How to close an LLC properly (and why 'I'll just stop paying' is the most expensive mistake)
Many people stop using their LLC and do what seems logical: stop paying. 'It's done.' But an LLC doesn't die on its own — while it exists in the state registry, it keeps generating obligations in your name. Here's the difference between abandoning and closing, and the 6 steps of a clean shutdown.
🌐 También en español: Cómo cerrar una LLC bien
Abandoning is not closing
While the LLC appears in the state registry, the annual report keeps coming due, the registered agent keeps coming due, and — if the owner is foreign — Form 5472 keeps coming due every year, with its penalty starting at USD 25,000. The state eventually dissolves it for non-payment. And do you know what that erases from your pending federal obligations?
Nothing. Administrative dissolution by the state does not extinguish accrued federal penalties. And if you ever want to do business in the US again, that history exists.
The clean shutdown, in 6 steps
1 · Decide with numbers, not fatigue. Keeping a Wyoming LLC compliant costs roughly USD 200-300 a year all-in. If there's a real chance you'll use it in the next 12 months, keeping it usually wins. If not: closing properly costs less than a year of penalties.
2 · Close operations before paperwork. Collect what's owed to you, pay what you owe, cancel subscriptions charging the account, and empty the balance with one final documented transfer. Only then close the bank account.
3 · File the Articles of Dissolution. The formal filing that removes it from the registry (in Wyoming, one form and a fee of about USD 60). The state requires being current first. Keep the dissolution certificate forever.
4 · The final IRS filing. The closing year carries its last Form 5472 + pro forma 1120 marked final. It's THE step everyone skips — and exactly where the USD 25,000 penalties 'from an LLC that didn't even exist anymore' are born.
5 · Close the EIN account. The number is never 'cancelled' (it stays assigned forever), but you notify the IRS by letter that the entity closed, attaching the CP 575. That cuts off future automated claims.
6 · Notify and archive. Cancel the registered agent (after dissolution, not before), notify Mercury/Wise/Stripe, and archive EVERYTHING for at least 6 years.
What if your dormant LLC is still worth keeping?
Many "dead" LLCs are recoverable: states allow reinstating a dissolved entity by paying what's owed, and missed filings have paths to regularization. The close-vs-rescue decision depends on how much is pending and what you want it for — exactly the diagnostic I run in the 15-minute consultation.
📄 Take this with you as a PDF
This article is also a free printable guide: How to close an LLC properly.
Your specific case?
Everything above is the general rule — real cases live in the details. In a 15-minute consultation (USD 29, credited toward any service) we review your situation and you leave with a concrete next step: book here →