Q: As a foreign individual with an LLC registered in Delaware, I previously operated an online store that required an EIN. However, I have since closed the store and I did not earn any income from it. How can I dissolve my LLC without incurring any fees?
A: If you have an LLC registered in Delaware but you no longer need the LLC, you can dissolve it by filing a Certificate of Dissolution with the Delaware Division of Corporations. However, there may be fees associated with dissolving the LLC.
Here are the general steps for dissolving an LLC in Delaware:
1. File and pay any outstanding and final franchise fees:
Before you dissolve your LLC, you should file any final franchise tax returns and pay any outstanding franchise tax owed to the state of Delaware.
2. Hold a meeting of members:
As the owner of the LLC, you should hold a meeting of members to vote on the decision to dissolve the LLC. The meeting should be documented with meeting minutes.
In Delaware, LLCs are governed by the Delaware Limited Liability Company Act (LLC Act), which does not specifically require holding a meeting of members to dissolve an LLC.
Under the LLC Act, an LLC may be dissolved upon the happening of certain events, including the passage of a resolution by the LLC members. The resolution should be properly documented in the LLC’s records, but it does not necessarily have to be done through a formal meeting.
Therefore, it is possible to dissolve your LLC in Delaware by passing a resolution rather than holding a meeting of members.
3. File Certificate of Cancellation:
After the passage of a resolution by the LLC members to dissolve the LLC, you must file a Certificate of Cancellation with the Delaware Division of Corporations.
The current fee (as of the time of this article) to file the Certificate of Cancellation with the Delaware Division of Corporations is $204.00. It’s important to ensure that the fee is paid in full and the form is properly completed and submitted in order to dissolve the LLC in accordance with Delaware state laws.
4. In addition to filing any final franchise tax returns and paying any outstanding franchise tax owed to the state of Delaware, it’s also important to file any final federal tax returns or information returns. Here are some additional details:
The LLC may need to file different types of final federal tax returns and information returns depending on its tax classification and ownership structure. Here’s a summary of some of the forms that may be required:
- Proforma 1120 and 5472: If the LLC is a foreign-owned single-member LLC, it may need to file a proforma 1120 and Form 5472 with the IRS.
- Form 1065: If the LLC is treated as a partnership for federal tax purposes, it will need to file a final Form 1065 with the IRS. This form should cover the period from the beginning of the tax year to the date of dissolution.
- Form 1120: If the LLC has elected to be treated as a C corporation for federal tax purposes, it will need to file a final Form 1120 with the IRS. This form should cover the period from the beginning of the tax year to the date of dissolution.
5. Close EIN Account:
If an LLC has an EIN, it must be closed as part of the dissolution process by sending a letter to the IRS that includes the legal name of the LLC, EIN, business address, reason for closing the account, and the date the LLC ceased business operations, and by ensuring that all federal tax obligations associated with the EIN have been fulfilled before closing the account.
The letter requesting to close an EIN for a dissolved LLC should be sent to the IRS at the following address:
Internal Revenue Service
Kansas City, MO 64108
Internal Revenue Service
Ogden, UT 84201
This information can be found on the IRS website under “How to Close Your Business” https://www.irs.gov/businesses/small-businesses-self-employed/how-to-close-your-business, which provides additional guidance on the steps involved in closing a business and associated tax obligations.
6. Notify creditors and close accounts:
After you have filed the Certificate of Dissolution, you should notify any creditors and close any accounts associated with the LLC.
As a Certified Public Accountant (CPA), I understand that this process can be complex and may require professional guidance. If you have any questions or concerns about tax consequences as it relates to dissolving your LLC or need assistance with any other accounting-related issues, please feel free to reach out to me. I am here to help and provide personalized solutions to fit your unique needs. Contact me today to schedule a consultation and let’s work together to achieve your financial goals.