How do I close a US LLC that I own from outside the US?

Delaware's LLC Act separates three steps. The company is dissolved on an event such as the time or event set in its LLC agreement or, unless the agreement says otherwise, the consent of members owning more than two-thirds of the profits interest; for a one-owner LLC, that is the owner.^[1] Its affairs are then wound up: assets go first to creditors, then to members.^[1] Finally a certificate of cancellation is filed with the Secretary of State; the company's existence as a separate legal entity continues until its certificate of formation is cancelled.^[9]

New Mexico's Act lists what its articles of dissolution state: the company's name, the dates its articles and amendments were filed, the event causing the dissolution, the effective date if not on filing, the name and address of each person with authority to wind up the business, and whether a court is supervising the winding up, among other items.^[4] For Wyoming or another state, the state's own current fee schedule sets the figure on the day you file.

Delaware's annual LLC tax is $400, due on 1 June after the calendar year or upon the cancellation of a certificate of formation. When a filing will end the company, the Act makes the full annual tax for the calendar year in which the certificate becomes effective due and payable before the filing.^[3] The Division's fee schedule lists the domestic LLC cancellation as $220 “plus annual taxes to cancel”.^[2]

Unpaid annual tax carries a $200 late charge, and interest at 1.5% for each month or part of a month until paid.^[3] A company closing early in a year therefore still pays that year's $400, along with any earlier year still open.

Part V of Form 5472, the part written for a foreign-owned US LLC, covers amounts paid or received in connection with the formation, dissolution, acquisition and disposition of the entity, including contributions to it and distributions from it.^[5] Money returned to the owner as the company winds up is one of those transactions, so the closing year is normally a Form 5472 year.

The form rides on a pro-forma Form 1120, on which the only information required is the company's name and address and items B and E.^[5] Item E is where the return is marked: the Form 1120 instructions say to check the “Final return” box when it is the corporation's final return and it will no longer exist.^[6]

On timing, the pro-forma 1120 and its Form 5472 are due by the Form 1120 due date, including extensions.^[5] The Form 1120 instructions give a corporation that has dissolved a due date of the 15th day of the 4th month after the date it dissolved.^[6] Form 7004 gives an automatic extension of time to file, generally 6 months.^[7] The $25,000 penalty for a Form 5472 not filed when due applies to the last year as to any other.^[5] Our Form 5472 guide explains the form in full.

The IRS describes an EIN as the permanent federal taxpayer identification number for the business. To close the business account, the IRS asks for a letter giving the business's complete legal name, its EIN, its address and the reason for closing, with a copy of the EIN assignment notice if you kept it; the IRS closing-a-business page gives the address.^[8] The IRS says it cannot close the account until all necessary returns are filed and all taxes owed are paid,^[8] so the letter follows the final Form 5472.

The same page asks a closing business to keep its records for as long as each type of record requires; property records, for example, until the period of limitations expires for the year the property was disposed of.^[8]

1. 01

   Decide and record the dissolution

   Under the LLC agreement or the state Act; for a one-owner LLC, the owner's consent.

2. 02

   Wind up

   Pay or provide for what the company owes, then return what is left to the owner, recorded in the books for Part V.

3. 03

   File with the state

   In Delaware, the year's annual tax and then the certificate of cancellation; in New Mexico, articles of dissolution.

4. 04

   Send the final Form 5472

   With a pro-forma 1120 marked “Final return”, by fax or mail.

5. 05

   Close the EIN account

   By letter to the IRS, once every return is filed.

Our Form 5472 filing prepares the closing year's Form 5472 and pro-forma 1120 for $449, with Form 7004 when more time is needed; a year that was missed before the closing is $399. Monthly US bookkeeping keeps the wind-up payments and the final distribution recorded for Part V.