Closing a US LLC properly: the state filing, the final tax forms and the EIN

A company you simply walk away from doesn't stop. The state keeps charging, the IRS keeps expecting Form 5472, and penalties build up against a company nobody is watching. Closing one properly is a short list done in order, and at the end nothing is owed to anyone. Here's the list.

1. 1

   Decide, and record it

   The members agree to dissolve, in writing, as the operating agreement requires. For a single-member company, that's a one-line written consent. Keep it with the company's records.

2. 2

   Wind up the company's affairs

   Collect what's owed to the company, pay what it owes, end contracts and subscriptions, and distribute what's left to the members according to their shares. Record the final distribution, because it goes on the last Form 5472.

3. 3

   Bring the state up to date

   A state generally won't dissolve a company that owes it money, so file any missed report and pay any tax and penalties first.

4. 4

   File the dissolution

   In Wyoming, you file articles of dissolution with the Secretary of State for $60. In Delaware, an LLC files a certificate of cancellation with the Division of Corporations for $220, once the yearly tax is paid. Time it well: Delaware doesn't prorate, so a company still on its records on 1 January owes that year's $400 too, and a Wyoming company dissolved before its anniversary month skips the next report. When the state records it, the company ends under state law.

5. 5

   File the final federal forms

   A final Form 5472 with a pro forma Form 1120 for the last year, marked as final and reporting the closing distributions. A multi-member LLC files a final Form 1065 instead. Any Form 1099-NEC for that year is still due the following 31 January.

6. 6

   Close the accounts

   Close the bank account once the final distributions have cleared, then Stripe, PayPal and every other platform, and any sales tax registration, with a final return.

7. 7

   Ask the IRS to close the business account

   The responsible party writes to the IRS with the company's legal name, EIN and address and the reason for closing, with a copy of the EIN confirmation letter if you have it. The IRS never reuses or cancels an EIN, but it stops expecting returns under it.

The records, which you should keep for several years; the company's history, which the state's register shows as dissolved; and responsibility for anything the company did while it existed, which dissolution doesn't erase. The name may become available to others after a while.

If you only want to stop paying a provider, you don't need to close the company; moving to another registered agent does that. If you've stopped the business for good, close the company. Otherwise a Delaware LLC keeps owing $400 a year, a Wyoming company is eventually dissolved by the state anyway, and the Form 5472 obligation runs the whole time. For a company we formed, we prepare and file the dissolution and the final federal forms for no fee of ours, whenever you decide, and pass the state's charge on at cost.