How to Properly Close (Dissolve) a US LLC
The idea that you can simply stop paying and let a US company fade away is one of the most expensive assumptions a non-resident founder makes. An LLC doesn't quietly disappear — it keeps generating bills and filing obligations until you formally close it, and the penalties for ignoring that can outlast the business by years. Here is how to dissolve a US LLC the right way, in the right order, so it ends clean.
Why "just walking away" is the expensive option
An inactive LLC is not a free LLC. Three separate meters keep running whether or not the company earns a dollar. Your registered agent keeps billing for the annual service you're legally required to maintain. The state keeps expecting its annual report or franchise tax, and adds late penalties when it doesn't arrive — Florida, for example, charges a $400 late penalty on top of its annual report fee. And at the federal level, a foreign-owned single-member LLC owes a Form 5472 filing every year the EIN is active, carrying a $25,000 penalty for a return that's late or missed even when the company did nothing.
Eventually the state will administratively dissolve a company that stops filing — but that is not a clean exit. It leaves unpaid fees and penalties attached to your name and to the entity, an open federal filing history, and, in some states, a lingering ability for creditors to act. Reinstating later, if you ever need to, means paying all of it off first. Dissolving on purpose is almost always cheaper than being dissolved by default, and it's the only version that actually ends your obligations.
The order of operations
Sequence matters here, because doing steps out of order can leave you unable to finish. This is the clean path:
- 1. Wind the business down. Settle outstanding debts, collect what's owed to you, and distribute any remaining assets to the owners. Keep the bank account open for now — you'll need it to pay final costs and receive any last funds.
- 2. File your final federal returns. For a foreign-owned single-member LLC, that means a final Form 5472 attached to a pro-forma Form 1120 for the short final year, marked as a final return. If the LLC elected to be taxed as a corporation, its final 1120 is a full return instead. This filing is due the following year on the normal schedule.
- 3. File the state dissolution. Submit Articles of Dissolution or a Certificate of Cancellation to the state where the LLC was formed (fees below). Some states won't accept it until you're current on franchise tax or reports.
- 4. Close the EIN account with the IRS. Send the IRS a letter to close the business account tied to your EIN, after the final returns are filed.
- 5. Cancel the registered agent and mailbox last. Only after everything above is filed and any final mail has arrived should you end the registered-agent service and any virtual mailbox — otherwise you can miss a state or IRS notice that matters.
State dissolution filings and fees
The formal step in each state is a short filing — Articles of Dissolution in most states, a Certificate of Cancellation in Delaware. The fees are modest and are the smallest part of the total cost; the real expense of a late close is the accumulated reports, franchise tax, and penalties you have to clear first. Here are the four states non-residents form in most often, as of 2026:
| State | Dissolution filing | State fee | Clear first |
|---|---|---|---|
| Wyoming | Articles of Dissolution | ~$60 | Current annual report |
| New Mexico | Articles of Dissolution | ~$25 | No annual report to clear |
| Florida | Articles of Dissolution | $25 | Any overdue annual report |
| Delaware | Certificate of Cancellation | ~$220 | $300/yr franchise tax paid in full |
Delaware is the outlier in both directions: the highest filing fee and the strictest precondition, since the state won't cancel the LLC until the $300 annual franchise tax is fully paid. New Mexico is the gentlest — no annual report to bring current and a small fee — which is one reason it's a popular home state. For the recurring costs that build up while a company sits open, our guide to annual LLC costs by state shows what you're really on the hook for, and Delaware vs Wyoming vs New Mexico compares them side by side.
Closing the EIN account
People often ask how to "cancel" an EIN. You can't — the IRS never reuses a number or truly deletes it — but you can and should close the business account attached to it once your final returns are in. The mechanism is a letter to the IRS stating the company's full legal name, the EIN, the business address, and the reason you're closing the account, ideally with a copy of the original EIN assignment notice (the CP 575). It goes to the IRS in Cincinnati, Ohio. This signals that the entity has wound down and stops the account expecting future filings. Do it after the final Form 5472 is filed, not before, so the last year is still on record.
A realistic timeline
Closing a company cleanly spans more than a single afternoon, mostly because of the tax calendar. The state dissolution filing itself is quick — often processed within a couple of weeks. But the final Form 5472 for your last active year isn't due until the following year's filing season, which means a company you decide to close in one year still has a filing to complete in the next before it's truly finished. The practical shape is: wind down and file the state dissolution now, keep the registered agent and a mailing address in place through the final filing, submit the final federal return when it's due, close the EIN account, and only then let the last services lapse. Plan for the process to straddle two tax years, and you won't be surprised by a stray obligation after you thought you were done. If a missed prior-year filing is part of why you're closing, our guide to the $25,000 Form 5472 penalty and our penalty-response service explain how reasonable-cause relief works.
Frequently asked questions
What happens if I just stop paying and walk away?
The company keeps generating obligations. The registered agent keeps billing, the state keeps adding report fees and penalties, and the federal Form 5472 duty continues while the EIN is active. The state eventually dissolves the company administratively, but that leaves unpaid fees and an open filing history rather than a clean close.
Do I still have to file a final tax return?
Yes. A foreign-owned single-member LLC files a final Form 5472 with a pro-forma Form 1120 for its last short year, marked final. It's due the following year, so closing in one year still leaves a filing for the next. Skipping it exposes you to the $25,000 penalty even though the company is gone.
How much does it cost to dissolve an LLC by state?
The filing fee is small and varies — roughly $60 in Wyoming, $25 in New Mexico, $25 in Florida, and about $220 in Delaware, where you must also be current on the $300 franchise tax first. The larger cost of a late close is the accumulated fees and penalties, not the filing.
Can I cancel my EIN with the IRS?
An EIN is never reassigned or truly cancelled, but you can close the business account. Send the IRS a letter with the legal name, EIN, address, and reason — ideally with the original EIN assignment notice — to the IRS in Cincinnati, Ohio, after your final returns are filed.
How we help
We close US companies the same way we open them — in the right order, with nothing left hanging. That means preparing and filing the final Form 5472 and pro-forma 1120, handling the state dissolution, drafting the EIN account-closure letter, and telling you exactly when it's safe to end the registered agent and mailbox so no notice slips through. If you have an LLC you no longer need — or one you stopped using and want to shut down cleanly before penalties pile up — talk to us and we'll map the exact steps for your state. You can also run a quick compliance check to see where the company stands first.