How to close an LLC and stop the annual fees

Plenty of freelancers form an LLC, go back to a salaried job, and forget about it. The state doesn't. Annual reports and taxes keep coming due, late fees stack up, and the LLC may end up administratively dissolved with a balance still owed. Here's how to close one properly, from our business setup series.

Why you can't just stop

The checklist

1. Read your operating agreement for how dissolution is approved, and record the decision in writing, signed by all members (for a single-member LLC, a one-page written consent).
2. Finish or hand off client work, send final invoices and collect what you're owed. Tell clients the date after which you'll stop invoicing under the LLC.
3. Pay remaining bills, then cancel what renews: the registered agent, a ZenBusiness Pro plan ($199 a year), LegalZoom subscriptions, software in the LLC's name.
4. If you paid contractors this year, file Form 1099-NEC for those over the IRS threshold. Our 1099-K vs 1099-NEC post has the current rules.
5. File the final federal return. A single-member LLC taxed by default reports on Schedule C with your Form 1040 for the year it closes. A multi-member LLC files Form 1065, checks the final return box and marks the K-1s final. If you had employees, file the final employment tax returns (Forms 940 and 941).
6. Bring state filings and taxes up to date. Delaware, for example, lists its cancellation fee as the filing fee plus the annual taxes owed.
7. File the dissolution or cancellation with the Secretary of State and pay the fee. Delaware lists $220 for a domestic LLC's certificate of cancellation and Florida $25 for articles of dissolution; other states list theirs on the fee schedule.
8. If the LLC was registered as foreign in other states, file a withdrawal in each one, or those states keep charging.
9. Close the IRS business account: mail a letter with the LLC's legal name, EIN, business address and the reason, plus a copy of the EIN notice if you have it. The IRS can't close the account until all returns are filed and taxes paid.
10. Close the business bank account last, after the final payments clear, and keep your records. See how long to keep business records.

What it costs

Timing the closing date

In California, the $800 annual tax is owed for each year the LLC exists. The Franchise Tax Board says that if the certificate of cancellation is filed after the end of the tax year, another year's return and another $800 may be required, so file before the year closes and ask your accountant about the exact date. In Delaware, the cancellation fee comes with any annual tax still owed, so budget for both.

Do you need to cancel the EIN?

The IRS says it can't cancel an EIN; it deactivates the business account instead, and the number is never reassigned. Sending the closing letter keeps the IRS from expecting returns that will never come. If you later start a new LLC, it gets a new EIN.

Where SoloWOS fits

Before you close accounts, send the last invoices clients pay by card and download your invoice and expense history so it's available for the final return. If you'll keep freelancing as a sole proprietor (see LLC vs sole proprietor for what changes), you can change the business name on your invoices and keep working. For the yearly costs that stop once the LLC is gone, see LLC fees by state.

State fees and IRS steps checked on October 23, 2026 on the agencies' own sites. This is general information, not legal or tax advice; a CPA can confirm your final returns.