Dissolve a Corporation in Delaware

People often ask, "Why go through the formal process of dissolving a corporation instead of simply leaving the company behind?"

Dissolving a business ends the corporation's responsibility for future annual Franchise Tax payments and Registered Agent Fees. Please note: The information on this page pertains to Delaware Corporation dissolutions. If you have a Delaware LLC you wish to close, please see our "Cancellation Process for a Delaware LLC" page.

Since the corporate dissolution filing is difficult to reverse, business owners generally prefer to speak with a tax professional or accountant before beginning the company dissolution process.

Those that would like to proceed to dissolve a Delaware corporation will need to pay a company dissolution fee, file all Franchise Tax reports and pay all Franchise Taxes due, including any late penalties and interest before the company can be dissolved.

Generally, if a corporation has a bank account, the business will often close the bank account before filing the Certificate of Dissolution.

The Dissolution of Corporation Process

There are several steps your company will need to follow to dissolve a corporation in Delaware and remove any liability you may have for various fees:

Step 1: Call a Shareholder Vote

To dissolve your business it requires shareholder approval. Therefore, the board of directors will need to call a meeting and take a vote before proceeding with the dissolution process. If a majority of shareholders are in agreement, then the dissolution process can commence. Once approved, a Certificate of Dissolution, called Articles of Dissolution in some other states, must be issued by the State of Delaware in order to formally dissolve a corporation.

Step 2: Pay Outstanding Taxes

When filing for dissolution, your Delaware corporation will need to be current on all taxes owed to the state, including franchise taxes, income taxes (if applicable), and any associated penalties or interest. If the corporation has filed taxes with the IRS, a closing tax return will generally need to be filed after receiving the Certificate of Dissolution, attach the Certificate of Dissolution to the final tax return.

If you need assistance filing a closing tax return, please consult a tax professional or accountant.

Step 3: File the Delaware Certificate of Dissolution

Once approved, a Certificate of Dissolution, called Articles of Dissolution in some other states, must be issued by the State of Delaware in order to formally dissolve a corporation.

Once you contact us and your payment is submitted, we will prepare all the necessary Delaware corporation dissolution documentation and submit it to you by email or fax for your signature.

It is important to note that the dissolution documentation must be signed by an officer of the corporation. After it's signed and returned to us by mail, email or fax, the Certificate of Dissolution will be filed with the state of Delaware within 24 hours.

The State of Delaware typically takes three to five business days to return the receipt of filing. Once we receive it, we will forward the Certificate of Dissolution to you by email for your records.

Step 4: Close Out-of-State Registrations

If your company was qualified to do business in other states, you'll also need to file separate dissolution documents with each state. You can file each document simultaneously with Harvard Business Services, Inc. to streamline the process. If you fail to do so, you may still be held liable for paying the associated annual fees in those states.

Step 5: Pay Debts and Distribute Assets

You will need to wrap up any outstanding affairs and make sure you notify, employees, suppliers, clients, and any other creditors before you distribute any remaining assets, often based on business ownership. As your corporation is settling any debts and obligations, ensure that you have the means to settle any pending legal disputes that your company is involved in.

Once all your debts are paid, the final step to dissolve a company is to distribute any remaining assets to the shareholders. This distribution is often based on the structure of the company. A common solution is to divide up the remaining cash by the number of shares and distribute that amount proportionately to shareholders based on the number of shares they own.

For more information on how to dissolve a company, or to begin the corporate dissolution process, please contact our helpful staff by phone (800-345-2677), email or live chat, and we'll be happy to assist.