When a company closes, it does not simply disappear from the state's records. Every state requires the owner to file official paperwork to end the company's legal existence. This paperwork has a name that matters: a certificate of dissolution.
But here is the complication. If your company is a corporation, you file a "certificate of dissolution." If it is an LLC, you file a "certificate of cancellation." These are not the same form, they have different requirements, and filing the wrong one is a common mistake that Delaware's corporate division has to correct.
This difference is not just paperwork. It affects whether your company stays on the state's "good standing" list, whether you can still pay taxes for it, and how complicated it becomes to restart the company later.
What the law actually requires
Delaware publishes the form requirements for both. They are in two separate sections of the Delaware Code.
For corporations, Delaware General Corporation Law section 8 Del. C. § 275 says the certificate of dissolution must include:
- The name of the corporation.
- The date its original certificate of incorporation was filed.
- The date that dissolution was authorized.
- A statement that the dissolution was authorized by the corporation's board of directors and its stockholders.
- The names and addresses of the corporation's directors and officers.
For LLCs, the Delaware Limited Liability Company Act section 6 Del. C. § 18-203 is stricter. It calls the document a "certificate of cancellation," not a "certificate of dissolution." And it adds a crucial timing requirement: the LLC must first complete "winding up" — which means collecting all money owed to it, paying all debts, and distributing what is left to the members. Only after all of that is done can you file the cancellation certificate.
If you file a cancellation certificate before winding up is complete, you have filed the document too early. Delaware allows you to correct this mistake with a separate "certificate of correction," but only if it is truly an error. The correction itself is an extra filing and often costs extra.
The reason for the difference is practical. A corporation can dissolve by a board resolution followed by a stockholder vote, and its assets and debts can be handled afterwards. An LLC's operating agreement usually controls how money is split, so winding up has to happen before you announce the company is gone.
🇺🇸 If the IRS counts you as a U.S. person
You can file the dissolution or cancellation certificate yourself if you are in Delaware during business hours and you can sign the form in person. You can also hire someone — a registered agent, lawyer, or accountant — to file it for you from anywhere.
Here is what to watch for:
- Which form to use. Make sure you are filing the right one. The state's website has separate forms for corporations (dissolution) and LLCs (cancellation). Using the wrong form means Delaware will reject it or send you a correction notice, adding weeks to the process.
- Winding up first (for LLCs). If your company is an LLC, Delaware will not accept a cancellation certificate unless the business has actually finished winding up — collecting receivables, paying debts, and distributing cash to members. You cannot skip this step.
- The state fee. Delaware charges a filing fee. The amount changes, and paying the wrong amount is another common cause of rejection.
After the certificate is filed and accepted, the company is officially dissolved or cancelled. At that point, Delaware stops issuing good standing certificates for that company.
🌏 If it does not
You hire someone to handle it. A registered agent, lawyer, or accountant can file the dissolution or cancellation certificate on your behalf. They will ask you questions to confirm the details, prepare the form, and submit it to Delaware. If you are managing the company's affairs from abroad, this is the practical path.
The same rules apply — use the right form, complete winding up first, and make sure the fee is correct. The only thing that changes is who is doing the filing.
Make sure whoever you hire is experienced with Delaware filings. A common mistake in cross-border dissolutions is forgetting that the LLC winding up requirement exists. A lawyer in your home country might file a cancellation certificate before the LLC has finished winding up, leaving you with a rejected filing and months of delay.
Corporation or LLC: Which paperwork applies
| What it is for | Corporation | LLC |
|---|---|---|
| Correct form name | Certificate of Dissolution | Certificate of Cancellation |
| Law section | 8 Del. C. § 275 | 6 Del. C. § 18-203 |
| Requires board and stockholder approval | Yes | Governed by the operating agreement |
| Requires winding up first | No (can happen after) | Yes (must be completed first) |
| Still get good standing certificates | No | No |
| Can be corrected if filed early | Usually | By filing a separate correction |
Common mistakes
🇺🇸 If the IRS counts you as a U.S. person
- Filing a cancellation certificate for an LLC before winding up is complete. Delaware will reject it. The correct sequence is: (1) wind up, (2) file the cancellation.
- Using the corporation form (certificate of dissolution) for an LLC, or vice versa. Delaware rejects both. The form name matters legally.
- Not paying the filing fee, or paying the wrong amount. This also triggers a rejection letter.
🌏 If it does not
- Hiring someone unfamiliar with Delaware who files the wrong form.
- Not clearly explaining to your lawyer or agent that your company must complete winding up before filing. Misunderstanding on this point is how cross-border dissolutions get held up for months.
- Assuming the company can close immediately. Settling debts and distributing money to members takes time. Until that is done, you cannot legally file.
FAQ
What is the difference between a certificate of dissolution and a certificate of cancellation?
A certificate of dissolution is for corporations. A certificate of cancellation is for LLCs. They are different forms filed under different Delaware laws. Using the wrong form will cause Delaware to reject your filing.
Can I file the certificate myself, or do I have to hire a lawyer?
If you are in Delaware and can sign in person, you can file it yourself. If you are not in Delaware, you typically hire a registered agent, lawyer, or accountant to file it for you. The form requirements are the same either way.
My LLC has not wound up yet. Can I file the cancellation certificate now anyway?
No. Delaware's law requires that the LLC first complete winding up — meaning the company has collected all money owed to it, paid all debts, and distributed remaining money to its members. You must finish that before filing. Filing too early is a procedural error that Delaware will flag.
What happens after the certificate is filed and accepted?
The company is officially dissolved or cancelled. Delaware will no longer issue good standing certificates for that company. If you try to open a bank account, get a loan, or prove the company's status later, the state will tell anyone who asks that the company is no longer active.
Can I restart the company after it is dissolved?
It depends on how much time has passed and what you want to do. You can sometimes file a "certificate of reinstatement" with Delaware, but only within certain timeframes and under specific conditions. It is simpler to just form a new company. Ask your lawyer about which option fits your situation.
Who is allowed to file the certificate of dissolution or cancellation?
For a corporation, the board of directors usually approves it and then someone (officer, director, or agent) files it. For an LLC, the operating agreement determines who can approve and file it — often the manager or managing member. If your agreement is unclear, ask the other members before filing.
Do I have to file taxes after the company is dissolved?
That depends on whether the company had any income or activity during the year it was dissolved. Talk to your accountant about that. Separately, if the company is an LLC and the owner is a non-resident alien, there may be a final Form 5472 required with a pro forma Form 1120, even though the LLC itself pays no tax.
What does "good standing" mean, and why does the certificate matter?
Good standing means the state considers your company to be legally active and in compliance with all filing rules. Once your certificate of dissolution or cancellation is filed and accepted, the company is no longer in good standing. The state will not issue a good standing certificate for a dissolved or cancelled company. This matters if you want to prove the company's status to a bank, lender, or investor later.