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How to Shutdown a Delaware C-Corp

NOT LEGAL ADVICE

Just finished the process myself. None of the below applies if your company owes other people money. That’s a completely different case. Here’s the basic outlines and pointers where your company doesn’t owe anyone money and that you don’t have any real assets. The easiest / fastest way to do this is to find a company to do it for you. But if you have a really clear cut and simple case, here’s some do-it-yourself pointers.

If you have the cash, I would definitely recommend you find a professional / professional company to do this for you because there can be a lot of weird nuances (maybe you have a lot of cash in the company bank account that has to be paid out through dividends before dissolution or it becomes state property, maybe you still owe taxes?!?).

If you don’t have the cash and the points below look like a foreign language to you, you have A LOT of work and research ahead of you.

  1. Make sure all the shareholders and directors are on board. If not, it gets more complicated. This post covers the case where you and and a co-founder want to shutdown a company and you don’t owe anybody money.

  2. Go to uslegalforms and get the templates for Delaware C-Corp dissolution. They will want you to get a subscription, but you sign up and then cancel after you get the form you need (they’re OK with people doing this). So, it will cost you about $45.

  3. Schedule a board meeting. Needs to formally documented and setup at least 10 days in advance of the meeting.

  4. Take a vote of the board of directors (which if you don’t have any investors and only 2-3 co-founders, it’s probably just you and co-founders) to vote on a dissolution resolution.

  5. Go to the Delaware Corporations website and pay your current franchise tax owed for the current year.

  6. File your resolution through the online form submission and give up your credit card number so they can charge you the ~$200 fee. This is a template you can use, but this was created before they started online submissions, so keep that in mind and make sure you read all the instructions:
    https://corpfiles.delaware.gov/Dissolution - 275 - web.pdf

  7. Get you confirmation. File form 966 with the IRS. https://www.irs.gov/pub/irs-pdf/f966.pdf

  8. File your form 1120 for the current year and any other forms you owe them.

If you’re ever in doubt on the Delaware part of the process, you can always go to the actual law itself that covers this topic: Section 275 / Title 8 of the Delaware Code: https://codes.findlaw.com/de/title-8-corporations/de-code-sect-8-275.html

Non-lawyers are allowed to read the law. Some of the words may be confusing, but Google can help you.

That’s the gist of the process. As you can see, it’s a pain in the a$$ compared to just paying Stripe $500 to open a Delaware C-Corp when you opened the company :)

  1. 1

    Dude, this is just normal stuff for company dissolution. I don't get what's pain in the a$$ here.
    You can't just close a company and leave a mess behind. Of course that you need to put things in order first.
    Basically:

    • You decide to shut down the company (steps 1-4)
    • You pay what you owe (you can't just close without paying what is due)
    • You tell the state to shut it down.

    No offence, but I think that your disappointment (or whatever bad emotion) is due to a lack of information (you had to learn the law all by yourself - kudos for that). The process is rather simple, though.

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