Forming an LLC in Illinois takes a few days. Dissolving one properly takes about six months. The Secretary of State filing is one page. The real work is with the other agencies. You close the accounts with the Illinois Department of Revenue and IDES. You give creditors notice so their claims expire. You file final returns and close the EIN with the IRS. The same steps apply to a $2 million company and to an LLC that never got off the ground.
Why Dissolve an LLC
Before you dissolve anything, one question worth an honest hour: is this a business somebody would pay for? Owners routinely shut down companies that a competitor, employee, or search fund would have bought. If the business still has customers and revenue, read my guide on what your business is actually worth and getting it ready to sell before you file anything to close it. Dissolution is for when there is truly nothing left to sell.
People dissolve LLCs for a handful of straightforward reasons. The business ran its course and there's nothing left to operate. Two partners decided they can't work together anymore and neither one wants to buy the other out, so they'd rather wind it down. The LLC was formed for a specific project (a real estate flip, a joint venture, a consulting contract) and that project is finished. Some clients come to me because they formed an LLC years ago, never did anything with it, and have been paying $75 annual report fees to the Secretary of State for a dormant entity that serves no purpose. If the business still has value, you might consider selling the LLC instead of dissolving it.
I also see dissolution as part of a larger restructuring. A client might dissolve one LLC because they're converting their business to an S-Corp, or because they've merged operations into a different entity. If you're in a situation where a partner is leaving but the business should keep going, you might not need dissolution at all. You might just need to change your LLC's membership by removing a member and updating your operating agreement instead. Dissolution is meant to be permanent. Make sure it's the right choice before you start the process.
Voluntary vs. Administrative Dissolution
There are two ways an Illinois LLC stops existing, and they work very differently.
Voluntary dissolution is when you choose to close the LLC. You consent to it (or just decide, if you're the sole member). You wind up the business and close the tax accounts. Then you file a Statement of Termination with the Secretary of State. You're in control of the timeline and the process. This is what the rest of this article covers in detail.
Administrative dissolution is when the Illinois Secretary of State dissolves your LLC involuntarily because you failed to meet your obligations. The two most common triggers are failing to file your annual report and failing to maintain a registered agent in the state. The Secretary of State first mails a notice of delinquency. You then have 120 days to cure a late annual report. You have 60 days to cure a missing registered agent. If you do not cure it, the state dissolves the LLC (805 ILCS 180/35-30). After that, the LLC may act only to wind up its business. The notice goes to the address on file. An outdated address means you may never see it.
The distinction matters because reinstatement works differently depending on which type of dissolution happened. I cover that in the reinstatement section below.
The Dissolution Process
Vote to Dissolve
If the LLC has multiple members, dissolution needs their approval. Your operating agreement should say how many members must approve. Most operating agreements I draft require a majority vote. The Illinois Limited Liability Company Act (805 ILCS 180) lets the operating agreement set the rule. Some LLCs have no operating agreement. I see this problem regularly. Then the default rule applies: the LLC dissolves on the consent of all members (805 ILCS 180/35-1).
For sole-member LLCs, this is simpler. You just decide. But I still recommend documenting the decision in writing with a dated resolution. For multi-member LLCs, the vote should be recorded in your meeting minutes. If anyone ever questions when the LLC was dissolved or whether the decision was authorized, you want a paper trail. I prepare these resolutions as part of the dissolution engagement.
One federal form can start on day one. An LLC taxed as a corporation files IRS Form 966 within 30 days after the members adopt the plan to dissolve.
Wind Up the LLC's Affairs and Notify Creditors
First, check the LLC's status on the Secretary of State's business search. The state terminates only an LLC in good standing (Secretary of State filing guidelines). If an annual report is late, file it and pay the penalty now. Then start winding up.
Winding up means finishing the business's outstanding obligations before you file anything with the state. Pay all debts and outstanding invoices. Collect any receivables owed to the LLC. Cancel ongoing contracts, leases, and vendor agreements. Close business credit cards. Notify customers or clients that the business is closing. If the LLC has employees, handle final payroll, issue final paychecks, and file employment tax returns. If the LLC is involved in pending litigation, you may need LLC court representation to resolve or settle those cases before the entity ceases to exist.
