How to Dissolve an LLC

Step-by-Step Process

1. 1

   Vote to Dissolve and Document the Decision

   Before you file anything with the state, your LLC members need to formally agree to dissolve. Check your operating agreement first. It likely spells out the exact voting threshold (unanimous, majority, or two-thirds) and any notice requirements for a dissolution vote.

   If your operating agreement is silent, your state's default LLC act applies. Most states require a majority vote of all members. In Delaware, the default threshold is two-thirds of membership interests. For single-member LLCs, you do not need a formal vote, but you should still put the decision in writing and date it.

   • Draft a written resolution recording the vote, the date, and the signatures of all consenting members
   • Keep meeting minutes or a signed consent form in your LLC records
   • Store these documents for at least 4 years in case of audit

   This resolution is a prerequisite for your state filing. Some states (including California) will reject your dissolution form without it.

   $0Same day to 1 week Internal LLC records (no state filing required for this step)

   Common Mistakes

   • Skipping the written resolution and later having no proof of member consent
   • Not checking the operating agreement for a specific voting threshold before proceeding
   • Failing to notify all members of the dissolution vote, which can trigger legal disputes
2. 2

   Settle Debts and Notify Creditors

   Once the vote passes, your LLC enters a "winding up" period. During this time, you can only conduct business activities related to shutting down. Your first priority is notifying every known creditor in writing. Most states give creditors 90 to 120 days to submit claims against the LLC.

   Send a written notice to each creditor that includes your LLC's name, the dissolution date, a mailing address for claims, and a deadline for submitting them. Pay all valid debts with LLC assets before distributing anything to members. If you pay members before creditors, courts can reverse those distributions and hold members personally liable.

   • In Delaware, creditors must be paid before any distributions to members per Section 18-804 of the Delaware LLC Act
   • Keep copies of every creditor notification and proof of payment
   • If debts exceed assets, consult a business attorney before proceeding
   $0 (plus whatever you owe creditors)90 to 120 days for creditor claim period Direct written notice to each creditor (no state filing)

   Common Mistakes

   • Distributing assets to LLC members before paying all creditor claims
   • Failing to send written notice to all known creditors, which leaves you open to future lawsuits
   • Not setting a clear deadline for creditor claims in the notification letter
3. 3

   Obtain Tax Clearance (If Your State Requires It)

   Some states will not accept your dissolution filing until you prove all taxes are paid. Texas is the most notable example. You must obtain a Certificate of Account Status from the Texas Comptroller using Form 05-359 before filing your Certificate of Termination. Processing can take over one month, so start early.

   Other states that require some form of tax clearance before dissolution include Illinois, Kansas, and Minnesota. New York does not require tax clearance for LLCs (only for corporations). California does not require a separate tax clearance certificate, but your dissolution form includes a statement that all final tax returns have been (or will be) filed with the Franchise Tax Board.

   • Texas: File Form 05-359 by mail to the Comptroller of Public Accounts, P.O. Box 149348, Austin, TX 78714-9348
   • California: No separate clearance needed, but you must certify tax compliance on the cancellation form
   • Florida, New York, Delaware: No formal tax clearance required for LLCs
   $0 (no fee for tax clearance certificates)1 to 6 weeks depending on state State Comptroller or Department of Revenue (varies by state)

   Common Mistakes

   • Trying to file dissolution in Texas without the Comptroller's Certificate of Account Status attached
   • Assuming all states require tax clearance when many (including New York and Florida) do not for LLCs
4. 4

   File Articles of Dissolution with Your State

   This is the core filing that formally ends your LLC's existence. The form name varies by state, so pay attention to exactly what your Secretary of State calls it. Filing fees range from $0 to $220 across all 50 states.

   Here is what you need in the five highest-traffic states:

   • California: File Certificate of Cancellation (Form LLC-4/7) with the Secretary of State. If the vote was not unanimous, also file Certificate of Dissolution (Form LLC-3). No filing fee. Processing takes 3 to 4 weeks by mail; hand-delivery in Sacramento costs $15. Download forms here.
   • Texas: File Certificate of Termination with the Secretary of State. Filing fee is $40. Attach the Comptroller's tax clearance certificate. File online via SOSDirect.
   • Florida: File Articles of Dissolution with the Division of Corporations. Filing fee is $25. File online at Sunbiz.org.
   • New York: File Articles of Dissolution with the Department of State within 90 days of the dissolution vote. Filing fee is $60. Expedited processing is available for an additional $25 to $150. File here.
   • Delaware: File Certificate of Cancellation with the Division of Corporations. Filing fee is $220. You must also pay all outstanding franchise tax ($300/year) before filing. The franchise tax is not prorated, so dissolving on January 2 means you owe the full year.
   $0–$220 (state filing fee)1 to 4 weeks for processing Secretary of State (or equivalent) in your state of formation

   Common Mistakes

   • Filing the wrong form (California has three different dissolution/cancellation forms depending on your situation)
   • In Delaware, filing the Certificate of Cancellation without paying all outstanding franchise taxes first (it will be rejected)
   • In New York, missing the 90-day filing deadline after the dissolution vote
5. 5

   File Final Federal Tax Returns with the IRS

   The IRS does not care what your state calls the process. It only cares about how your LLC is classified for tax purposes. You must file a final federal tax return and check the "Final return" box, or the IRS will assume your LLC is still active and expect returns next year.

