When your Delaware LLC needs to be wound down and dissolved, you are essentially putting an end to its life.After all your LLC is considered a separate legal person, usually with its own identification number (EIN).So, it is important to make sure that when it is time that the LLC is properly dissolved.
If you have decided to formally dissolve your LLC (Cancellation in Delaware), there are several steps you must take to make sure you follow Delaware’s rules for cancelling an LLC.
Below is a detailed explanation of how you do this.
Two Types of Dissolution
First you must decide if you wish to abandon your LLC or formally dissolve it
ØAbandon - If an LLC was formed, but no business whatsoever has been conducted, those with authority (i.e. Members or Managers) can simply abandon the LLC. This process allows Delaware Secretary of State to put the LLC into "Cancel Void" status for not keeping up with its filings. This will take more than three (3) years before it occurs, and until then, the LLC can be reinstated by just paying the overdue fees an penalties.
Remember that the LLC (not the parties who formed it) is still liable for any fees and filings until it is dissolved. Once the LLC is in Cancel Void status, the LLC will essentially cease to exist, although it is still possible to reinstate with revival by paying an additional $200 fee, along with overdue franchise taxes. NOTE: If you have conducted any business activity, you should follow the formal process of Voluntary Dissolution.
ØVoluntary Dissolution - – This is the formal process of bringing the LLC's existence to an end voluntarily, and along with it any future obligations by the LLC. It requires three steps to complete this process: elect dissolution internally, file dissolution & notify.
Step I – Elect Dissolution Internally
1.Reason Why – Once you’ve decided on voluntary dissolution, because your LLC is a separate person, you need to follow the same formalities for dissolving your LLC as you have done during the whole life of your LLC.
2.Formally Decide - With most LLC's making a decision is up to the member or managers of the LLC to come to an agreement and sign to it in writing. This is most important with a dissolution. So, unlike a corporation, which must do this formally by having the directors & shareholders meet, a Delaware LLC requires no formal meeting, but only the agreement of the members (or managers if the LLC is managed by managers).
Step II – File with Secretary of State
Secretary of State does not have an electronic process for filing dissolution, so you will have do this by filing physical Certificate of Cancellation with the Delaware Division of Corporations at the Secretary of State. You'll pay the cancellation fee of $250, plus any taxes due for the previous year (due 6/1 of this year) and for this year (due next year on 6/1).
Step III – Notify the World
Don’t forget to tell other governmental agencies, vendors, and customers that your LLC has formally wrapped up its operations. Here is a partial list of those you need to notify:
ØIRS – You usually do this through your filing a final tax return
ØDept. of Revenue – This only applies if your LLC actually operated in Delaware (had an office, retail center, etc.), then you should notify this agency.
ØRegistered Agent - You must let your registered agent know that your entity, which they are responsible for, as been formally dissolved.
ØBank - You should have already closed down the bank account(s), but if you have not, be sure to formally notify the bank to close your accounts.
ØVendors - All vendors that have accounts, should be notified
ØCustomers - This goes without saying, that any ongoing customers should receive some sort of notification.
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