Short answer: an LLC is closed in four moves, in this order: wind up (collect what is owed, pay debts, empty Stripe and the bank account), file the dissolution with the state, file the final information return with the IRS marked as final, and close the EIN’s business account by letter. The state fee is $25 to $200 depending on the state; the real cost is the final 5472. What closing is not is stopping the registered agent payments: that is abandonment, and abandonment keeps generating federal obligations for years.
This is part of how to form a US LLC as a non-resident and complements what happens when an LLC is not maintained.
Before closing: the three alternatives
Closing is the right decision more often than people think, but not always. Before dissolving, rule out three alternatives:
Keep it dormant. A Wyoming LLC with no activity costs around $185 a year (registered agent plus annual report) and a 5472 with zeros in it. If there is a real chance you will use it again within a year or two, keeping it is cheaper than closing and re-forming, and it preserves the entity’s age, which banks like. What you cannot do is keep it dormant without filing the 5472: that is the combination that produces the $25,000 penalties.
Transfer it or move it. An LLC can be sold or assigned (under the transfer clause of the operating agreement), and in many states it can be domesticated to another state without dissolving. If the problem is Delaware and its franchise tax, the answer may be moving it to Wyoming, not closing it.
Rescue it. If the LLC “does not work” because the bank rejected it, the provider disappeared or the file was badly built, closing it and opening another fixes nothing: the next bank will see the same file. That is what we review under switch your LLC.
If none of the three applies, close it properly. Read on.
The right order, step by step
1. Pick the date and put it in writing
In a single-member LLC the decision to dissolve is yours, but it should be documented: a member’s resolution with the date, signed. The operating agreement usually sets how the decision is taken and in what order the company is wound up; follow it. That date matters to the IRS and to the state.
A calendar tip: if you can choose, close before the next annual report falls due or, in Delaware, before next year’s franchise tax accrues. Closing in January instead of December can cost you a whole year of fees.
2. Wind up: collect, pay and empty
- Issue the last invoices and collect what is outstanding.
- Pay suppliers, contractors and the registered agent whatever is owed. If there are debts you cannot pay, dissolution does not make them disappear, and it is worth getting advice before going further.
- Cancel subscriptions in the LLC’s name: software, virtual office, the domain if you are not keeping it.
- Stripe and other gateways: stop accepting payments, wait for the last charges to settle, and close the account. Stripe holds the balance for a period to cover possible chargebacks; factor that in before closing the bank. Details in Stripe for non-residents.
- Transfer the remaining bank balance to your personal account as a final distribution to the member. Leave the account open with a small balance until everything else is done: the last refund to a customer or the last bank fee needs an account to come out of.
3. Dissolve with the state
Each state has its own form and fee. The three jurisdictions most non-residents use:
| State | Document | Fee | Precondition |
|---|---|---|---|
| Wyoming | Articles of Dissolution | $60 | Annual report up to date |
| New Mexico | Articles of Dissolution | $25 | None specific |
| Delaware | Certificate of Cancellation | $200 | Franchise tax paid through the year of cancellation |
The state takes from a few days to a few weeks to record the dissolution and returns a certificate. Keep it: it is what the bank and, if needed, the IRS will ask for as proof that the entity no longer exists.
Until that document is recorded, the LLC still exists for the state, and annual reports keep falling due.
4. File the final return with the IRS
The year the LLC dissolves is reported like any other: Form 5472 with the pro-forma 1120, by 15 April of the following year, with the final return box ticked. It reports the final distribution to the member (the money you took out on closing), which is a reportable transaction.
If earlier years were never filed, file them now. Dissolution erases neither the obligation nor the penalty; what can help, if you have never been penalised, is attaching a reasonable-cause statement to the late returns, which a CPA knows how to draft. The form is covered in Form 5472 for non-resident LLCs.
If the LLC was ETBUS and you filed a 1040-NR, that year is the final one too. And if you held a sales tax permit in any state, it has to be cancelled with a final return.
5. Close the EIN’s business account
The EIN is not cancelled: it stays attached to that LLC forever. What you do is write to the IRS asking it to close the company’s business account, with the legal name, the EIN, the address and the reason, attaching a copy of the CP 575 letter if you have it. Do it after filing the final return, not before.
