Cancellation Process for a Delaware LLC

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Please note: The information on this page pertains to Delaware LLCs. If you have a Delaware corporation you wish to close, please see our "Dissolving a Corporation" page.

At some point in the business’s lifecycle, you may find it necessary to dissolve an LLC -- a process that culminates in the Delaware Certificate of Cancellation. There are a couple ways to initiate the cancellation process. Learn how in this How to Dissolve an LLC guide.

Dissolving vs Cancelling: What's the Difference?

Many people use the terms "dissolving" and "cancelling" interchangibly when referring to an LLC or corporation. While both terms represent the same result (closure of the company), it is important to note that, technically, they are distinct processes.

In Delaware, "dissolution" refers to the process of closing a corporation through the filing of a Certificate of Dissolution. LLCs, on the other hand, are "cancelled" through a Certificate of Cancellation. 

While the difference in meaning is small, you will want to ensure you file the correct paperwork with the State of Delaware in order to correctly close your company.

How to Cancel Your Delaware LLC

Option 1: Unanimous or Majority Vote

The process to dissolve an LLC in Delaware can begin with a unanimous vote among owners. Or, depending on its terms, your Operating Agreement may specify how to dissolve the LLC with a certain percentage of members in agreement to cancel.

Typically, the first thing business owners will want to do is talk to a tax professional and/or attorney to determine if cancelling the LLC is the best option for the company. If the circumstances call for the LLC to be cancelled, it is best to then consult your LLC Operating Agreement, which usually outlines your cancellation process.

Option 2: Delaware Law

When canceling a Delaware LLC, Delaware law allows the LLC members who collectively own more than two-thirds of the company to agree by vote to cancel the LLC.

Before Cancelling Your LLC

Before you dissolve your LLC, you should typically terminate all your LLC’s business affairs, such as:

  • Settling pending lawsuits;
  • Allocate assets;
  • Pay state franchise taxes and federal taxes, including any late fees and interest due;
  • Settle and close any outstanding business of the LLC;
  • Sell or disseminate the LLC's property;
  • Settle any liabilities the LLC may be facing, such as creditors' claims, loans or contracts;
  • If your LLC has been registered to operate in other states, file additional forms in each of those states to terminate your Foreign Qualification
  • Close your LLC’s bank account (keep in mind there are fees associated with closing the LLC).

The most important step in the Delaware LLC cancellation process is to file a Certificate of Cancellation.

Steps to File a Certificate of Cancellation

  1. Prepare the Certificate of Cancellation, which can be obtained from the State of Delaware's website or our team can help you prepare one.
  2. One member (owner) of the LLC must sign the Certificate of Cancellation.
  3. Pay the cancellation and preparation service fees, as well as the current year's Delaware Franchise Tax Fee.
  4. File the Certificate of Cancellation.

Please keep in mind that once a Delaware LLC is canceled, the company name becomes available for anyone else in the state to utilize.

The Safest, Most Efficient Way to Cancel Delaware LLCs

Harvard Business Services, Inc. can help you cancel your Delaware LLC in a professional and prompt manner. After you contact us in regard to cancelling your Delaware LLC and you submit your payment, we will expertly assemble the required paperwork and forward it to you via email or fax for your signature.

After you sign and return it to us by fax, mail or email, we will file the Certificate of Cancellation with the Delaware Secretary of State within 24 hours.

The Delaware Division of Corporations generally takes three to five (3-5) business days to return the receipt of filing to us; once we receive it, we will immediately forward it to you via email for your records.

 

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It is very important to complete the process to cancel your Delaware LLC. If you do not legally and officially cancel your LLC, your company will continue to be held responsible for the annual Delaware Franchise Tax Fee as well as your LLC's annual Registered Agent Fee until either the Registered Agent resigns or until the state of Delaware voids the company.

After Cancelling Your LLC

Write a letter to the IRS, requesting closure of your LLC's EIN Number. Include the full name of the LLC, its address and a copy of the Certificate of Cancellation.

Since 1981, Harvard Business Services, Inc. has helped form 282,446 Delaware corporations and LLCs for people all over the world.

Registered Agent Service

Harvard Business Services, Inc. guarantees your annual Delaware Registered Agent Fee will remain fixed at $50 per company, per year, for the life of your company.