The banking piece is important. The LLC's bank account should stay open until all outstanding checks have cleared and all automatic payments have been stopped. Close the account last, after everything else is settled.
Notify creditors in writing. The LLC Act gives you a way to cut off claims. Send each known creditor a written notice (805 ILCS 180/25-45). The notice says what a claim must include and where to send it. It also states the deadline. The deadline must be at least 120 days after the creditor receives the notice. A claim that misses the deadline is barred. For creditors you do not know about, the LLC can publish one notice in a newspaper (805 ILCS 180/25-50). It runs in the county of the LLC's principal office. Those claims are barred unless the creditor sues within 5 years after publication.
If the LLC holds real property, vehicles, or equipment, transfer or sell them during wind-up. A dissolved LLC can still sign a deed while it winds up (805 ILCS 180/35-4). Do the deed and title work before you file the Statement of Termination. After termination, the last members or managers act only as trustees for the company (805 ILCS 180/35-20). A sale of most of the LLC's equipment or real property can also trigger Form CBS-1. The buyer files it at least 10 business days before closing. I handle the real estate transfer work as well. If the LLC owns property, we coordinate the deed and the dissolution in one engagement.
LLC Dissolution: Your Options
- $75/yr annual report for a dormant LLC
- $100 late penalty if you miss a year
- Ongoing IRS filing obligations
- Potential creditor liability exposure
- Statement of Termination (LLC-35.15)
- IDOR and IDES account closings
- EIN closure letter
- Creditor notices priced on request
- Complex LLCs quoted after free call
- Statement of Termination ($5 fee)
- Most skip the IDOR and IDES closings
- Most skip creditor notice (personal liability risk)
- Most skip final tax returns ($255/mo/partner IRS penalty)
- No guidance on asset distribution order
What this costs without an attorney:
IRS late-filing penalty: $255 per month per partner (2025 Form 1065 instructions). A two-member LLC that files 12 months late owes $6,120. Plus $75/yr in annual reports for an entity doing nothing.
What this costs with us:
$250 flat fee for simple LLCs. Statement of Termination, Illinois tax account closings, and the EIN closure letter. Creditor notices are priced on request.
Simple Dissolutions: $250 + $5 State Fee
Asset-free LLC with no outstanding debts? The $250 flat fee covers the Statement of Termination, the Illinois tax account closings, and the EIN closure letter. Creditor notices are priced on request. LLCs with assets, real property, or creditor obligations are quoted after a free consultation. If the LLC sells its business assets first, the work is billed hourly. See both paths.
Close the Illinois Tax Accounts
This is the step that surprises most business owners. The Secretary of State does not ask for a tax clearance. But the Illinois Department of Revenue (IDOR) still expects a final return for each tax the LLC paid. Most returns have a box that marks them final. Check it (IDOR: Closing Your Business).
If the LLC collected sales tax, file a final Form ST-1. The deadline is one month after the LLC stops selling (35 ILCS 120/3). If the LLC had employees, file a final Form IL-941. Complete Step 2, Line B, with the date withholding stopped. File the final Form UI-3/40 with IDES and check the termination box. Add Form UI-50A, or close the account in MyTax Illinois. Then close each IDOR account in MyTax Illinois. Form REG-3-C does the same job on paper.
Form CBS-1 is a different form. It is a bulk sales notice, not a clearance request. It applies only when the LLC sells most of its inventory, fixtures, equipment, or real property. The buyer must file it. The seller may file it. The deadline is 10 business days before closing (35 ILCS 120/5j; 35 ILCS 5/902(d)). IDOR then has 10 business days to order the buyer to hold back part of the price. IDOR issues a bulk sales release only after all taxes are paid.
Some banks and licensing agencies want proof that the LLC owes no Illinois tax. For that, an owner or officer files Form ITR-1, Request for Tax Clearance. IDOR processes it only after every return is filed and paid. Allow at least 10 business days. The state does not need it to terminate the LLC.
Selling the Assets? The Buyer's CBS-1 Comes First.
If the LLC sells its equipment, inventory, or building, the buyer files Form CBS-1. The deadline is 10 business days before closing. I set the closing date around it. Simple dissolutions start at $250. A sale-first wind-down is billed hourly.
