How to Dissolve an LLC in Illinois: Steps (2026)
You dissolve an Illinois LLC by approving dissolution, winding up the business (paying creditors and distributing assets), settling all final taxes, and filing a Statement of Termination (Form LLC-35.15) with the Illinois Secretary of State under Article 35 of the LLC Act (805 ILCS 180). The LLC continues after dissolution only to wind up its affairs.
Quick Answer
- Final form
- Form LLC-35.15, Statement of Termination
- Agency
- Illinois Secretary of State - Department of Business Services
- Statute
- 805 ILCS 180, Article 35 (Dissolution)
- Filing fee
- Set by the Secretary of State - confirm current amount
- Taxes
- File final IL-1065/IL-1120; close Dept. of Revenue accounts
- Must be current on
- Annual reports ($75) and any $100 penalties
Dissolution vs. Termination in Illinois
Illinois separates two ideas that people often blur together. Dissolution is the event that starts the closing process - a vote, an event in your operating agreement, or an administrative action by the state. Termination is the end point, when the LLC's existence formally concludes after it has wound up its business. Under the LLC Act, a dissolved LLC continues only for the purpose of winding up: it can collect assets, pay debts, and distribute what remains, but it should not carry on new business. You file the Statement of Termination (Form LLC-35.15) after winding up is complete. For the general framework, see the national how to dissolve an LLC guide.
How to Dissolve an Illinois LLC, Step by Step
Voluntary dissolution follows four steps. Each corresponds to Article 35 of the Illinois LLC Act or a tax obligation. The sequence is deliberate: you approve the decision, wind up so that debts and taxes are settled, and only then file the paperwork that ends the entity. Skipping ahead to the final filing before winding up can leave obligations unresolved and expose members to liability.
- Approve the dissolution. Trigger an event of dissolution as your operating agreement or the LLC Act requires - typically a member vote or unanimous written consent. Record the decision in your minutes or a written consent.
- Wind up the business. Stop taking on new business, notify known creditors, collect receivables, sell or distribute assets, and pay or make provision for all debts and liabilities. Whatever remains is distributed to members according to the LLC Act and your operating agreement.
- Settle Illinois and federal taxes. File your final Form IL-1065 (or IL-1120) and final federal returns, marking them final, and close your sales tax and withholding accounts with the Illinois Department of Revenue through MyTax Illinois. Pay any outstanding business taxes, including the replacement tax.
- File the Statement of Termination (Form LLC-35.15). Once wound up, file Form LLC-35.15 with the Illinois Secretary of State. The statement lists the LLC's name and an address for service of any later process. When accepted, the LLC is terminated.
Before filing, make sure your LLC is current on its annual reports; unresolved delinquencies and penalties can complicate closing.
Step 1: Approve Dissolution
An Illinois LLC dissolves upon an event specified in your operating agreement, the consent of the members as the agreement or the LLC Act requires, or by judicial or administrative action. Most voluntary closings begin with a member vote or a written consent to dissolve. Document the approval carefully - it establishes the effective date of dissolution and the authority to wind up. If your operating agreement sets a specific vote threshold or procedure, follow it exactly.
For a single-member LLC, this step is simple: you decide to dissolve and record it in writing. For a multi-member LLC, the operating agreement usually controls how many members must agree and by what process; if the agreement is silent, the default rules in the LLC Act apply. Either way, a short written consent or resolution stating the decision and its effective date is worth creating, because it is the document that authorizes everything that follows - signing off on asset sales, paying creditors, and ultimately filing the Statement of Termination.
Step 2: Wind Up the Business
Winding up is the core of a proper dissolution. During this phase the LLC ceases ordinary business and instead: collects and liquidates assets, gives notice to creditors, pays or makes reasonable provision for known claims, and distributes any surplus to members. Illinois law lets a dissolved LLC dispose of known and unknown claims through statutory notice procedures, which can limit later liability. Handling creditors correctly protects members from personal exposure and reduces the risk of clawback claims after the LLC is gone.
The Order of Distribution
The LLC Act sets a priority for who gets paid during winding up. Creditors - including members who are creditors - are paid first from the LLC's assets. Only after liabilities are satisfied or provided for may the remaining assets be distributed to members, generally in proportion to their rights to distributions under the operating agreement. Distributing assets to members before creditors are paid can expose those members to liability for the unpaid debts, so the sequence matters. If the LLC's debts exceed its assets, members should get professional advice before making any distribution, because an insolvent wind-up has its own rules.
Notifying Creditors
Giving proper notice to known creditors - telling them the LLC is dissolved and where to send claims by a stated deadline - starts the clock on their claims and helps cut off stale demands. Following the statutory notice process is what lets members close the books with confidence that a creditor cannot resurface years later against distributed assets. Keep written proof of every notice you send as part of your dissolution file.
Step 3: Settle Illinois Taxes and Close Accounts
Tax cleanup is essential before termination, and it is the step owners most often underestimate. File a final Form IL-1065 (partnership) or Form IL-1120 (corporation) with the Illinois Department of Revenue, marked as a final return, and pay any personal property replacement tax due - 1.5% for an LLC taxed as a partnership. If your LLC collected sales tax or withheld employee tax, close those accounts through MyTax Illinois so no further returns are expected. Also file final federal returns and, if you had employees, final federal employment tax filings. An LLC continues after dissolution specifically to satisfy these obligations, so do not skip them.
