Closing a U.S. LLC or Corporation: Steps, Taxes and Costs

The short answer

Stopping activity does not close a company. Until it is formally dissolved, state taxes and filings keep running: a California LLC owes its $800 annual tax until it is cancelled.
A company must file a final return for the year it closes. A corporation marks its last Form 1120 as final.
For a foreign-owned single-member LLC, money paid or received in connection with the dissolution is a reportable transaction on Form 5472.
To close the IRS business account, you send a letter with the legal name, EIN, address and reason. The IRS closes it only after all returns are filed and all taxes are paid.
At MyUSAService, dissolution costs $348 in Florida or Wyoming and $1,077 in Delaware, including the current year's franchise tax (prices as of September 2026).

Table of contents

Why stopping activity is not enough
Steps to close a U.S. company
The final tax year
Closing the EIN account
Merging or converting instead of closing
Common mistakes
What it costs with MyUSAService
Frequently asked questions

Many founders abroad simply stop using their U.S. company: no more sales, no more payments, maybe a closed bank account. The company, however, stays alive until it is formally dissolved, and so do its obligations.

This guide covers the steps to close a U.S. LLC or corporation properly, the tax filings for the last year and what it costs.

Why stopping activity is not enough

A company that has not been dissolved still exists for the state and for the IRS:

State annual reports and taxes keep coming due, as listed in our guide to annual compliance requirements. A California LLC owes its $800 annual tax every year until it is cancelled. Delaware charges its annual tax every year the company exists.
Missed state filings lead to penalties and, eventually, administrative dissolution. An administratively dissolved company is not the same as a properly closed one, and reinstating it later can cost more than closing it would have.
IRS filing obligations continue as long as the company exists and has reportable activity.

Steps to close a U.S. company

Decide and document the decision. Members or shareholders approve the dissolution according to the operating agreement or bylaws. Keep the signed decision.
Settle debts and obligations. Pay suppliers, lenders and any taxes due. Collect what the company is owed.
Notify the people involved. Creditors, employees, contractors and clients.
File the dissolution with the state. The document is usually called articles of dissolution or certificate of cancellation, depending on the state and the entity. Some states require all annual taxes and reports to be paid and filed before they accept it.
Withdraw from other states. If the company was registered to do business in other states, file a withdrawal there too.
File the final federal returns. See the next section.
Close the IRS business account. After the final returns.
Close bank and payment accounts, licenses and registrations. Cancel business licenses, sales tax registrations and subscriptions tied to the company.
Keep the records. The IRS lists record retention as the last step of closing a business.

The final tax year

The IRS requires a final return for the year the business closes. What you file depends on the entity:

Corporation: a final Form 1120, marked as the final return.
Multi-member LLC taxed as a partnership: a final Form 1065.
Foreign-owned single-member LLC: Form 5472 with a pro forma Form 1120 for the final year. Amounts paid or received in connection with the dissolution count as reportable transactions, so the final year usually requires a filing. Our guide to inactive LLC tax returns explains which transactions count.

If the company had employees or paid contractors, final payroll returns and information returns are also due. The regular due dates are in our calendar of IRS filing deadlines.

Closing the EIN account

An EIN is permanent: it is never reassigned to another business. What you close is the IRS business account linked to it. The IRS asks for a letter that includes:

The complete legal name of the business.
The EIN.
The business address.
The reason for closing the account.

If you kept the notice the IRS sent when it assigned the EIN, enclose a copy. The letter goes to the Internal Revenue Service, Cincinnati, OH 45999. The IRS closes the account only after all necessary returns have been filed and all taxes owed have been paid.

Merging or converting instead of closing

Sometimes the right move is not closing but merging with another company or converting to a different entity type, for example from an LLC to a corporation. Both are handled under state law, with their own filings, and both can have tax consequences: see our comparison of LLC and corporation tax implications. Bringing in a new owner is a different case, covered in how to add a member to an LLC. Get legal and tax advice before choosing this path.

Common mistakes

Stopping activity without dissolving, and receiving state bills and penalties years later.
Dissolving with the state but skipping the final federal returns.
Forgetting Form 5472 for the final year of a foreign-owned single-member LLC.
Closing the bank account before all taxes and fees are paid.
Forgetting registrations in other states.

What it costs with MyUSAService

MyUSAService handles the state dissolution and the closing of the EIN account with the IRS. Prices as of September 2026:

State	Price	Estimated time
Florida	$348	30 business days
Wyoming	$348	30 days plus mailing
Delaware	$1,077, including the current year’s franchise tax	5 to 7 days

The final tax return is a separate service, from $951.

Frequently asked questions

What are the steps to closing a business in the U.S.?

Approve the dissolution, settle debts, notify creditors and employees, file the dissolution with the state, file the final federal returns, close the IRS business account, and cancel accounts, licenses and registrations.

Do I need to dissolve my LLC if I never used it?

Yes. An unused LLC still exists until it is dissolved, and state taxes and reports keep coming due. A California LLC, for example, owes $800 a year until it is cancelled.

What happens if I do not dissolve my LLC properly?

State penalties and late fees accumulate, the company loses good standing and the state may dissolve it administratively. Unpaid state taxes can remain due.

Can I close my EIN?

The EIN itself stays assigned to your business permanently. You can close the IRS business account linked to it by letter, once all returns are filed and all taxes are paid.

Do I have to file taxes for the year I close the company?

Yes. The IRS requires a final return for the year the business closes. For a foreign-owned single-member LLC, the dissolution itself is usually a reportable transaction on Form 5472.

Thinking about closing your U.S. company?

Talk for 30 minutes, free of charge, with a MyUSAService consultant.