File the Statement of Termination (Form LLC-35.15)
When wind-up is complete, you file Form LLC-35.15, Statement of Termination, with the Illinois Secretary of State. The filing fee is $5. You can file online or mail the paper form in duplicate. The form is one page. It gives the LLC's name and a mailing address for legal papers. It states that the LLC has been terminated. A manager or other authorized person signs it under penalty of perjury (805 ILCS 180/35-15).
The Secretary of State marks the filing "Filed" and returns a copy. Online filers get a link to print it. At that point the LLC's existence ends under Illinois law (805 ILCS 180/35-20). It can no longer conduct business or enter contracts. It still exists for lawsuits and for property found later.
Final Tax Returns and the EIN Letter
The state filing is done. The tax returns are not. A multi-member LLC files a final Form 1065 and checks the "final return" box. It also checks the "final K-1" box on each Schedule K-1. A single-member LLC reports on the owner's Schedule C. An LLC taxed as an S corporation files a final Form 1120-S. In Illinois, the LLC files a final Form IL-1065 or Form IL-1120-ST. Check "Final return" and enter the termination date. If the LLC had employees, file a final Form 941 and Form 940, and issue W-2s.
Next, close the LLC's EIN account with the IRS. Send a letter with the LLC's legal name, EIN, address, and the reason for closing. Include a copy of the EIN assignment notice if you kept it. The IRS will not close the account until every return is filed and every tax is paid. The IRS does not cancel an EIN. It deactivates the account so the notices stop. Mail the letter to the address on the IRS EIN closing page. The full IRS closing procedures are on the IRS website.
Every Form, in Order
Not every LLC needs every row. A dormant LLC with no employees, no sales tax account, and no assets skips most of them. Each row says who files the form.
| When | Form and who files | Official form link |
|---|---|---|
| Month 1 | Written consent to dissolve. The members sign it. Nothing goes to the state. | 805 ILCS 180/35-1 |
| Within 30 days of the consent | IRS Form 966. Only an LLC taxed as a corporation files it. | Form 966 (IRS) |
| Month 1, if a report is late | Annual Report, Form LLC-50.1. The LLC files it. The state terminates only an LLC in good standing. | LLC forms (Secretary of State) |
| 10 business days before an asset sale closes | Form CBS-1, bulk sales notice. The buyer must file it. The seller may file it. | Form CBS-1 (IDOR) |
| Within 10 days after an asset sale | IDES reports and payment. The seller files them. The buyer holds back money until IDES confirms payment. | 820 ILCS 405/2600 |
| During wind-up | Written notice to known creditors. The LLC sends it. The claim deadline is at least 120 days after receipt. | 805 ILCS 180/25-45 |
| During wind-up (optional) | Newspaper notice for unknown claims. The LLC publishes it once. Claims expire 5 years after publication. | 805 ILCS 180/25-50 |
| Quarter of the last paycheck | Final Form IL-941, Step 2, Line B. The LLC files it with IDOR. | Form IL-941 (IDOR) |
| Quarter of the last paycheck | Final Form UI-3/40, termination box checked, plus Form UI-50A. The LLC files both with IDES. | UI-3/40 and UI-50A (IDES) |
| Quarter of the last paycheck | Final Forms 941 and 940, and W-2s. The LLC files them with the IRS. | Closing a business (IRS) |
| Within one month after sales stop | Final Form ST-1 sales tax return. The LLC files it with IDOR. | Form ST-1 (IDOR) |
| After the final returns | Close each IDOR account. The LLC uses MyTax Illinois or Form REG-3-C. | Form REG-3-C (IDOR) |
| Only if a bank or agency asks | Form ITR-1, Request for Tax Clearance. An owner or officer signs it. The state does not require it to terminate. | Form ITR-1 (IDOR) |
| After all debts are paid | Distribution to members. The members receive what remains. No form. | 805 ILCS 180/35-10 |
| After wind-up is complete | Form LLC-35.15, Statement of Termination, $5. A manager or authorized person signs it. | File online or paper form (Secretary of State) |
| Return due date for the final year | Final federal return, final box checked. The LLC files Form 1065, 1120-S, or 1120. A single owner uses Schedule C. | Closing a business (IRS) |
| Return due date for the final year | Final Illinois return, "Final return" box and termination date. The LLC files Form IL-1065, IL-1120-ST, or IL-1120. | IL-1065, IL-1120-ST, IL-1120 (IDOR) |
| After every return is filed and paid | Letter to close the EIN account. An owner or authorized person signs it. | EIN closing (IRS) |
| Within 90 days after termination, if you change course | Form LLC-35.22, Articles of Revocation of Termination, $5. A majority of the members or managers approves it. | Form LLC-35.22 (Secretary of State) |
Sources: 805 ILCS 180/25-45, 25-50, 35-1, 35-10, 35-15, 35-20, 35-22; 35 ILCS 120/3 and 5j; 35 ILCS 5/902(d); 820 ILCS 405/2600; Illinois Department of Revenue, IDES, IRS, and Secretary of State forms, checked October 19, 2026.