6. Close the bank account and cancel the agent
With the dissolution recorded and the final return filed, close the bank account (Mercury and Relay do it from the app, after the balance has been distributed) and cancel the registered agent. Cancelling the agent too early is a common mistake: without an agent the state cannot serve notice on you, and a voluntary dissolution gets complicated.
7. Keep the papers
Articles of Organization, operating agreement, CP 575 letter, every return filed, the dissolution certificate and the bank statements: seven years. The IRS can ask about past years even after the entity is gone, and so can your home tax authority.
What happens if you walk away instead
It is the route many people take, and the most expensive one.
- You stop paying the registered agent. The agent resigns and notifies the state. The LLC is left with nobody to receive notices.
- You skip the annual report. Wyoming, for instance, dissolves administratively 60 days after the deadline with no agent in place. The entity shows as “inactive” or “administratively dissolved” on the public register, visible to anyone who searches your name.
- The IRS hears about none of it. For the IRS the LLC exists as long as it has an EIN and no final return has been received. Every 15 April without a 5472 is, potentially, another $25,000 penalty. We meet clients with three unfiled years on an LLC they believed was “closed” because they stopped paying the agent.
- The bank account drifts into limbo. At its next review the bank sees the entity dissolved on the register and freezes or closes the account, with the balance held until someone with authority claims it, and there is no longer an entity with authority.
- Your name stays attached. The next time you want to open an LLC or a bank account, the verification provider can see the earlier one in bad standing. It is not a blacklist, but it is one more question to answer.
Administrative dissolution can be reversed in most states within a window (Wyoming, two years; Delaware, through a Certificate of Revival) by paying what is owed. If you do not want to reverse it, complete steps 4 to 7 anyway: administrative dissolution closes the entity with the state, not with the IRS.
What closing properly costs
- State fee: $25 to $200, per the table above.
- Final information return (5472 + 1120): from around $300 if a CPA prepares it, more if there are unfiled years.
- Letter to the IRS and account closures: no cost.
- Time: three weeks to three months, depending on the state’s processing and on how long Stripe takes to release the balance.
Against a $25,000 penalty for one forgotten year, it is the best cost-to-risk trade you will ever make with the LLC.
If you are not sure whether to close
Before dissolving a structure that cost money and time, it is worth a second opinion on whether the problem is the LLC or the file it was built with. The free assessment tells you whether an LLC fits your current situation; if you already know it does not, switch your LLC explains when we tell you to close it and what we put on the table (cost, timing, what happens to the banking relationship) before you decide.
Frequently asked questions
Can I close my LLC by just not paying the registered agent and the annual report?
You can, but that does not close it: it abandons it. The state will eventually dissolve it administratively, but in the meantime the federal obligations keep running (Form 5472, with its $25,000 penalty per year), the bank account drifts into limbo, and your name stays attached to an entity in bad standing. A formal dissolution costs between $25 and $200 depending on the state and avoids all of that.
How much does it cost to dissolve an LLC?
The state fee is low: $60 in Wyoming (Articles of Dissolution), $25 in New Mexico and $200 in Delaware (Certificate of Cancellation), which also requires the franchise tax to be paid up to the year of cancellation. On top of that comes the final information return to the IRS, which is the real cost if a CPA prepares it.
Do I still file Form 5472 for the year I close?
Yes. The year the LLC dissolves is filed like any other: Form 5472 with the pro-forma 1120, with the final return box ticked, by 15 April of the following year. If earlier years were never filed, they have to be filed too: dissolution erases neither the obligation nor the penalty.
What happens to the EIN when I close the LLC?
The EIN is never cancelled or reused: it stays attached to that entity permanently. What you do is write to the IRS to close the company's business account, giving the name, EIN, address and reason, once every return has been filed.
When is it better to keep the LLC dormant than to close it?
When there is a real chance you will use it again within a year or two. Keeping a Wyoming LLC costs around $185 a year for the agent and the annual report, plus the 5472 for each year. Closing and forming a new one costs more than that, and you lose the entity's age, which banks value. If the chance is low, close it: a dormant LLC with no 5472 is the most expensive and most avoidable penalty there is.
My LLC has already been administratively dissolved by the state. What now?
Decide whether you want it. If you do, most states allow reinstatement within a window (two years in Wyoming) by filing the missed reports and paying a fee. If you do not, you should still file any outstanding 5472s and the final one, close the bank account and write to the IRS: administrative dissolution closes the entity with the state, not with the IRS.