Voluntary dissolution is closing your company because you decided to, not because the state closed it for you. That second version has its own name: administrative dissolution. It happens when you miss a filing or a fee. Voluntary dissolution is the opposite. You choose the date, you follow a vote procedure, and you file paperwork saying the company is done.
The vote procedure is where an LLC and a corporation split. They are not the same entity type with different names. They run on different statutes, and those statutes ask for different things before you can close.
This page covers Delaware, because it is the state founders use most often. Other states have their own dissolution statutes, and the vote thresholds can differ. Check your state's version before you rely on the numbers below.
What the law actually asks for
LLC: 6 Del. C. § 18-801
A Delaware LLC dissolves when one of four things happens:
- An event or time your operating agreement says causes dissolution. If your operating agreement has a dissolution clause, that clause controls first.
- A vote of members holding more than two-thirds of the profits interest, unless your operating agreement sets a different rule. This is the default vote threshold when the operating agreement is silent.
- The LLC has no members left. There are some narrow exceptions for the last member's estate, but the general rule is that an LLC with zero members dissolves.
- A court orders it to dissolve, under a separate section of the same law (§ 18-802).
The threshold to notice is the second one: profits interest, not membership units and not a simple headcount of members. If you own 40% of the membership units but your operating agreement gives you 70% of the profits, you hold 70% for this vote. Most single-member and small multi-member LLCs never need to think about this, because one person, or a small group with matching ownership and profit shares, controls the whole company anyway. It matters once an LLC has members with mismatched economics: a founder who kept most of the profits interest but sold voting units, for example.
A member's death, bankruptcy, or resignation does not, by itself, dissolve the LLC. The company keeps existing unless the operating agreement says otherwise. This surprises people who expect an LLC to behave like a partnership that ends when a partner leaves. It does not, under Delaware law, unless you wrote that rule into your own operating agreement.
Corporation: 8 Del. C. § 275
A Delaware corporation dissolves through one of two paths:
- The board adopts a resolution, then a majority of the outstanding stock entitled to vote approves it at a meeting called for that purpose.
- All the stockholders entitled to vote sign a written consent, with no board resolution and no meeting required at all.
The second path is the one an LLC does not have. A corporation can skip the board step entirely if every voting stockholder signs off in writing. An LLC's dissolution rule runs through the members directly; a corporation's default rule runs through the board first, unless everyone agrees to skip that step.
Once the vote passes, the corporation files a certificate of dissolution with the state. The company is not closed the moment the vote happens. It is closed once the state processes that filing, and the corporation still has to wind up its affairs first: paying debts, settling claims, and distributing what is left to shareholders.
The one thing that is the same for both
Neither statute mentions where the members, managers, directors, or shareholders live. Delaware does not ask about citizenship or residency to approve a dissolution vote, and it does not ask on the certificate you file to close the company. The vote rule is about ownership structure, not about the owner's location.
🇺🇸 If the IRS counts you as a U.S. person
You dissolve the company using the same vote rule as anyone else: the profits-interest threshold for an LLC, or the board-plus-majority (or full written consent) rule for a corporation.
On the tax side, you file your company's final federal return and mark it as final. If the LLC was disregarded for tax purposes, you report its last activity on your own Form 1040 as usual, the same way you reported it every year the company operated. There is no extra cross-border filing waiting for you after the company closes.
🌏 If it does not
You dissolve the company through the exact same state-law procedure. Delaware's dissolution statutes do not have a separate track for foreign owners.
The difference shows up after the company is gone. If you owned a single-member LLC that was disregarded for U.S. tax purposes, dissolving the company is itself a "reportable transaction" for that LLC. You still owe a final Form 5472, filed together with a pro forma Form 1120, covering the period up to the date of dissolution. The obligation does not disappear because the company no longer exists. Skipping this filing carries the same penalty exposure as skipping it in any other year.
This catches people off guard because closing a company feels like the end of paperwork. For a foreign-owned disregarded LLC, it is one more filing, not zero.
Vote rule comparison
| What you are closing | Default vote rule | Can you skip a board or meeting? | Statute |
|---|---|---|---|
| LLC | Members holding more than two-thirds of the profits interest (unless the operating agreement says otherwise) | There is no board; members vote directly | 6 Del. C. § 18-801 |
| Corporation | Board resolution, then a majority of voting stock at a meeting | Yes — full stockholder written consent skips the board and the meeting | 8 Del. C. § 275 |
| Either entity, once dissolved | Company must wind up affairs (pay debts, settle claims, distribute what remains) before it is fully closed | — | Applies to both |
| Foreign-owned single-member disregarded LLC | No separate dissolution vote rule; the tax filing obligation is unaffected by residency | Not applicable — filing rule is unrelated to the vote | Form 5472 rule (not a dissolution statute) |
Common mistakes
🇺🇸 If the IRS counts you as a U.S. person
- Assuming a member's exit or death automatically dissolves the LLC. Under the default Delaware rule, it does not, unless your operating agreement says so.
- Voting on membership units instead of profits interest, when the operating agreement gives them different weights.
🌏 If it does not
- Treating dissolution as the last filing. For a foreign-owned disregarded LLC, the final Form 5472 and pro forma Form 1120 come after the vote, not before it.
- Assuming residency changes the vote threshold. It does not. The two-thirds profits-interest rule and the corporate majority-vote rule apply the same way regardless of where the owner lives.
FAQ
Do all members have to agree to dissolve an LLC?
No. Delaware's default rule only requires members holding more than two-thirds of the profits interest to vote in favor, unless the operating agreement sets a different threshold. Unanimous consent is not the default requirement.
What is "profits interest," and how is it different from membership units?
Profits interest is your share of the LLC's profit distributions. Membership units are ownership units, which may or may not carry the same percentage of profits. Most small LLCs set these equal, so the distinction does not come up. It matters when an operating agreement splits them differently, for example if a founder gave up voting units but kept a larger profit share.
Can a corporation dissolve without a board meeting?
Yes, if every stockholder entitled to vote signs a written consent. Delaware's corporation statute allows dissolution through written consent alone, with no board resolution and no meeting.
If a member of my LLC dies, does the company dissolve automatically?
Not under Delaware's default rule. The LLC continues unless your operating agreement specifically names a member's death as a dissolution event.
Does living outside the United States change the vote threshold to dissolve my company?
No. Neither the LLC dissolution statute nor the corporation dissolution statute mentions residency or citizenship. The vote rules are the same regardless of where the members, managers, directors, or shareholders live.
I own a foreign-owned single-member LLC. Do I still have to file anything after I dissolve it?
Yes. Dissolving the LLC is treated as a reportable transaction for Form 5472 purposes. You file a final Form 5472 together with a pro forma Form 1120, covering the period up to the dissolution date, even though the company no longer exists.
Is dissolving an LLC the same as winding it up?
No. Dissolution is the vote or event that starts the process. Winding up is what happens afterward: paying debts, settling claims, and distributing remaining assets before the company is fully closed.