. If the LLC has several members, read the operating agreement first and follow it exactly. Our guide on dissolving a multi-member LLC covers the points that need extra care.
Step 2: Check the LLC's standing with the state
Most states only accept a dissolution from an LLC in good standing. That means its annual reports are filed and its fees and franchise taxes are paid. If something is missing, the state can reject your filing.
A few examples:
- Delaware requires its $300 annual LLC tax to be paid for every year, including the year of cancellation.
- Wyoming requires the LLC to be active and in good standing.
If the LLC is behind, you usually need to catch up first. See how to dissolve an LLC with an overdue annual report. If the state has already dissolved the LLC on its own, read administrative dissolution, because that is a different situation.
Step 3: File the dissolution document with the state
Next, the LLC files the state's dissolution document with the Secretary of State. Each state has its own form and its own name for it. Delaware calls it a "Certificate of Cancellation". Arizona calls it "Articles of Termination". Many states use "Articles of Dissolution".
The form usually asks for the LLC's exact legal name, its file number with the state, and the date the members approved the dissolution. Most states charge a filing fee. A few states have a later termination step after the first filing. When the state accepts the filing, you receive a confirmation. Keep it with the LLC's records.
State pages with the document name and fee: Delaware, Wyoming, Florida, North Carolina, and all covered states. To see what the whole process costs, read how much it costs to dissolve an LLC.
Step 4: Wind up the business
"Winding up" means finishing the LLC's business. In practice, it means three things:
- Pay the LLC's debts and bills.
- Collect any money the LLC is still owed.
- Distribute what is left to the members.
Keep a record of every final payment and distribution. You will need these numbers for the final tax return. If the LLC is owned by someone outside the US, distributions to the owner are reportable transactions on Form 5472. See dissolving a foreign-owned LLC.
Step 5: Close the EIN business account with the IRS
The IRS never cancels or reuses an EIN. Instead, it "closes the business account". To do this, the LLC sends the IRS a letter with:
- the complete legal name of the LLC,
- the EIN,
- the business address,
- the reason for closing the account.
An owner or authorized person signs the letter. If you have the EIN assignment notice (CP 575), include a copy. The IRS will not close the account until all required returns are filed and all taxes are paid. The confirmation comes by mail and can take several weeks. Our guide on closing an EIN business account has more detail.
Step 6: File the final federal tax return
The last year of the LLC still needs a tax return. Which one depends on how the LLC is taxed:
- Single-member LLC owned by a US person: no separate LLC return. The last year goes on the owner's Form 1040 (Schedule C, E or F).
- Multi-member LLC: a final Form 1065, with a Schedule K-1 for each member.
- LLC taxed as an S corporation or C corporation: a final Form 1120-S or Form 1120.
- Foreign-owned single-member LLC: Form 5472 attached to a pro forma Form 1120, also for the final year. See Form 5472 in the final year.
Check the "final return" box where the form has one. We do not prepare tax returns. You or your accountant file this return. Read the LLC final tax return for the details and due dates.
Step 7: Close the remaining accounts
Once the last payments have gone out, close everything else the LLC still has open:
- state tax accounts, such as sales tax permits and state payroll accounts,
- business licenses, where the LLC has them,
- the business bank account, after the last payments clear,
- Stripe, PayPal and marketplace accounts, such as an Amazon seller account.
Keep the LLC's records after closing. Many advisors suggest keeping them for at least several years. Our close LLC checklist puts all of this on one page.
Step 8: Cancel the registered agent last
Do not cancel the registered agent too early. While the LLC exists, the state sends its notices to the agent. If you cancel first and the state then has a question about your filing, the notice may never reach you. Wait until the state confirms the dissolution, then cancel. See cancel your registered agent after dissolution.
Why the order matters
Each step depends on the one before it. The state may reject a dissolution from an LLC that is not in good standing. The IRS will not close the EIN account while a return is missing. And the registered agent is your link to the state until the very end. If you follow the order above, you avoid most of the problems owners run into.
What you should not do is simply stop paying and let the LLC lapse. That does not close it. The state may keep adding fees, and the IRS is never told the business ended.