Business Dissolution: Two Ways to Go About It


how to close a companyHow to Close Your Company

When a Delaware company is no longer viable, there are two options available to the company owner in order to complete a business dissolution.

One approach is to file the proper cancellation (for an LLC) or dissolution (for a corporation) documents with the state of Delaware to formally close the company.

Just as formation documents are filed with the Secretary of State’s office to create a Delaware company, official documents must also be filed to legally close the company.

An alternative route is to have the acting Registered Agent resign upon the entity. While this course of action is not the same as filing a formal certificate, it will put the company into a forfeit status. An entity in a forfeit status is considered an inactive company by the state of Delaware.

However, the resignation process actually takes a couple of months to complete; it does not occur right away like a cancellation/dissolution.  These steps must be taken before the Registered Agent is formally resigned from the company:


  • First, the current Registered Agent must provide the entity with a notice of its intent to resign. This notification informs the entity the Registered Agent is pursuing the resignation, which will put the company into a forfeit status.


  • The Registered Agent must wait 30 days after this notice has been sent to the company before taking any action. This time period basically gives the company the option to request that the Registered Agent not proceed with the resignation filing. 


  • If there is no action from the entity, the Registered Agent can then submit the resignation filing to the state of Delaware.


At this point, the state of Delaware gives the entity another 30 days to rename the former Registered Agent as its current Registered Agent for the entity or to find a new Registered Agent to act on its behalf. 

business dissolutionAgain, if no action is taken, then the entity will become officially forfeit and will lose its good standing status.

During the approximate 60-day waiting period, the entity can potentially still receive notices for payments due, such as the annual Franchise Tax Fee.

Until the entity is actually resigned upon and in a forfeit status, the Franchise Tax notices will continue to be generated by the state of Delaware.

People often assume—incorrectly—that if their company is in the resignation phase they will not have to pay that company’s Franchise Tax Fee. The Franchise Tax Fee is automatically imposed on the entity by the state of Delaware at the beginning of each new year. 

Regardless of whether the entity has conducted any business, it will generate a Franchise Tax Fee. If the entity is resigned upon and the Franchise Tax Fees are not paid, the assessment stays with the entity.

Therefore, if the entity is restored at a later date, the outstanding Franchise Tax Fees must be paid at the time of a renewal filing. However, no new Franchise Tax fees are imposed on an entity that is in a forfeit status.

All possible options and subsequent consequences should be reviewed by the company’s responsible parties to determine the best course of action for the entity.

More By Amy Fountain

There are 5 comments left for Business Dissolution: Two Ways to Go About It

Joenie Vergara said: Friday, February 9, 2018

Thank you for this guides, now I know how can I help my friend about to his problem which is what he needs to do for his company because he wants to close his company, you giving me and my friend a good Ideas for that problem that's why I'm very thankful for this blog, keep sharing good information and guides.Thanks.

HBS Staff replied: Monday, February 12, 2018

We are glad our blog was helpful to you and your friend.

MK GLOBAL said: Saturday, January 27, 2018

I registered my company on 2017 in Delaware and I am interested to close it down. please let me know how much it cost me and how long it takes time. Thanks M.Khazai

HBS Staff replied: Tuesday, January 30, 2018

Thank you for your comment. Our filings team will send an email directly to the email on file with the closing options for your company.

Chris said: Wednesday, January 24, 2018

Hello, I wish to dissolute my c-corp. How much would it cost if I used your service to formally close my company? Thanks in advance.

HBS Staff replied: Wednesday, January 24, 2018

For an accurate quote, we need your company name. Please give us a call at 800 345 2677.

sk elmasry said: Sunday, October 30, 2016

If I cancel my LLC, is there any potential harm if I decide to open a new one in the future in Delaware or elsewhere. Also, is there an option to suspend company activities, rather than cancelling it? please advise.

HBS Staff replied: Monday, October 31, 2016

Once the entity is cancelled or dissolved, it is no longer in existence and has no bearing on a new company formation. Feel free to call us for more information on canceling an LLC. 1-800-345-2677.

Larry blackburn said: Wednesday, September 14, 2016

I wish to close my LLC as i do not foresee any future use for the company.

HBS Staff replied: Friday, September 16, 2016

Thank you for inquiring about our LLC cancellation service.  We are sorry to hear you wish to cancel your LLC, but appreciate the opportunity to serve as your Delaware Registered Agent. Formally canceling a Delaware LLC includes a $450 filing fee and $300 for the 2016 Franchise Tax. The total to formally cancel the LLC using our service is $750.00 After we receive payment, we will prepare a Certificate of Cancellation for your signature and forward it to you via fax or email. Once it is returned to us, the Certificate will be filed with the state of Delaware. As soon as the approved cancellation document is available, we will forward it to you for your records.  

To proceed please call us at 800 345 2677 ext 6911.

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