How to File the Final Franchise Tax Return for a Dissolved Delaware LLC

Introduction

When a Delaware LLC ceases operations, it must formally dissolve with the Delaware Division of Corporations and file its final franchise tax return to avoid ongoing fees and penalties.
Many business owners mistakenly believe that stopping business activity automatically ends state obligations it does not.
In 2025, filing the final Delaware Franchise Tax Return is an essential compliance step to close your LLC properly and prevent future liabilities.

Step 1: Understanding Delaware Franchise Tax Obligations

Delaware imposes an annual franchise tax on every active LLC, regardless of income or activity.

• Flat Annual Tax: $300 per year (Del. Code, Title 6, §18-1107).
• Due Date: June 1 of each year.
• Filing Portal: Delaware Division of Corporations Online System.

Important:
Even if your LLC never conducted business or earned income, you must pay franchise tax for each year until it is officially dissolved with the state.

Step 2: Prerequisite: File the Certificate of Cancellation

Before submitting your final franchise tax, you must first dissolve your LLC legally by filing a Certificate of Cancellation.

Where to File:
Delaware Division of Corporations
401 Federal Street, Suite 4
Dover, DE 19901

Filing Fee: $200 (as of 2025).

What You’ll Need:

• LLC name and file number.
• Effective date of cancellation.
• Signature of the authorized member or manager.

Once accepted, Delaware will mark your entity as “Cancelled,” stopping future tax accruals.

Step 3: Filing the Final Franchise Tax Return

After the Certificate of Cancellation is filed, you must still settle the final franchise tax for the year of dissolution.

Steps to File:

1. Go to the Delaware Division of Corporations Franchise Tax Filing Portal.
2. Enter your LLC file number and business name.
3. Select the “Final Return” option.
4. Report tax due for the portion of the year your LLC was active.
5. Pay the $300 tax for the final year (Delaware does not prorate).

Example:
If your LLC dissolved on March 15, 2025, you must still pay the full $300 franchise tax for 2025 before final closure.

Step 4: Federal Filing: Final Return with the IRS

If your Delaware LLC had income or transactions, you must also file a final federal return:

• Single-Member LLC: File Schedule C with your final Form 1040.
• Multi-Member LLC: File Form 1065 and check the “Final Return” box.
• LLC Electing Corporation: File Form 1120 and indicate “Final Return.”

Attach a statement of dissolution including the date business ceased operations.

Step 5: Settle Any Outstanding Debts and State Accounts

Before finalizing dissolution:

1. Cancel your Delaware business license with the Division of Revenue.
2. Pay all outstanding franchise tax or penalties.
3. Close any open bank accounts or registered agent agreements.

If you owe back franchise taxes, the Division of Corporations will not issue a certificate confirming your LLC’s cancellation until the balance is paid in full.

Step 6: Late Filing Penalties

If you fail to file or pay your final franchise tax on time, Delaware imposes:

• $200 penalty (minimum).
• 1.5% monthly interest on the unpaid balance.

Continued noncompliance can lead to:

• Referral to collections.
• Bar from reinstating under the same name.
• Legal action for unpaid state obligations.

Step 7: Keep Proof of Cancellation

Once your final return is accepted and taxes are cleared, you’ll receive:

• Certificate of Cancellation (stamped copy).
• Final Tax Payment Receipt from the Delaware Franchise Tax Division.

Keep both documents for at least seven years in case of IRS or state audit requests.

Conclusion

Filing your final franchise tax return completes the legal and tax closure of a Delaware LLC.
Even though Delaware’s process is straightforward, missing a filing can lead to unnecessary penalties.
Ensuring that both the Certificate of Cancellation and final franchise tax return are filed on time guarantees a clean exit and full compliance with Delaware and IRS regulations.

Call to Action

For assistance with Delaware LLC dissolution, final franchise tax filings, or IRS compliance, contact Anshul Goyal, CPA EA FCA, a U.S.-licensed Certified Public Accountant, Enrolled Agent authorized to practice before the IRS, and cross-border tax expert helping Delaware LLC owners wind down businesses efficiently and legally.

Disclaimer

This article is for informational purposes only and should not be treated as legal or tax advice. Always consult a CPA before filing your final Delaware franchise tax return.

Top 5 FAQs

1. Do I need to pay franchise tax if my Delaware LLC never operated?
   Yes. The $300 tax applies annually until you file a Certificate of Cancellation.
2. Can I prorate the final year’s tax?
   No. Delaware requires full payment for the year, even if dissolved early.
3. What happens if I don’t file the final tax return?
   Penalties and interest accrue, and your LLC remains in delinquent status.
4. How do I know my LLC is fully dissolved?
   You’ll receive an official stamped Certificate of Cancellation from the Delaware Division of Corporations.
5. Can I reinstate a dissolved Delaware LLC later?
   Yes, but only after paying all past-due taxes, penalties, and reinstatement fees.

About Our CPA

Anshul Goyal, CPA EA FCA is a Certified Public Accountant licensed in the United States, Enrolled Agent admitted to practice before the IRS, and cross-border tax expert assisting clients with Delaware LLC dissolutions, franchise filings, and IRS compliance across the U.S.