What to Do if You Don't Need Your LLC Anymore

There are many reasons why a business owner may choose to no longer utilize their LLC. Most often it is because the business was unsuccessful at producing revenue or because the business owner retired or moved on from the business entirely.

One important step in closing your Delaware LLC is to officially cancel your LLC charter with the state of Delaware. It’s important to correctly close your LLC in order to avoid fines and penalties for an LLC you are no longer utilizing. Delaware imposes taxes on all active charters annually, with fees due by June for LLCs and March for corporations. However, these fees are assessed for every year the charter remains open, even if it's just for one day. If your Delaware LLC is operating on January 1st, you will owe franchise taxes for that year. 

Some business owners opt to essentially do nothing with their LLC and to intentionally not pay state franchise taxes in order to force the state to administratively cancel the LLC charter. This typically takes several years.

Allowing the state to administratively cancel your company charter after a period of non-compliance with tax payments and filings can lead to more significant problems, such as mounting penalties, fees, and potential personal liability for business-related judgments. Therefore, formally concluding your business obligations by filing a cancellation with the state is crucial. This process terminates your company's existence and ensures that you will no longer accrue taxes or penalties.

To file a cancellation yourself, you can obtain the LLC Certificate of Cancellation form from the Delaware Division of Corporations website and fill out the required filing memo. These forms, along with corresponding fees, should be faxed or mailed to the Delaware Division of Corporations. However, note that processing time may be longer as you won't have direct access to the Delaware Corporate Information System the way that a registered agent does. 

Alternatively, if you've closed your business and prefer assistance, a Delaware registered agent like The Incorporators Ltd. can help. Our team can provide the necessary documents and fees, submit your filing to the state, and ensure accurate and timely completion of your cancellation. Fill out our contact form and we'll be in touch shortly to collect the necessary details to begin closing your LLC.

Don't hesitate to reach out for assistance in legally canceling your LLC charter in Delaware and wrapping up your business affairs effectively. If you have any questions about an existing Delaware LLC, feel free to give us a call at (800) 233-3928.