Shutting down a Delaware LLC the right way protects you from future lawsuits, surprise tax bills, and lingering Franchise Tax assessments. Whether you’re winding down a side-project or pivoting to a C-Corp, this 2025 guide walks you through the exact steps—and the federal tax forms—that complete a clean exit.
Relevant IRC Codes & Definitions
| Code / Reg | Why It Matters When You Dissolve |
|---|---|
| IRC §708 | A partnership (multi-member LLC) terminates when no business remains—triggers a final Form 1065. |
| IRC §6012 | Requires final returns for single-member LLCs electing corporate status (Form 1120 “Final”). |
| IRC §331 | Governs liquidating distributions from an LLC taxed as a corporation. |
| IRC §165 | Allows ordinary or capital loss deductions for abandoned business assets. |
| Delaware 6 Del. C. §18-203 | Requires a Certificate of Cancellation to dissolve a Delaware LLC. |
IRS & State Form References
| Purpose | Form(s) Needed |
|---|---|
| File Final Federal Return | Schedule C (SMLLC) or Form 1065 / 1120 marked “Final Return.” |
| Report Asset Sales | Form 4797 or Schedule D if gain/loss on liquidation. |
| Apply for EIN Closure | Letter to IRS once final return accepted (optional but recommended). |
| Delaware Dissolution | Certificate of Cancellation + $200 filing fee (standard). |
| BOI Final Update | File within 30 days of cancellation with FinCEN. |
| Delaware Franchise Tax | Pay any unpaid $300 annual tax before filing cancellation. |
Real-World Example
Case Study: CodeLaunch LLC (single-member, no employees) shuts down in April 2025.
- Paid 2024 $300 fee; 2025 fee not yet assessed.
- Sold remaining laptop for $1,000 gain.
Steps Taken
- Filed Final Schedule C with $1,000 gain; deducted close-out expenses under IRC §162.
- Submitted Certificate of Cancellation online; paid $200.
- Filed BOI update noting entity ceased to exist.
Outcome: Owner avoided 2026 tax notices and maintained clean personal credit.
Step-by-Step Dissolution Checklist (2025)
- Vote / Member Resolution to dissolve.
- Settle debts & distribute assets—record fair-market values.
- Close bank & merchant accounts; download statements.
- File final federal tax return (1065/1120/Schedule C) and mark “Final.”
- Pay any Delaware $300 fee still outstanding.
- Prepare & file Certificate of Cancellation with the Delaware Secretary of State.
- Submit BOI final report to FinCEN within 30 days.
- Retain records for 7 years in case of IRS or state audit.
Conclusion
Dissolving a Delaware LLC isn’t just a single form—it’s a sequence of tax, legal, and reporting steps. Complete each in order, and your old entity won’t resurface with penalties when you least expect it.
Call to Action
Need a turnkey LLC shutdown—state filing, final returns, and BOI update handled for you?
👉 Schedule a dissolution call with Anshul Goyal, CPA, and close your Delaware LLC stress-free.
Disclaimer
This article is provided for informational purposes only and does not constitute legal, tax, or financial advice. Tax outcomes vary based on asset values, debt settlements, and prior elections (S-Corp, C-Corp, partnership). Delaware fees and IRS regulations may change. Consult qualified professionals before filing dissolution documents or final tax returns.
Anshul Goyal, CPA EA FCA is licensed in the United States, admitted to practice before the IRS as an Enrolled Agent, and a Chartered Accountant in India. He assists founders with Delaware entity lifecycle management, IRS resolution, and cross-border tax strategy.
FAQs (Top 5 High-Searched)
1. Do I have to pay the $300 fee in my final year?
Yes—any unpaid Franchise Tax must be cleared before cancellation.
2. How long does Delaware take to process a cancellation?
Typically 3–5 business days; same-day with expedited fee.
3. Will I get a tax refund on overpaid Franchise Tax?
No—Delaware does not refund prorated fees.
4. Do I need a new EIN if I start another LLC?
Yes—each entity must have its own EIN.
5. What if I forgot to file BOI?
File immediately; penalties run $500 per day until corrected.
About Our CPA
Anshul Goyal, CPA EA FCA has helped 2,000+ founders dissolve or convert entities, eliminating more than $5 million in avoidable penalties and future tax notices.