How to Dissolve an LLC: Steps, Forms & Final Taxes (2026)

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

You dissolve an LLC by approving the dissolution the way your operating agreement requires, winding up the business, and filing Articles of Dissolution with the Secretary of State that formed it. You then file final federal and state tax returns with the "final return" box checked, close the IRS business account tied to your EIN, cancel licenses and permits, and keep your records.

Who Needs to Dissolve an LLC, and When

Dissolution is the legal act of ending an LLC's existence, and it applies to any limited liability company that has stopped, or is about to stop, doing business. Dissolution formally terminates the entity so that state annual reports, franchise taxes, and registration fees stop accruing. In general legal usage, dissolution triggers a winding-up period in which the business settles its affairs before it legally ceases to exist. Walking away does not end an LLC: it stays on the state's records and keeps generating obligations until you file the required paperwork.

You should dissolve when the members decide to close, when the LLC has completed the purpose it was formed for, or when an event named in your operating agreement triggers dissolution. The process below describes voluntary dissolution - the members choosing to close. It differs from administrative dissolution (the state closing your LLC for unpaid fees or missed reports) and judicial dissolution (a court ordering it). This guide covers the universal, national steps; the exact form, fee, and any tax clearance requirement come from the state where you formed the LLC. For the specifics of one state, see how to dissolve an LLC in Texas, and for the broader business closeout, see how to close a business.

What You'll Need to Dissolve Your LLC

Before you file anything, gather the documents that govern the LLC and prove it can wind up cleanly. Having these ready prevents a rejected filing or a lingering tax account:

• Your operating agreement, which sets the vote or consent needed to dissolve and the order for distributing assets.
• A written record of the members' vote or unanimous written consent to dissolve.
• The LLC's EIN, prior tax returns, and the IRS EIN assignment notice, if available.
• A current list of creditors, debts, and open contracts to notify and settle.
• Your state's Articles of Dissolution form and, in some states, a tax clearance or good-standing certificate.
• A list of licenses, permits, sales tax accounts, and DBAs to cancel.

Because the U.S. Small Business Administration (SBA) advises coordinating with your accountant and the IRS when you close, it helps to confirm your tax position before you file the state paperwork.

How to Dissolve an LLC, Step by Step

Dissolving an LLC follows the same six-step arc in every state, even though the state form and fee differ. Each step below maps to a requirement of your operating agreement, state LLC law, or a federal tax rule.

1. Approve the dissolution. Hold the member vote or obtain the written consent your operating agreement requires, and record it in the LLC's minutes or a written resolution. If the agreement is silent, your state's default LLC statute sets the vote needed to dissolve.
2. Wind up the business. Stop taking on new business, then settle the LLC's affairs: notify creditors, pay or provide for debts and claims, close out contracts, and distribute any remaining assets to the members per the operating agreement. In a winding-up, creditors are paid before members receive anything.
3. File Articles of Dissolution with the Secretary of State. File the dissolution document - called Articles of Dissolution, Certificate of Dissolution, or Statement of Dissolution depending on the state - with the agency that formed your LLC, and pay the state fee. Fees and whether tax clearance is required first vary by state.
4. File final federal and state tax returns. File the LLC's last income tax return and check the "final return" box. A multi-member LLC files Form 1065 and marks the "final K-1" boxes; a single-member LLC reports on Schedule C. If the LLC elected corporate treatment, file Form 1120 or Form 1120-S, and the corporation also files Form 966. File final employment tax returns if you had employees (see below).
5. Cancel your EIN account, licenses, and permits. Mail the IRS a letter to close the business account tied to your EIN, and cancel state and local business licenses, sales tax permits, and any DBA so they stop generating renewals and tax filings.
6. Keep your business records. Retain income, property, and employment tax records after you close. The IRS says to keep employment tax records for at least four years and to keep property records until the period of limitations runs.

Articles of Dissolution and State Filing

Articles of Dissolution is the state filing that formally ends your LLC's legal existence. Because LLCs are creatures of state law, the document's name, its filing fee, and the processing time are set by each state's Secretary of State (or equivalent business division) - not by the federal government. Some states call it a Certificate of Dissolution, Certificate of Cancellation, or Statement of Dissolution, and a few states charge no fee to file it while others charge a set amount. Because these fees are state-specific and change, this guide does not quote a single figure; confirm the current form and fee on your state's site or a state guide such as Texas.

Several states add a tax clearance step: the Secretary of State will not accept your dissolution until the state tax agency confirms the LLC has filed and paid its franchise or business taxes. Texas, for example, requires a Certificate of Account Status for dissolution from the Comptroller before it will file a termination. Check whether your state requires clearance before you submit the Articles, or the filing may be rejected. The SBA notes that filing your dissolution documents is what lets you "avoid continued taxes and filing requirements" from the state.

Final Federal and State Tax Returns

Final tax returns are the federal step that tells the IRS the LLC has stopped operating. On the LLC's last income tax return, you check the box that marks it a final return. How the LLC is taxed determines which return that is: a single-member LLC reports on Schedule C with the owner's Form 1040; a multi-member LLC files Form 1065 and checks both the "final return" box and the "final K-1" boxes on each Schedule K-1; an LLC that elected C-corporation status files Form 1120, and one that elected S-corporation status files Form 1120-S.

