How to close an LLC
Closing an LLC properly takes 7 steps. Skip any of them and the state keeps charging you annual fees — and creditors can sometimes reach members personally. Here's the right order, with state-specific notes for Texas, Florida, and California.
The 7-step dissolution process
- 1
Vote to dissolve.
Members vote to wind up the LLC under your operating agreement's dissolution clause (or your state's default rule — typically majority of membership interests). Document the resolution in writing.
- 2
Settle debts and obligations.
Pay all known creditors, terminate contracts, cancel subscriptions, and resolve any pending litigation. Distribute remaining assets to members in proportion to ownership.
- 3
Cancel registrations and licenses.
Cancel state and local business licenses, sales tax accounts, employer accounts (state and federal), and any DBA registrations. Close foreign-qualification filings in every state where the LLC was registered.
- 4
File Articles of Dissolution.
File the state's dissolution form (Articles of Dissolution, Certificate of Cancellation, or Certificate of Termination depending on state) with the Secretary of State. Fees range from $0 (e.g. some annual-report-states) to $200.
- 5
Get tax clearance (where required).
States like Texas, Colorado, and California require a tax clearance certificate from the state tax authority before they'll accept the final dissolution. Request it early — it can take 4–8 weeks.
- 6
File final federal and state tax returns.
Mark the final Form 1065 / 1120-S / Schedule C as the "final return". Close the EIN account by mailing a letter to the IRS. (Domestic US LLCs no longer file BOI reports after FinCEN's March 2025 rule, so there's no final BOI to submit.)
- 7
Close bank accounts and keep records.
Distribute remaining funds, close the business bank account, and keep dissolution paperwork, tax returns, and financial records for at least 7 years.
How long it takes
Most states process Articles of Dissolution in 1–4 weeks once filed. The long pole is tax clearance: states like Texas, Colorado, California, and Hawaii require a clearance certificate from the state tax authority before they'll accept the dissolution. Clearance typically takes 4–8 weeks. Plan for 6–10 weeks end-to-end in tax-clearance states; 2–4 weeks in the rest.
How much it costs
- State dissolution fee: $0–$200. Florida $25, Texas $40, Delaware $200, California $0.
- Tax clearance certificate: usually free, but takes weeks.
- Final tax return preparation: $200–$1,500 depending on entity complexity.
- Outstanding annual reports: required to be current before most states will accept dissolution.
State-specific notes
Texas
Get a Certificate of Account Status for Dissolution / Termination from the Texas Comptroller first, then file Form 651 Certificate of Termination with the Secretary of State and pay the $40 fee. Allow 6–10 weeks total.
Florida
File Articles of Dissolution through Sunbiz with a $25 fee. No tax clearance required. Your last annual report must be on file or Sunbiz will reject the dissolution.
California
File Form LLC-3 (Certificate of Dissolution) and Form LLC-4/7 (Certificate of Cancellation) with the Secretary of State. No state fee. File a final Form 568 with the Franchise Tax Board and pay any remaining $800 minimum franchise tax for the partial year.
Delaware
File a Certificate of Cancellation with the Division of Corporations ($200). Confirm all franchise taxes are paid current first — Delaware will not cancel an LLC with unpaid franchise tax.
What happens if you just stop using it
The state keeps invoicing annual reports and franchise taxes. After 1–3 years of non-compliance you'll be administratively dissolved, hit with late fees, and put on the state's delinquent list. Worse, if creditors emerge during the limbo period and the dissolution wasn't done properly, members can sometimes lose the liability shield. Always dissolve formally — the dissolution fee is much smaller than the cleanup cost.
After dissolution
- Keep dissolution paperwork, tax returns, and financial records for at least 7 years.
- The EIN is permanent — never reassigned, even after you close the account.
- If members later restart the same business, they should form a new LLC and get a new EIN.
Common mistakes
- Filing dissolution before settling debts
Most states reject the filing or void the dissolution if creditors weren't notified.
- Forgetting foreign qualifications
Out-of-state registrations keep billing long after the home LLC is gone.
- Skipping the final tax return
Without the 'final return' box checked, the IRS keeps expecting filings — and penalties stack.
- Letting the state administratively dissolve
Cheaper to dissolve formally for $25–$200 than to deal with late fees, reinstatement, and creditor exposure.