How to Cancel a Delaware LLC

How to Cancel a Delaware LLC

Closing a Delaware LLC generally involves both winding up the company's affairs and formally canceling its Certificate of Formation with the State.

Depending on your LLC and its Operating Agreement, the process may include:

1. Review your LLC Operating Agreement. Determine what your Operating Agreement requires for dissolution and winding up.
2. Approve the dissolution of the LLC. Follow the procedures outlined in the Operating Agreement, which may require approval from the LLC's members.
3. Wind up the LLC's affairs. This can include settling debts and liabilities, resolving outstanding contracts or claims, and distributing remaining assets.
4. Pay applicable Delaware franchise taxes. Delaware requires taxes due through the effective date of cancellation to be paid before the Certificate of Cancellation can be filed.
5. File a Certificate of Cancellation. Once the LLC has been dissolved and its affairs have been wound up, the Certificate of Cancellation is filed with the Delaware Division of Corporations to formally cancel the LLC's Certificate of Formation.
6. Complete any remaining tax, banking or administrative requirements. Depending on your circumstances, additional steps may be required with the IRS, financial institutions, other states or other agencies.

Dissolving vs. Canceling a Delaware LLC: What's the Difference?

The terms “dissolving” and “canceling” are often used interchangeably when discussing the closure of a business, but under Delaware law they refer to different parts of the process.

For a Delaware LLC, dissolution begins the process of winding up the company's affairs. After the LLC has been dissolved and the winding-up process has been completed, a Certificate of Cancellation is filed with the Delaware Division of Corporations to cancel the LLC's Certificate of Formation.

This is also different from the process used to close a Delaware corporation. Delaware corporations generally file a Certificate of Dissolution, while Delaware LLCs ultimately file a Certificate of Cancellation.

If you need to close a Delaware corporation, please see our Dissolving a Delaware Corporation page.

Before Canceling Your Delaware LLC

Before filing a Certificate of Cancellation, there may be several matters that need to be addressed as part of winding up the LLC.

Depending on your company's circumstances, these may include:

• Reviewing the LLC Operating Agreement for dissolution and winding-up requirements
• Obtaining any required approval from the LLC's members
• Settling outstanding debts, liabilities, loans, contracts or creditor claims
• Resolving pending legal matters
• Distributing or otherwise addressing the LLC's remaining assets and property
• Paying applicable Delaware franchise taxes and other tax obligations
• Closing or addressing company bank accounts and other financial accounts
• Filing any required final federal, state or local tax returns
• Withdrawing or terminating registrations in other states where the LLC was foreign qualified

The specific requirements can vary depending on the LLC, its Operating Agreement and its business activities. Business owners should consult appropriate legal or tax professionals regarding obligations specific to their company.

Filing a Delaware Certificate of Cancellation

The Certificate of Cancellation is the filing used to formally cancel a Delaware LLC's Certificate of Formation with the Delaware Division of Corporations after dissolution and winding up have been completed.

Before the Certificate of Cancellation can be filed, applicable Delaware franchise taxes owed through the effective date of cancellation must be paid.

Let Harvard Business Services Handle the Filing

Harvard Business Services can prepare and submit your Delaware LLC's Certificate of Cancellation on your behalf.

Our cancellation service includes:

• Preparing the Certificate of Cancellation
• Paying the applicable State of Delaware filing fee for the Certificate of Cancellation
• Submitting the filing to the Delaware Division of Corporations
• Providing the completed filing once it has been returned by the State

The total cost for our Delaware LLC cancellation service is $450, including the applicable State of Delaware filing fee for the Certificate of Cancellation. Any applicable or outstanding Delaware franchise tax is additional, so the final amount may vary by company.

Cancellation is typically approved within 5–7 business days once filed with the State of Delaware, though processing times may vary depending on the State’s current filing volume.

And remember: your LLC does not need to have been formed by Harvard Business Services, nor do we need to currently serve as its Registered Agent, for you to use this service.

After Canceling Your Delaware LLC

Canceling the LLC with Delaware may not be the final administrative step in closing the business.

Depending on your circumstances, you may also need to address federal, state or local tax accounts, licenses and permits, bank accounts, contracts, or registrations in other jurisdictions.

For example, if your Delaware LLC was foreign qualified to conduct business in another state, canceling the LLC in Delaware does not automatically terminate its registration in that state. Separate withdrawal or termination filings may be required.

You may also need to notify the IRS that the business has closed and take any steps required to close associated tax accounts.

Because these requirements depend on the individual business, consider consulting a qualified legal or tax professional regarding your company's specific obligations.

Can a Canceled Delaware LLC Be Reinstated?

A Delaware LLC that has been formally canceled is generally not simply “renewed” in the same way a company that has fallen out of good standing may be revived.

If a Certificate of Cancellation was filed in error, there may be circumstances in which corrective filings can be made. Additional filing fees, franchise taxes and other requirements may apply, and the LLC's former name may need to remain available.

If you believe an LLC was canceled in error, it is important to determine the appropriate corrective action based on the company's specific circumstances.

Special Considerations When Canceling an LLC

Single-Member LLCs: If you are the LLC's sole member, you may be able to approve dissolution yourself, subject to the terms of your Operating Agreement. The LLC's affairs still need to be properly wound up before cancellation.

Inactive or Never-Used LLCs: An LLC may still owe Delaware franchise taxes even if it never conducted business. Simply abandoning or no longer using the LLC does not formally cancel it.

Foreign-Qualified LLCs: If your Delaware LLC is registered to do business in other states, separate filings may be necessary to withdraw or terminate those registrations.

LLCs With Outstanding Debts or Obligations: Debts, liabilities and creditor claims should be appropriately addressed as part of the winding-up process before cancellation.

Why It's Important to Formally Cancel a Delaware LLC

If you've decided to close your business, simply stopping operations does not formally cancel your Delaware LLC.

Until the company is properly canceled, it may continue to incur Delaware franchise tax obligations and other costs or responsibilities associated with maintaining the entity.

Completing the formal cancellation process creates a clear end to the LLC's existence with the State of Delaware and helps prevent avoidable future obligations.

Harvard Business Services can help make the filing portion of that process simple.

You don't have to be an existing HBS client. If you have a Delaware LLC that's ready to be canceled, we can help.