If the LLC had employees, file final employment tax returns: Form 941 (or the annual Form 944) for the final quarter with the box indicating you closed the business, and Form 940 for federal unemployment (FUTA) tax marked final. Issue each employee a Form W-2, and file Form 1099-NEC for any contractor you paid $600 or more during the year. An LLC that elected corporate treatment must also file Form 966, Corporate Dissolution or Liquidation, after it adopts a resolution or plan to dissolve; an LLC taxed as a partnership or disregarded entity does not file Form 966. Don't forget the parallel final state tax returns - income, franchise, and sales tax - each marked final with the applicable state agency. For the wider tax picture, see business tax filing and S-corporation elections.

Cancel Your EIN Account, Licenses, and Permits

Your EIN is permanent: the IRS states that once it assigns an EIN to a business entity, that number becomes the entity's permanent federal taxpayer ID and is never reused or reassigned. You cannot "cancel" it, but you can and should close the business account associated with it once the LLC is closed. To do so, mail the IRS a letter that includes the LLC's legal name, its EIN, the business address, and the reason you are closing the account; include the EIN assignment notice if you have it. Send it to the IRS at MS 6055, Kansas City, MO 64108, or MS 6273, Ogden, UT 84201. The IRS will not close the account until you have filed all outstanding returns and paid any tax owed.

Separately, cancel every state and local registration the LLC no longer needs so they stop triggering renewals, fees, and tax filings. The SBA specifically advises canceling "registrations, permits, licenses, and business names" you no longer need. That typically includes your state sales and use tax permit, any local business license, professional or regulatory permits, and any assumed name (DBA) registration. Closing these accounts is what actually stops the state and local tax machinery, and it is easy to overlook because it lives outside the Secretary of State filing.

LLC Dissolution Checklist and Responsible Agency

The table below summarizes the universal dissolution tasks, the document or action each requires, and which authority handles it. Use it as a closing checklist; the exact state form and fee come from your Secretary of State, so confirm those locally rather than assuming a national figure.

For a detailed breakdown of what filing and professional fees to expect, see how much it costs to dissolve an LLC.

What Happens If You Don't Dissolve Your LLC

Skipping formal dissolution does not make an LLC disappear - it makes it a growing liability. Because the entity remains on state records, it keeps owing annual report fees, franchise or privilege taxes, and registered-agent obligations, and interest and penalties accrue on anything unpaid. Many states will eventually administratively dissolve an LLC that stops filing, but that is a penalty status, not a clean exit; the back fees can still be owed and can block you from reinstating or forming a new entity, and in some states unresolved obligations can reach the members.

Frequently Asked Questions

What is the first step to dissolve an LLC?

Approve the dissolution the way your operating agreement requires - usually a member vote or written consent - and record it in writing. If the agreement is silent, your state's default LLC statute sets the vote needed to dissolve.

What form do I file to dissolve an LLC?

You file Articles of Dissolution (sometimes a Certificate or Statement of Dissolution) with the Secretary of State that formed the LLC. The form name and fee vary by state, so use your state's official form and confirm the current fee.

Do I have to cancel my EIN when I close my LLC?

The IRS never reuses or cancels an EIN, but you should close the business account tied to it by mailing a letter with the legal name, EIN, address, and reason. You must first file all outstanding returns and pay any tax owed.

Which tax returns are final when I dissolve an LLC?

File your final income return - Form 1065 for a multi-member LLC or Schedule C for a single-member LLC - and check the "final return" box. File final Forms 941 (or 944) and 940 if you had employees, and issue W-2s.

Do I need Form 966 to dissolve my LLC?

Only if your LLC elected to be taxed as a corporation. A corporation or farmer's cooperative files Form 966 after adopting a resolution or plan to dissolve. An LLC taxed as a partnership or disregarded entity does not file it.

What happens if I don't formally dissolve my LLC?

The LLC stays on state records, so annual reports, franchise taxes, and fees keep accruing until you file dissolution paperwork. States can add penalties and eventually administratively dissolve the LLC for noncompliance.

Related

• How to form an LLC (cluster hub)
• What happens if you don't dissolve an LLC? (paired)
• How much does it cost to dissolve an LLC?
• How to close a business
• How to dissolve an LLC in Texas (state guide)
• How to get an EIN
• Business tax filing

Sources

1. IRS - Closing a Business (final returns, "final return" box, Forms 1065/1120/1120-S, employment tax, canceling EIN, records).
2. IRS - Canceling an EIN – Closing Your Account (EIN never reused; letter to Kansas City or Ogden; file all returns first).
3. IRS - About Form 966, Corporate Dissolution or Liquidation (filed by a corporation/cooperative adopting a resolution or plan to dissolve).
4. IRS - About Form 1065, U.S. Return of Partnership Income (final return / final K-1 for multi-member LLC).
5. IRS - About Form 1120-S, U.S. Income Tax Return for an S Corporation.
6. IRS - About Form 1120, U.S. Corporation Income Tax Return.
7. IRS - About Form 941, Employer's Quarterly Federal Tax Return (final employment tax return).
8. IRS - About Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.
9. IRS - About Form 1099-NEC, Nonemployee Compensation ($600 contractor threshold).
10. IRS - How Long Should I Keep Records? (employment tax records at least four years; property records to end of limitations).
11. U.S. Small Business Administration - Close or Sell Your Business (vote to dissolve per formation documents, file dissolution, cancel registrations/permits/licenses, final tax returns, cancel EIN).
12. Cornell Law School, Legal Information Institute - Dissolution (legal definition; termination of the entity relationship).
13. Cornell Law School, Legal Information Institute - Winding Up (settle debts, liquidate assets, distribute remaining proceeds; voluntary vs. compulsory).

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. LLC dissolution rules and fees are set by each state; verify current requirements with your Secretary of State, state tax agency, and the IRS before acting.