What We Do, and What It Costs
Abdilla and Associates winds down your LLC properly. That means more than the $5 state filing. We close the LLC with every agency that knows it exists. The work follows one of two paths. Your path depends on one question: does the LLC sell its business or its assets before it closes?
| Path | When it fits | Fee |
|---|---|---|
| Path 1: Close only | No sale of the business or its assets | $250 flat fee for simple LLCs. Complex dissolutions quoted after a free consultation. |
| Path 2: Sell, then close | The LLC sells its business assets first | Hourly: $350 an hour out of court, $450 in court |
| Creditor notices | Either path | Priced on request, after a free call |
Path 1: The LLC Closes Without a Sale
This path fits an LLC that stops operating and has nothing to sell. A dormant LLC is the common case. Here is what we do, in order.
- We confirm the decision. We prepare the written consent to dissolve. The members sign it. Nothing is filed with the state at this step.
- We check good standing. The Secretary of State terminates only an LLC in good standing. If an annual report is late, we file it first.
- We close the Illinois tax accounts. We confirm the final sales tax, withholding, and IDES returns are filed. Then we close each account with the Department of Revenue and IDES.
- We guide the distribution. Creditors are paid first. Members receive what remains, under the operating agreement or the LLC Act.
- We file the Statement of Termination. We file Form LLC-35.15 with the Secretary of State after wind-up is complete.
- We close the EIN account. We draft the letter to the IRS. It goes out after the final returns are filed and paid.
For a simple LLC, the $250 flat fee covers all six steps. State fees and late penalties are extra. Creditor notices are not included. If you want them, we send written notice to each known creditor and arrange the newspaper notice. That work is priced on request, after a free call. Your CPA or tax preparer files the final federal and Illinois income tax returns. We coordinate the dates with them.
Path 2: The LLC Sells Its Business Assets, Then Closes
This path fits an LLC that sells its inventory, fixtures, equipment, or real property before it closes. The sale adds a tax step with a hard deadline. The buyer must file Form CBS-1 with the Department of Revenue. The deadline is at least 10 business days before closing. A buyer who files late can owe the LLC's unpaid Illinois taxes. So we set the closing date around that filing.
- We review the deal. We read the letter of intent and the purchase agreement. We set a closing date that leaves room for the CBS-1 deadline.
- We get Form CBS-1 filed on time. The buyer must file it. The seller may also file it. We prepare it or coordinate with the buyer's attorney. It goes in at least 10 business days before closing.
- We handle the Department's reply. The Department has 10 business days to order the buyer to hold back part of the price. It then has 60 business days to state the actual amount. We clear any balance so the Department issues its bulk sales release.
- We close the sale. We handle the closing documents, including any deed if the LLC sells real property.
- We handle the IDES step. After the sale, the LLC files its IDES reports and pays within 10 days. The buyer may hold back money until IDES confirms payment.
- We wind down the LLC. From here, the work is the same as Path 1. We close the tax accounts, guide the distribution, file Form LLC-35.15, and close the EIN account.
We bill this path hourly: $350 an hour out of court and $450 an hour in court. A sale's scope is not known at the start, so we do not quote a flat fee. Creditor notices are priced on request, as in Path 1. Your CPA or tax preparer files the final returns. A sale often adds Form 8594 to the federal return. We coordinate the dates with them.