   Here is which form to file based on your LLC's tax classification:

   • Single-member LLC (disregarded entity): File your personal Schedule C with Form 1040. Check the "Final return" box on Schedule C.
   • Multi-member LLC (partnership): File a final Form 1065 and issue final K-1s to all members. Check both the "Final return" box on Form 1065 and the "Final K-1" box on each Schedule K-1.
   • LLC taxed as S Corp: File a final Form 1120-S and issue final K-1s. Check the "Final return" box.
   • LLC taxed as C Corp: File a final Form 1120 and file Form 966 (Corporate Dissolution or Liquidation) within 30 days of adopting the dissolution plan.

   If you had employees, you must also file final Form 941 (quarterly payroll taxes), Form 940 (FUTA), and issue final W-2s. The IRS Closing a Business checklist covers all of this.

   $0 (or CPA fees of $200–$1,000 if you hire help)File by the return due date for the year of dissolution IRS (irs.gov or mail to the IRS service center for your state)

   Common Mistakes

   • Forgetting to check the 'Final return' box, which keeps your LLC active in IRS systems and triggers penalty notices the following year
   • Not filing Form 966 within 30 days of the dissolution vote if the LLC was taxed as a C Corporation
   • Failing to issue final K-1s to all members of a multi-member LLC
6. 6

   File Final State Tax Returns

   Your federal return is only half the equation. Every state where your LLC operated or was registered also expects a final tax filing. Miss this, and your state tax authority will keep the LLC active in their records.

   Here is what to file in the top states:

   • California: File a final Form 568 (LLC Return of Income) with the Franchise Tax Board and check the "Final" box. If you do not file this, the FTB auto-generates a new $800 franchise tax bill the next year.
   • Texas: File a final franchise tax report (if your LLC met the revenue threshold of $2.47 million). Most small LLCs owe $0 in franchise tax.
   • New York: File a final Form IT-204-LL (Partnership, LLC, LLP annual filing fee). The fee ranges from $25 to $4,500 based on New York-source income.
   • Florida: No state income tax return for LLCs (Florida has no individual income tax).
   • Delaware: Pay the $300 annual franchise tax for the final year through the Division of Corporations. This must be cleared before your Certificate of Cancellation is accepted.

   Do not forget about sales tax. If your LLC collected sales tax, file a final sales tax return and close the account with your state's Department of Revenue.

   $0–$800+ (depending on outstanding state taxes owed)Due by the return deadline for your final tax year State Franchise Tax Board, Department of Revenue, or Comptroller (varies by state)

   Common Mistakes

   • In California, filing the SOS cancellation form without also filing a final Form 568 with the FTB (this triggers ongoing $800/year bills)
   • Forgetting to close state sales tax accounts, which generates ongoing filing requirements and penalties
7. 7

   Cancel Licenses, Permits, and Registrations

   After the state and IRS paperwork is filed, clean up the rest of your business footprint. Cancel every license, permit, and registration tied to your LLC. If you skip this step, some agencies will continue to invoice you for renewal fees.

   • Cancel your city and county business licenses
   • Cancel any state-level professional or occupational licenses
   • Cancel DBA (fictitious business name) registrations
   • If your LLC was registered as a foreign LLC in other states, file withdrawal or termination paperwork in each one. You will continue to owe annual fees and taxes in those states until you do.
   • Close your business bank accounts and any credit lines. You may need a copy of your filed dissolution paperwork to close the accounts.

   If you had an EIN (Employer Identification Number), write a letter to the IRS requesting that the EIN be deactivated. Include the LLC's legal name, EIN, mailing address, and a copy of your dissolution filing. The IRS will not cancel the EIN (it stays assigned to your LLC permanently), but they will deactivate the business account so no future filings are expected. Mail it to the IRS campus in Cincinnati, OH or Ogden, UT depending on your state.

   $0 in most cases (some states charge small admin fees)1 to 4 weeks Each licensing agency, state SOS for foreign LLC withdrawal, IRS for EIN closure

   Common Mistakes

   • Forgetting to withdraw from states where the LLC was registered as a foreign LLC (annual fees keep accruing)
   • Not keeping a copy of the dissolution confirmation before trying to close bank accounts (banks often require it)
8. 8

   Distribute Remaining Assets and Store Records

   After all debts are paid, taxes are filed, and creditor claims are resolved, distribute whatever is left to the LLC members. Follow the distribution rules in your operating agreement. If your operating agreement does not specify, distribute according to each member's ownership percentage.

   The order of priority matters (and courts enforce it):

   1. Pay all remaining creditors and known liabilities
   2. Return any outstanding member contributions (if your operating agreement specifies)
   3. Distribute remaining assets to members based on their ownership interests

   Finally, store all dissolution records securely. Keep your filed articles of dissolution, final tax returns, creditor notifications, member consent forms, and bank account closure confirmations for at least 4 years after the dissolution date. The IRS can audit returns for up to 3 years (6 years if there is a substantial understatement), and some states have longer retention requirements.

   Congratulations. Your LLC is officially dissolved. If you are starting a new venture, check out our best LLC formation services or our complete guide to business entity types to pick the right structure next time.

   $0Same day (after all prior steps are complete) Internal records (no state filing required for this step)

   Common Mistakes

   • Distributing assets before all creditor claims are resolved, which can trigger personal liability for members
   • Throwing away dissolution records too early (keep them at least 4 years for IRS audit protection)