Step 4: File the Statement of Termination (Form LLC-35.15)
When winding up is complete, file Form LLC-35.15, Statement of Termination, with the Illinois Secretary of State under Section 35-15 of the LLC Act. The statement sets forth the LLC's name and a post office address to which any later process against the company may be mailed. The Secretary of State charges a filing fee for the Statement of Termination; because the exact amount is set administratively and can change, confirm the current fee with the Department of Business Services before filing. Once the Secretary of State accepts the statement, the LLC's existence formally ends.
File the Statement of Termination only after winding up is genuinely complete - after debts are paid or provided for and assets distributed - because termination ends the entity's active existence. Keep a stamped copy of the accepted statement with your permanent records; it is your proof that the LLC was closed properly and on a specific date, which can matter if a creditor or tax authority raises a question later. If any member later needs to confirm the termination, the filing appears in the Secretary of State's public entity database.
| Step | What you file / do | Where |
|---|---|---|
| Approve dissolution | Member vote / written consent | Internal record |
| Wind up | Pay creditors, distribute assets | Internal |
| Final tax returns | Form IL-1065 / IL-1120 (final) | Dept. of Revenue |
| Close tax accounts | Sales tax / withholding closure | MyTax Illinois |
| Terminate | Form LLC-35.15 | Secretary of State |
Administrative Dissolution vs. Voluntary Closing
If you simply stop filing, the state will eventually act for you. When an LLC fails to file its annual report or maintain a registered agent, the Secretary of State can administratively dissolve the LLC after notice. That is not a clean exit: unpaid $75 fees and $100 penalties keep accruing until the dissolution is processed, and reinstating the entity later costs $200 plus the delinquent reports. Voluntarily terminating with Form LLC-35.15 while current on filings is the orderly way to close.
After Termination: Records and Loose Ends
After termination, keep the LLC's records, final tax returns, and dissolution documents for several years in case of an audit or a later claim. Cancel any remaining licenses, permits, or assumed-name registrations, close the business bank account after final distributions, and cancel your EIN account with the IRS by sending a closing letter if you no longer need it. If you registered your LLC in other states as a foreign LLC, withdraw those registrations separately.
Common Mistakes to Avoid
Two mistakes cause most dissolution problems. The first is abandoning the LLC instead of terminating it - walking away without filing Form LLC-35.15 leaves the entity on the record accruing $75 annual report fees and $100 penalties until the state dissolves it involuntarily. The second is distributing assets before settling debts and taxes, which can make members personally answerable for what was left unpaid. A third, quieter mistake is failing to close Department of Revenue accounts, which can generate estimated assessments for returns the state still expects. Doing the four steps in order - approve, wind up, settle taxes, terminate - avoids all three.
Reinstating a Dissolved LLC
If your LLC was administratively dissolved and you want to revive it rather than close it, you file an application for reinstatement, pay the $200 reinstatement fee, and file all delinquent annual reports with their $75 fees and $100 penalties. Reinstatement restores the LLC as if it had never been dissolved. This is the opposite path from voluntary termination - choose it only if you intend to keep operating; otherwise, terminate cleanly with Form LLC-35.15.
Frequently Asked Questions
How do I dissolve an LLC in Illinois?
Approve dissolution as your operating agreement or the LLC Act requires, wind up the business by paying creditors and distributing assets, settle final taxes, and file a Statement of Termination (Form LLC-35.15) with the Illinois Secretary of State.
What form dissolves an Illinois LLC?
After winding up, you file Form LLC-35.15, the Statement of Termination, with the Illinois Secretary of State under Article 35 of the LLC Act. It formally ends the LLC once accepted.
How much does it cost to dissolve an Illinois LLC?
The Statement of Termination carries a filing fee set by the Secretary of State; confirm the current amount before filing. You must also be current on annual reports and any penalties.
Do I have to pay Illinois taxes before dissolving?
Yes. File final federal and Illinois returns (such as Form IL-1065) and close your Department of Revenue accounts. An LLC continues after dissolution only to wind up, including tax obligations.
What happens if I just stop filing instead of dissolving?
The LLC stays on the record with accruing $75 annual report fees and $100 penalties until the Secretary of State administratively dissolves it. Terminating with Form LLC-35.15 stops these obligations cleanly.
Related
- How to dissolve an LLC (cluster hub)
- How to form an LLC in Illinois
- Illinois LLC annual report and taxes
- Illinois registered agent requirements
- Illinois LLC cost and filing fees
- How to get an EIN (and how to close it)
- How to get a business license in Illinois
- S-corp vs LLC
Sources
- Illinois LLC Act - 805 ILCS 180/35-1, Events causing dissolution.
- Illinois LLC Act - 805 ILCS 180/35-3, Winding up.
- Illinois LLC Act - 805 ILCS 180/35-4, Distribution of assets.
- Illinois LLC Act - 805 ILCS 180/35-15, Statement of termination (Form LLC-35.15).
- Illinois LLC Act - 805 ILCS 180/35-25, Administrative dissolution.
- Illinois LLC Act - 805 ILCS 180/50-10, Fees ($200 reinstatement; $75 annual report).
- Illinois Secretary of State - Limited Liability Companies (Department of Business Services).
- Illinois Department of Revenue - Business Registration and account closure.
- Illinois Department of Revenue - Partnerships (final Form IL-1065).
- IRS - Closing a Business.
- IRS - Canceling an EIN – Closing Your Account.
- Legal Information Institute - Dissolution (Wex).
LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Laws, fees, and procedures change; verify current requirements with the Illinois Secretary of State and Illinois Department of Revenue before acting.