What Happens to Assets and Liabilities
After all debts, obligations, and liabilities have been paid or adequately provided for, any remaining assets get distributed to the members according to the operating agreement. Most operating agreements allocate distributions based on membership interest percentages, so a 60/40 LLC splits remaining assets 60/40. Some LLCs have no operating agreement. Then the LLC Act's default rule applies. Each member first gets back any contributions not yet returned. Any remainder is split in equal shares (805 ILCS 180/35-10).
The order matters, and Illinois law is clear about it. Creditors get paid first. Members get what's left. You cannot skip ahead and distribute assets to members before all creditors have been satisfied.
If the LLC holds real property, convey it during wind-up, before you file the Statement of Termination. That keeps the deed and the title work simple. If the LLC is being dissolved as part of a business sale, the asset transfer and dissolution are coordinated as part of the closing.
Reinstating a Dissolved LLC
If your LLC was administratively dissolved by the Secretary of State for failing to file annual reports or maintain a registered agent, you can reinstate it. To reinstate, file Form LLC-35.40/45.65, Application for Reinstatement Following Administrative Dissolution or Revocation. The filing fee is $200. File all past-due annual reports with it, and pay all back fees and penalties (805 ILCS 180/35-40). If the LLC missed three years of annual reports, you're paying three years of $75 filing fees plus any late penalties. Once the state files the application, the LLC's existence is treated as continuous.
A voluntary termination is harder to undo. Within 90 days, the members can revoke it. A majority of the members or managers must approve. The LLC must not have begun to distribute its assets. The LLC then files Form LLC-35.22, Articles of Revocation of Termination, for $5 (805 ILCS 180/35-22). After that window, call me before you form a new LLC. The Secretary of State also publishes Form LLC-45.70, Application for Reinstatement Following Termination. Whether it fits your LLC depends on the facts. Be certain before we file anything. If you may need the entity again, keep it active. Pay the $75 annual report each year as a holding cost.
Common Mistakes When Dissolving an LLC
Filing the Statement of Termination too early. The LLC Act calls for the filing after wind-up is complete. Creditors with written notice need their full claim window first. The tax accounts should be closed first, too. Wind up first. File last.
Treating Form CBS-1 as a dissolution form. CBS-1 is a bulk sales notice. The buyer of the LLC's assets files it, at least 10 business days before closing. A buyer who files late can owe the LLC's unpaid Illinois taxes. The cap is the value of the assets bought.
Not filing final tax returns. Dissolving the LLC with the Secretary of State does not close your tax obligations. The IRS expects a final return. Illinois expects a final return. If the LLC had employees, the Department of Employment Security expects final unemployment insurance filings. The LLC doesn't exist anymore, but the tax obligation does.
Forgetting to close the EIN account. The IRS will keep sending notices, requesting returns, and flagging your EIN as delinquent if you don't close the account. Writing the closure letter takes five minutes and saves you years of compliance headaches. There's no reason to skip it.
Distributing assets before paying creditors. I covered this above, but it's worth repeating. Members who take distributions ahead of creditors can be held personally liable for the unpaid debts. The LLC's liability shield does not protect you from this specific mistake. Pay creditors first. Always.
Not updating your operating agreement when you should have restructured instead. Some clients come to me wanting to dissolve their LLC because a partner left. Dissolution might not be the right move. If the business is still viable and you want to keep operating, you can remove the departing member, buy out their interest, and continue under the existing entity. Dissolution ends the business. A membership change keeps it alive.
Justin made the process incredibly easy and straightforward. He was always available to answer my questions and provided excellent guidance throughout.
I Handle the Paperwork So You Can Move On.
Statement of Termination, tax account closings, EIN closure. $250 flat fee for simple LLCs. Complex dissolutions quoted after a free consultation. Sale-first wind-downs are billed hourly. Creditor notices are priced on request.
Frequently Asked Questions
Further Reading
External resources: Illinois Secretary of State: LLC Division · 805 ILCS 180 (Illinois LLC Act) · IRS: Closing a Business · Statement of Termination, Form LLC-35.15 (Secretary of State) · Closing Your Business (IDOR) · Form CBS-1 bulk sales notice (IDOR)